<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1998
REGISTRATION NO. 333-60347
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
VAIL BANKS, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
COLORADO 6712 84-1250561
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification Number)
Incorporation or
Organization)
Classification Code
Number)
108 S. FRONTAGE ROAD WEST
SUITE 101
VAIL, COLORADO 81657
(970) 476-2002
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
---------------
E.B. CHESTER, JR.
CHAIRMAN
108 S. FRONTAGE ROAD WEST
SUITE 101
VAIL, COLORADO 81657
(970) 476-2002
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
---------------
COPIES TO:
JAN M. DAVIDSON WILLIAM T. LUEDKE IV
KILPATRICK STOCKTON LLP BRACEWELL & PATTERSON, L.L.P.
1100 PEACHTREE STREET, SUITE 2800 SOUTH TOWER PENNZOIL PLACE
ATLANTA, GEORGIA 30309 711 LOUISIANA STREET, SUITE 2900
(404) 815-6500 HOUSTON, TEXAS 77002
(404) 815-6555 (FAX)
(713) 223-2900
(713) 221-1212 (FAX)
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Vail Banks' Articles of Incorporation provides for indemnification of
directors to the full extent permitted by Colorado law and, to the extent
permitted by such law, eliminate or limit the personal liability of directors
to Vail Banks and its shareholders for monetary damages for certain breaches
of fiduciary duty and the duty of care. Such indemnification may be available
for liabilities arising in connection with this Offering. Insofar as
indemnification for liabilities under the Securities Act may be permitted to
directors, officers or persons controlling Vail Banks pursuant to the
foregoing provisions, Vail Banks has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. Pursuant to its Articles of
Incorporation, Vail Banks may indemnify its officers, employees, agents and
other persons to the fullest extent permitted by Colorado law.
Vail Banks' Bylaws also provide that Vail Banks shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of Vail Banks, or who, while a director,
officer, employee or agent, is or was serving as a director, officer, trustee,
general partner, employee or agent of one of Vail Banks' subsidiaries or, at
the request of Vail Banks, of any other organization, against any liability
asserted against such person or incurred by such person in any such capacity,
whether Vail Banks would have the power to indemnify such person against such
liability under Colorado law. Vail Banks intends to purchase and maintain
insurance on behalf of all of its directors and executive officers.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is an estimate of the approximate amount of the fees and
expenses (other than underwriting commissions and discounts) payable by Vail
Banks in connection with the issuance and distribution of the shares of Common
Stock.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................ $ 7,293
NASD Filing Fees and Blue Sky Fees and Expenses.................... 5,000
Consulting Fees.................................................... 185,000
Printing and Engraving Expenses.................................... 125,000
Legal Fees and Expenses............................................ 350,000
Accounting Fees and Expenses....................................... 110,000
Transfer Agent Fees and Expenses................................... 2,500
Miscellaneous...................................................... 65,207
--------
Total............................................................ $850,000
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Vail Banks has issued the following securities since July 31, 1995 in
transactions exempt under Section 4(2) of the Securities Act.
<TABLE>
<CAPTION>
SECURITY NO. SHARES AGGREGATE CONSIDERATION DATE OF ISSUANCE
-------- ---------- ----------------------- ----------------
<C> <C> <S> <C>
Common Stock 318,770 Consideration for merger July 31, 1998
of Independent
Bankshares, Inc.
Common Stock 204,540 $2.0 million July 24, 1998
Common Stock 454,890 $3.0 million April 30, 1997
Series A Preferred 34,258 Consideration for merger December 1, 1997
of VNB Building Corp.
Mandatorily Convertible N/A $1.6 million; assumed in December 1, 1997
Debentures acquisition of Cedaredge
</TABLE>
II-1
<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement between the Underwriters and the
Registrant
2.1 Merger Agreement and Plan of Reorganization by and between Vail
Banks, Inc. and Telluride Bancorp, Ltd., dated April 16, 1998, as
amended**
2.2 Merger Agreement and Plan of Reorganization by and between Vail
Banks, Inc., WestStar Bank, Independent Bankshares, Inc., and
Glenwood Independent Bank, dated March 10, 1998**
3.1 Amended and Restated Articles of Incorporation of the Registrant**
3.2 Amended and Restated Bylaws of the Registrant**
4.1 Form of Common Stock Certificate of the Registrant**
5.1 Opinion of Kilpatrick Stockton LLP**
10.1 Stock Purchase Agreement by and between Vail Banks, Inc., WestStar
Bank, Cedaredge Financial Services, Inc., WestStar Community
Bank, and certain Company Shareholders, dated July 3, 1997**
10.2 Loan Agreement by and between Barnett Bank of Southwest Florida
and Bank of Colorado Holding Company, dated December 10, 1993**
10.3 Stock Incentive Plan, as amended**
10.4 Agreement with the Wallach Company, dated April 17, 1997**
10.5 Consulting Agreement between Vail Banks, Inc. and Dillon Schramm
Associates, LTD, dated April 21, 1998**
21.1 Subsidiaries of the Registrant**
23.1 Consent of Fortner, Bayens, Levkulich & Co., P.C.**
23.2 Consent of Dalby, Wendland & Co., P.C.**
23.3 Consent of GRA, Thompson, White & Co., P.C.**
23.4 Consent of Kilpatrick Stockton LLP, included in opinion filed as
Exhibit 5.1
24.1 Power of Attorney (on signature page)**
27.1 Financial data schedule**
99.1 Consent of Prospective Director Garner F. Hill, II.**
</TABLE>
- --------
**Previously filed.
(b) Financial Statement Schedules
None required
ITEM 28. UNDERTAKINGS
Vail Banks hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Vail Banks
pursuant to the foregoing provisions, or otherwise, Vail Banks has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Vail Banks
of expenses incurred or paid by a director, officer or controlling person of
Vail Banks in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, Vail Banks will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Securities
Act, and will be governed by the final adjudication of such issue.
The undersigned Vail Banks hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM SB-2 AND AUTHORIZED THIS AMENDMENT
NO. 3 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
IN THE CITY OF VAIL, STATE OF COLORADO, ON THE 30TH DAY OF NOVEMBER, 1998.
VAIL BANKS, INC.
/s/ Lisa M. Dillon
By: _________________________________
LISA M. DILLON,
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons on the 30th
day of November, 1998, in the capacities indicated.
<TABLE>
<S> <C>
SIGNATURE POSITION
* Chairman
- -------------------------------------
E.B. CHESTER, JR.
/s/ Lisa M. Dillon President and Chief
- ------------------------------------- Executive Officer;
LISA M. DILLON director (principal
executive officer)
* Senior Executive
- ------------------------------------- Vice President and
JOSEPH S. DILLON Chief Financial
Officer (principal
financial and
accounting officer)
</TABLE>
II-4
<PAGE>
* Director
- -------------------------------------
KAY H. CHESTER
* Director
- -------------------------------------
JAMES G. FLAUM
* Director
- -------------------------------------
S. DAVID GORSUCH
* Director
- -------------------------------------
JAMES M. GRIFFIN
* Director
- -------------------------------------
BYRON A. ROSE
* Director
- -------------------------------------
E. WILLIAM WILTO
* Director
- -------------------------------------
JAMES C. ALLEN
* Director
- -------------------------------------
MARTIN T. HART
* Director
- -------------------------------------
ROBERT L. KNOUS, JR.
* Director
- -------------------------------------
KENT MYERS
Director
*
- -------------------------------------
DONALD L. VANDERHOOF
By: /s/ Lisa M. Dillon
-------------------------------------
LISA M. DILLON, AS ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT 1.1
================================================================================
VAIL BANKS, INC.
1,600,000 SHARES*
COMMON STOCK
---------------
UNDERWRITING AGREEMENT
---------------
, 1998
----------
================================================================================
*Plus an option to purchase from the Company up to 240,000 additional shares to
cover over allotments.
<PAGE>
VAIL BANKS, INC.
1,600,000 SHARES COMMON STOCK*
UNDERWRITING AGREEMENT
__________, 1998
A. G. EDWARDS & SONS, INC.
HOEFER & ARNETT INCORPORATED
as Representatives of the
Several Underwriters
c/o A. G. Edwards & Sons, Inc.
One Boston Place
Boston, Massachusetts 02108
Ladies and Gentlemen:
SECTION 1. Introductory. Vail Banks, Inc., a Colorado corporation (the
"Company"), proposes to issue and sell 1,440,000 shares (the "Primary Shares")
of its authorized but unissued Common Stock, par value $1.00 per share ("Common
Stock"), and VBI Employee Limited Partnership and James M. Griffin (the
"Selling Shareholders") propose to sell 120,000 and 40,000 shares, respectively,
of Common Stock ("Secondary Shares"), to A. G. Edwards & Sons, Inc. and Hoefer &
Arnett Incorporated and to each of the other underwriters (the "Underwriters")
for whom A. G. Edwards & Sons, Inc. and Hoefer & Arnett Incorporated are acting
as representatives (in such capacity, the "Representatives"). In addition, the
Company proposes to grant to the Underwriters an option to purchase up to
240,000 additional shares of Common Stock ("Additional Shares") as provided in
Section 5 hereof. The Primary Shares and Secondary Shares are referred to
herein as the "Firm Shares," and the Firm Shares, and to the extent such option
is exercised, the Additional Shares, are hereinafter collectively referred to as
the "Shares."
You have advised the Company and the Selling Shareholders that you propose
to make a public offering of the Shares as soon as you deem advisable after the
registration statement hereinafter referred to becomes effective, if it has not
yet become effective, and the Pricing Agreement hereinafter defined has been
executed and delivered.
_______________
* Plus an option to acquire up to 240,000 additional shares to cover over
allotments.
<PAGE>
Prior to the purchase and public offering of the Shares by the
Underwriters, the Company, the Selling Shareholders and the Representatives
shall enter into an agreement substantially in the form of Exhibit A hereto
("Pricing Agreement"). The Pricing Agreement may take the form of an exchange
of any standard form of written telecommunication between the Company, the
Selling Shareholders and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares
will be governed by this Agreement, as supplemented by the Pricing Agreement.
From and after the date of the execution and delivery of the Pricing Agreement,
this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company and the Selling Shareholders hereby confirm their agreements
with respect to the purchase of the Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) A registration statement on Form S-B2 (File No. 33-60347) and a
related preliminary prospectus with respect to the Shares have been prepared and
filed with the Securities and Exchange Commission ("Commission") by the Company
and in conformity with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "1933 Act"; all references herein to specific rules are rules
promulgated under the 1933 Act); and the Company has so prepared and has filed
such amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof. In the event that the Company
determines to rely upon Rule 430A, the Company will prepare and file a
prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. There have been or will
promptly be delivered to you two signed copies of such registration statement
and amendments, including the exhibits filed therewith, and such number of
conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus or prospectuses and final
forms of prospectus as the Representatives may reasonably request.
-3-
<PAGE>
The registration statement and prospectus, as amended, on file with
the Commission at the time the registration statement became or becomes
effective, including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A(b), are hereinafter
called the "Registration Statement" and the "Prospectus", respectively, except
that if the prospectus filed by the Company pursuant to Rule 424(b) differs from
the prospectus on file at the time the Registration Statement became or becomes
effective, the term "Prospectus" shall refer to the Rule 424(b) prospectus from
and after the time it is filed with the Commission or transmitted to the
Commission for filing. The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder are hereinafter collectively
referred to as the "Exchange Act."
(b) The Commission has not issued any order preventing or suspending
the use of any preliminary prospectus, and each preliminary prospectus has
conformed in all material respects with the requirements of the 1933 Act and, as
of its date, has not included any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made. When the Registration
Statement became or becomes effective, and at the First Closing Date and the
Second Closing Date hereinafter defined, as the case may be, the Registration
Statement, including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), and the
Prospectus and any amendments or supplements thereto, in all material respects
conformed or will in all material respects conform to the requirements of the
1933 Act, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, included or will include any untrue statement
of a material fact or omitted or will omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company makes no representation or warranty as to
information contained in or omitted from any preliminary prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Representatives specifically for use in the
preparation thereof.
(c) The Company and each of its subsidiaries (which includes the
assets, liabilities, business and operations, without limitation, previously
acquired in connection with the Company's acquisitions of Independent
Bankshares, Inc. and its subsidiaries ("Independent") and Cedaredge Financial
Services, Inc. and its subsidiaries ("Cedaredge")), and Telluride Bancorp, Ltd.,
a Colorado corporation ("Telluride"), and each of its subsidiaries, including,
without limitation, Bank of Telluride and Western
-4-
<PAGE>
Colorado Bank (the "Telluride Subsidiaries"), have been duly incorporated and
are validly existing as corporations or banks in good standing under the laws of
their respective jurisdictions of incorporation, with full power and authority
to own or lease their properties and conduct their businesses as described in
the Prospectus; the Company's only subsidiaries are those listed on Exhibit 21
of the Registration Statement; the Company and each of its subsidiaries, and
Telluride and each of its subsidiaries, are duly qualified to do business as
foreign corporations under the corporation law of, and are in good standing as
such in, each jurisdiction in which they own or lease substantial properties,
have an office, or in which substantial business is conducted and such
qualification is required except in any such case where the failure to so
qualify or be in good standing would not have a material adverse effect upon the
condition (financial or otherwise), earnings, affairs, business or prospects of
the Company and its subsidiaries, or Telluride and its subsidiaries, as the case
may be, taken as a whole ("Material Adverse Effect"); and no proceeding of which
the Company has knowledge has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification. WestStar Bank, a subsidiary of the Company
("WestStar Bank") and the Telluride Subsidiaries are referred to herein as the
"Banks."
(d) The Company has an authorized and outstanding capitalization as of
September 30, 1998 as set forth in the Prospectus under "Capitalization--Actual"
(as adjusted for the ten for 1 stock split effective ___________, 1998) and the
Shares conform in all material respects to the description thereof contained in
the Prospectus. All of the issued and outstanding shares of Common Stock have
been duly authorized, validly issued and are fully paid and non-assessable and
free of preemptive or other similar rights and there are no options, agreements,
contracts or other rights in existence to acquire from the Company any shares of
Common Stock, except as set forth in the Prospectus. Except as set forth in the
Prospectus, there are no holders of the securities of the Company having rights
to the registration thereof. The Company and Telluride have no banking
subsidiaries other than WestStar Bank and the Telluride Subsidiaries,
respectively. All of the capital stock of each subsidiary of the Company, other
than WestStar Bank, has been duly authorized, validly issued and is fully paid
and non-assessable. Telluride has no subsidiaries, other than the Telluride
Subsidiaries. All of the outstanding capital stock of each of the Banks has
been duly authorized, validly issued and is fully paid and nonassessable. Each
of the Company and Telluride, directly or indirectly, owns of record and
beneficially, free and clear of any liens, claims, encumbrances or rights of
others, all of the issued and outstanding shares of each of its respective
subsidiaries, except as referred to in the Prospectus. There are no options,
agreements, contracts or other rights in existence to purchase or acquire from
the
-5-
<PAGE>
Company or its subsidiaries, or Telluride or its subsidiaries, any issued and
outstanding shares of the capital stock of such subsidiaries.
(e) The Primary Shares to be sold by the Company pursuant to this
Agreement and the Pricing Agreement have been duly authorized and, when issued
and paid for in accordance with this Agreement and the Pricing Agreement, will
be validly issued, fully paid and non-assessable; the Secondary Shares to be
sold by the Selling Shareholder are duly authorized, validly issued, fully paid
and non-assessable; the Shares are not subject to the preemptive rights of any
shareholder of the Company; the holders of the Shares will not be subject to
personal liability by reason of being such holders; and all corporate actions
required to be taken for the authorization, issue and sale of the Shares have
been validly and sufficiently taken.
(f) The execution, delivery and performance by the Company of this
Agreement and the Pricing Agreement have been duly authorized by all necessary
corporate action on the part of the Company and do not and will not violate any
provision of the Company's articles of incorporation (as amended) or bylaws (as
amended) and do not and will not constitute or result in the breach of, or be in
violation of, any of the terms or provisions of or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or its subsidiaries under any material
agreement, franchise, license, indenture, lease, mortgage, deed of trust, or
other instrument to which the Company or any subsidiary is a party or by which
the Company, any subsidiary or the property of any of them may be bound or
affected, or any law, order, judgment, decree, rule or regulation applicable to
the Company or any subsidiary of any government, governmental instrumentality,
court or regulatory body, administrative agency, or other governmental body
having jurisdiction over the Company or any subsidiary or any of their
respective properties, or any order of any court or governmental agency or other
regulatory authority entered in any proceeding to which the Company or any
subsidiary was or is now a party or by which it is bound. No consent, approval,
authorization or other order of or filing with, any court, regulatory body,
administrative agency or other governmental body is legally required for the
execution and delivery of this Agreement or the Pricing Agreement by the Company
or the consummation by the Company of the transactions contemplated herein or
therein, except as may be required under or by the 1933 Act, the Nasdaq/National
Market or the blue sky laws of the various jurisdictions. This Agreement and
the Pricing Agreement have been duly authorized, executed and delivered by the
Company and constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms except insofar as (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws now or
-6-
<PAGE>
hereafter in effect relating to creditors' rights generally; (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding thereafter may be brought; and (iii) such enforcement may be
subject to any limitations under applicable law which relate to the
indemnification and contribution provisions of this Agreement.
(g) Each of (i) Fortner, Bayens, Levkulich & Co., PC, (ii) Dalby,
Wendland & Co. PC and (iii) GRA Thompson, White & Co., P.C., who have expressed
their opinion with respect to certain of the financial statements included in
the Registration Statement, are independent accountants within the meaning of
the 1933 Act.
(h) The consolidated financial statements, together with the notes
thereto, of the Company, Telluride, Independent and Cedaredge included in the
Registration Statement comply in all material respects with the 1933 Act and
present fairly the consolidated financial position of the Company, Telluride,
Independent and Cedaredge, respectively, as of the respective dates of such
financial statements (including, without limitation, the allowance for possible
loan losses), and the consolidated results of operations and cash flows of the
Company, Telluride, Independent and Cedaredge for the respective periods covered
thereby, are in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed in the
Prospectus; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. No other
financial statements are required to be included in the Registration Statement.
The consolidated financial, statistical and numerical information with respect
to the Company and its subsidiaries, and the financial and statistical
information with respect to WestStar Bank, set forth in the Prospectus are
fairly presented, were derived from the consolidated financial statements or the
books and records of the Company and its subsidiaries and are prepared on a
basis consistent with the audited financial statements of the Company.
(i) The pro forma financial information of the Company and its
subsidiaries included in the Registration Statement presents fairly the
information shown therein; has been compiled on a basis consistent with that of
the audited consolidated financial statements of the Company and its
subsidiaries, and of Telluride and its subsidiaries, Independent and Cedaredge
included in the Registration Statement; has been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements; and the assumptions used in the preparation thereof are reasonable.
-7-
<PAGE>
(j) Neither the Company nor any subsidiary thereof, nor either
Telluride or any subsidiary thereof, is in violation of its articles of
incorporation, articles of association, or bylaws, in each case as amended, or
in default under any consent decree, formal agreement, memorandum of
understanding or similar agreement, or in default with respect to any provision
of any lease, loan agreement, franchise, license, permit or other contractual
obligation to which it is a party or by which it or any of its properties may be
bound; there does not exist any state of facts which constitutes an event of
default by the Company as defined in such documents or which, with notice or
lapse of time or both, would constitute such an event of default, except for any
such violation or default of the articles of incorporation, articles of
association, bylaws, consent decrees, formal agreements, memoranda of
understanding or similar agreements, or any lease, loan agreement, franchise,
license, permit or other contractual obligations referred to in this
subparagraph (j) which, either individually or in the aggregate, would not have
a Material Adverse Effect.
(k) Except as disclosed in the Prospectus, (A) there is no action,
suit or proceeding before or by any court or governmental or regulatory agency
or body, domestic or foreign, or any arbitrator or arbitration panel, now
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries, or Telluride or any of its subsidiaries,
including without limitation proceedings relating to discrimination or
environmental matters, which could result in a Material Adverse Effect, and (B)
there is no decree, judgment, order, formal agreement or memorandum of
understanding of any kind in existence applicable to the Company or any of its
subsidiaries, or Telluride or any of its subsidiaries, or any of their
respective officers, employees or directors, requiring or restraining the taking
of any actions of any kind in connection with the business of the Company and
its subsidiaries or Telluride or its subsidiaries, respectively.
(l) Each of the Company and Telluride is a bank holding company duly
registered with the Board of Governors of the Federal Reserve System ("Federal
Reserve Board") under the Bank Holding Company Act of 1956, as amended. Each
Bank is a Colorado State bank duly chartered and organized by authority of the
Colorado Division of Banking ("CDB"). The deposit accounts of each Bank are
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund or the Savings Association Insurance Fund to the fullest extent permitted
by law, and all premiums and assessments required in connection therewith have
been paid by such Bank. Since January 1, 1993, the Company and each Bank has
filed all material reports and amendments thereto that they were required to
file with the Federal Reserve Board, the CDB and any other federal or state
regulatory authorities. Except as set forth in the
-8-
<PAGE>
Prospectus, there is no unresolved material violation, criticism or exception by
any governmental or regulatory agency with respect to any report or statement
relating to any examinations of the Company or any of its subsidiaries. The
conduct of the business of the Company and each of its subsidiaries is in
compliance in all respects with applicable federal, state, local and foreign
laws and regulations, and all formal agreements, memoranda of understanding and
similar agreements with regulatory authorities, except where the failure to be
in compliance would not have a Material Adverse Effect. Each of the Company and
its subsidiaries, and each of Telluride and its subsidiaries, own or possess or
have obtained all governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease or own, as the case may be, and to
operate their properties and to carry on their businesses as presently conducted
except where the failure to have any such governmental licenses, permits,
consents, orders, approvals and other authorizations would not have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries, nor Telluride
or any of its subsidiaries, has received any written notice of proceedings
related to revocation or modification of any such licenses, permits, consents,
orders, approvals or authorizations which singly or in the aggregate, if the
subject of an unfavorable ruling or finding, would result in a Material Adverse
Effect. Except as disclosed in the Prospectus, none of the Company, Telluride or
the Banks is currently a party or subject to any agreement or memorandum with,
or directive or order issued by, the Federal Reserve Board, the CDB or any other
federal or state regulatory authorities, which imposes any material restrictions
or requirements not generally applicable to bank holding companies or commercial
banks.
(m) Each of the Company and its subsidiaries, and each of Telluride
and its subsidiaries, Independent and Cedaredge, have good and marketable title
to all of the properties and assets reflected as owned by them in the financial
statements hereinabove described (or described elsewhere in the Prospectus),
subject to no lien, mortgage, pledge, charge, encumbrance or title defect of any
kind except those, if any, reflected in such financial statements (or described
elsewhere in the Prospectus) or which are not material to the Company and its
subsidiaries, or Telluride and its subsidiaries, as the case may be, taken as a
whole. Each of the Company and its subsidiaries, and each of Telluride and its
subsidiaries, hold their respective leased properties that are material to the
Company and its subsidiaries, or Telluride and its subsidiaries, respectively,
taken as a whole under valid and binding leases.
(n) None of the Company or its subsidiaries has taken, and none will
take, directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
-9-
<PAGE>
(o) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated or
contemplated therein, there has not been (i) any material adverse change in the
condition (financial or otherwise), earnings, affairs, or business of the
Company or its subsidiaries, or of the earnings, affairs or business of
Telluride or its subsidiaries, whether or not arising in the ordinary course of
business, (ii) any material transaction entered into, or any material liability
or obligation incurred, by the Company or its subsidiaries or by Telluride or
its subsidiaries other than in the ordinary course of business, (iii) any
change in the capital stock, or increase in the short-term debt or long-term
debt of the Company or its subsidiaries or of Telluride or its subsidiaries, or
(iv) any dividend or distribution of any kind declared, paid or made by the
Company or Telluride in respect of its capital stock.
(p) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement by the 1933 Act which have not been described or filed as required.
The contracts so described in the Prospectus are in full force and effect on the
date hereof; and neither the Company nor any of the subsidiaries, nor to the
knowledge of the Company, any other party, is in breach of or default under any
of such contracts in any material respect.
(q) The Company together with its subsidiaries, and Telluride together
with its subsidiaries, own and possess sufficient right, title and interest in
and to, or has duly licensed from third parties the right to use, all
trademarks, trade names, copyrights and other proprietary rights ("Trade
Rights") material to the business of the Company and each of its subsidiaries,
or Telluride and its subsidiaries, in each case taken as a whole. None of the
Company or any of its subsidiaries or Telluride or any of its subsidiaries has
received any written notice of infringement, misappropriation or conflict from
any third party as to such material Trade Rights which has not been resolved or
disposed of, and none of the Company or any of its subsidiaries, or Telluride or
any of its subsidiaries, has infringed, misappropriated or otherwise conflicted
with material Trade Rights of any third parties, which infringement,
misappropriation or conflict would have a Material Adverse Effect.
(r) All offers and sales of equity securities prior to the date hereof
by the Company, or any of its subsidiaries, including securities issued or
exchanged in connection with the acquisitions of Independent and Telluride, were
at all relevant times either exempt from the registration requirements of the
1933 Act and the registration requirements of all applicable state securities or
blue sky laws, or were duly registered in accordance with the provisions
thereof.
-10-
<PAGE>
(s) Each of the Company and its subsidiaries, and each of Telluride
and its subsidiaries, has timely filed all necessary federal and state income
and franchise tax returns required to be filed through the date hereof and have
paid all taxes shown as due thereon, and there is no tax deficiency that has
been, or to the knowledge of the Company might reasonably be expected to be,
asserted against the Company or any of its subsidiaries or any of their
properties or assets, or against Telluride or any of its subsidiaries or any of
their properties or assets, that could reasonably be expected to have a Material
Adverse Effect.
(t) The Company has filed a registration statement pursuant to Section
12(g) of the Exchange Act to register its Common Stock thereunder, has filed an
application to list the Shares for quotation on the Nasdaq National Market
("Nasdaq") and has received notification that the Shares have been authorized
for quotation on Nasdaq, subject to notice of issuance or sale, as the case may
be.
(u) Neither the Company nor any of its subsidiaries (and neither
Telluride nor any of its subsidiaries) is, and neither the Company nor any of
its subsidiaries intends to conduct its business in a manner in which it would
become, an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(v) No labor dispute with the employees of the Company or any of its
subsidiaries, or with the employees of Telluride and its subsidiaries, is
pending or, to the knowledge of the Company, threatened that could reasonably be
expected to have a Material Adverse Effect. Each employee benefit plan within
the meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), for which the Company or any subsidiary acts as sponsor within the
meaning of ERISA is and has been in all material respects operated and
administered in accordance with the provisions of ERISA and applicable law. The
present value of all benefits vested under each employee benefit plan which is
subject to Title IV of ERISA did not exceed, as of the end of the most recent
plan year, the value of the assets of the plan allocable to such vested or
accrued benefits, and no such plan or any trust created thereunder has incurred
any "accumulated funding deficiency" within the meaning of the Internal Revenue
Code ("Code") since the effective date of ERISA. No employee benefit plan or any
trust created thereunder or any trustee fiduciary or administrator thereof has
engaged in a "prohibited transaction" within the meaning of the Code or ERISA or
violated any of the fiduciary standards of ERISA, and there has been no
"reportable event" within the meaning of
-11-
<PAGE>
ERISA with respect to any such plan. Neither Telluride nor its subsidiary
maintains an employee benefit plan within the meaning of ERISA.
(w) Each of the Company and its subsidiaries, and, to the knowledge of
the Company, each of Telluride and its subsidiaries, (A) makes and keeps books,
records and accounts which, in reasonable detail and in all material respects,
accurately and fairly reflect its transactions and dispositions of its assets
and (B) maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (1) transactions are executed in accordance with
management's general or specific authorizations, (2) transactions are recorded
as necessary (i) to permit the preparation of financial statements in conformity
with generally accepted accounting principles consistently applied or any other
criteria applicable to such statements and (ii) to maintain accountability for
assets, (3) access to assets is permitted only in accordance with management's
general or specific authorizations and (4) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(x) Except as disclosed in the Prospectus, (A) none of the Company,
Telluride or any of their respective subsidiaries is presently engaged in
negotiations for the acquisition of all or a portion of the stock or other
equity interest or all or a portion of the assets of any person (including
without limitation any company, corporation, partnership, limited liability
company, partnership, joint venture or sole proprietorship), and (B) has no
agreements or understandings with respect to the acquisition of all or a portion
of the stock or other equity interest or all or portion of the assets of any
specific person.
(y) Except as disclosed in the Prospectus, as of the date of the
Prospectus and as of each Closing Date, (A) no extension of credit made by any
Bank to an executive officer, director, or affiliate of the Company, Telluride
or any of the Banks is (1) delinquent, past due, on non-accrual status or non-
performing, (2) identified as a potential problem loan on any internal "watch
list" or (3) constitutes a restructured loan; and (B) all extensions of credit
to any director or executive officer or any member of their immediate family (1)
were made in the ordinary course of business, (2) were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and (3) did not involve
more than the normal risk of collectibility or present other unfavorable
features.
(z) That certain Merger Agreement and Plan of Reorganization dated
April 16, 1998, as amended, between the Company and Telluride described in the
Prospectus under the caption "Recent and Proposed Mergers" and the transactions
-12-
<PAGE>
contemplated thereby have been authorized by all necessary corporate action on
the part of the Company, been executed and delivered by the Company and the
other parties thereto and constitutes a valid and binding obligation of the
Company (assuming the due authorization, execution and delivery thereof by the
other parties thereto) enforceable against the Company in accordance with its
terms, except insofar as (i) such agreement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other laws relating to creditors'
rights generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding thereafter may be brought.
(aa) The Company intends to apply the net proceeds from the sale of
the Shares for the purposes set forth in the Prospectus under the caption "Use
of Proceeds."
SECTION 3. Representations and Warranties of the Selling Shareholders.
Each Selling Shareholder severally represents and warrants to the Company and
each Underwriter, that:
(a) The Selling Shareholder has placed in custody under a Custody
Agreement ("Custody Agreement") with Securities Transfer Corporation, as
Custodian ("Custodian"), for delivery under this Agreement, certificates in
negotiable form representing the Secondary Shares to be sold by the Selling
Shareholder hereunder. The Selling Shareholder specifically agrees that the
Secondary Shares represented by the certificates so held in custody for such
Selling Shareholder are subject to the interests of the Underwriters hereunder,
that the arrangements made by the Selling Shareholder for such custody are to
that extent irrevocable and not subject to termination and that the obligations
of the Selling Shareholder hereunder shall not be terminated by any act of the
Selling Shareholder, by operation of law, or by the occurrence of any other
event.
(b) All consents, approvals, authorizations and orders necessary for
the execution and delivery by the Selling Shareholder of this Agreement, and for
the sale and delivery of the Secondary Shares to be sold by the Selling
Shareholder hereunder, have been obtained; and the Selling Shareholder has full
right, power and authority to enter into this Agreement and to sell, assign,
transfer and deliver the Shares to be sold by the Selling Shareholder hereunder.
(c) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by the Selling Shareholder and constitute
valid and binding obligations of the Selling Shareholder enforceable against the
Selling
-13-
<PAGE>
Shareholder in accordance with their terms except insofar as (i) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding thereafter may be brought; and (ii) such enforcement
may be subject to any limitations under applicable law which relate to the
indemnification and contribution provisions of this Agreement.
(d) The sale of the Secondary Shares to be sold by the Selling
Shareholder hereunder and the compliance by the Selling Shareholder with all of
the provisions of this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, partnership agreement, loan agreement or
other agreement or instrument to which the Selling Shareholder is a party or by
which the Selling Shareholder is bound, or to which any of the property or
assets of the Selling Shareholder is subject, nor will such action result in any
violation of the provisions of partnership agreement of any Selling Shareholder
that is a limited partnership or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the Selling
Shareholder or the property of the Selling Shareholder.
(e) The Selling Shareholder has, and immediately prior to each time of
delivery (as set forth in Section 5 hereof) the Selling Shareholder will have,
good and valid title to the Shares to be sold by the Selling Shareholder
hereunder, free and clear of all liens, encumbrances, equities or claims; and,
upon delivery of such Shares and payment therefor pursuant hereto, good and
valid title to such Shares, free and clear of all liens, encumbrances, equities
or claims, will pass to each of the Underwriters.
(f) The information pertaining to the Selling Shareholder under the
caption "Principal and Selling Shareholders" in the Prospectus does not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(g) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Shareholder will deliver to you prior to or at the First Time of Delivery (as
hereinafter defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
-14-
<PAGE>
(h) The Selling Shareholder has not taken, nor will it take, directly
or indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of the Company to
facilitate its sale or resale of the Shares.
(i) The Selling Shareholder agrees to cooperate to the extent
reasonably necessary to cause the Registration Statement and any post-effective
amendment thereto to become effective at the earliest possible time. The
Selling Shareholder agrees to do or perform all things reasonably required to be
done or performed by the Selling Shareholder prior to the First Closing Date to
satisfy all conditions precedent to the delivery of and the payment for the
Secondary Shares being sold by the Selling Shareholder pursuant to this
Agreement.
SECTION 4. Representation and Warranty of the Representatives. The
Representatives represent and warrant to the Company and the Selling
Shareholders that the information set forth with respect to the Shares (a) on
the cover page of the Prospectus with respect to price, underwriting discount
and terms of the offering and (b) under "Underwriting" in the Prospectus
constitutes the only information furnished to the Company by and on behalf of
the Underwriters for use in connection with the preparation of the Registration
Statement and such information is correct in all material respects.
SECTION 5. Purchase, Sale and Delivery of Shares. (a) On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
to each Underwriter, severally and not jointly, and the each Selling
Shareholder, severally and not jointly, agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter severally and not jointly,
agrees to purchase from the Company and each Selling Shareholder, the Firm
Shares. The purchase price per share to be paid by each Underwriter to the
Company and the Selling Shareholders shall be the price per share set forth in
the Pricing Agreement.
Delivery of certificates for the Firm Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of A. G. Edwards
& Sons, Inc., One Boston Place, Boston, Massachusetts 02108 (or such other place
as may be agreed upon by the Company and the Representatives) at such time and
date, not later than the third full business day following the first date that
any of the Common Shares are released by you for sale to the public, as you
shall designate by at least 48 hours prior notice to the
-15-
<PAGE>
Company (the "First Closing Date"); provided, however, that if the Prospectus
is at any time prior to the First Closing Date recirculated to the public, the
First Closing Date shall occur upon the later of the third full business day
following the first date that any of the Common Shares are released by you for
sale to the public or the date that is 48 hours after the date that the
Prospectus has been so recirculated.
Delivery of certificates for the Firm Shares shall be made by or on behalf
of the Company and each Selling Shareholder to you, against payment by you of
the purchase price therefor by federal funds wire transfer payable in same day
funds to the order of the Company and each Selling Shareholder. The
certificates for the Firm Shares shall be registered in such names and
denominations as you shall have requested at least two full business days prior
to the First Closing Date, and shall be made available for checking and
packaging on the business day preceding the First Closing Date at a location in
New York, New York, as may be designated by you. Time shall be of the essence,
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
(b) In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an aggregate of 240,000 Additional Shares, at the
same purchase price per share to be paid for the Firm Shares, for use solely in
covering any over allotments made by the Underwriters in the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised
at any time (but not more than once), in whole or in part, within 30 days after
the date of the final Prospectus upon written notice by you to the Company
setting forth the aggregate number of Additional Shares as to which the
Underwriters are exercising the option, the names and denominations in which the
certificates for such shares are to be registered and the time and place at
which such certificates will be delivered. Such time of delivery (which may not
be earlier than the First Closing Date), being herein referred to as the "Second
Closing Date," shall be determined by you, but if at any time other than the
First Closing Date, shall not be earlier than three nor later than ten full
business days after delivery of such notice of exercise. Certificates for the
Additional Shares will be made available at the Company's expense for checking
and packaging at 9:00 A.M., local time, on the first full business day preceding
the Second Closing Date at a location in New York, New York as may be designated
by you. The manner of payment for and delivery of the Additional Shares shall
be the same as for the Firm Shares as specified in Section 5(a).
(c) If the Company has elected not to rely upon Rule 430A, the initial
public
-16-
<PAGE>
offering price of the Shares and the purchase price per share to be paid by the
Underwriters for the Shares shall have each been determined and set forth in the
Pricing Agreement, dated the date hereof, and an amendment to the Registration
Statement and the Prospectus will be filed before the Registration Statement
becomes effective.
(d) If the Company has elected to rely upon Rule 430A, the purchase price
per share to be paid by the Underwriters for the Shares shall be an amount equal
to the initial public offering price, less an amount per share to be determined
by agreement between the Representatives and the Company. The initial public
offering price per share of the Shares shall be a fixed price to be determined
by agreement between the Representatives and the Company. The initial public
offering price per share and the purchase price, when so determined, shall be
set forth in the Pricing Agreement. In the event that such prices have not been
agreed upon and the Pricing Agreement has not been executed and delivered by the
parties thereto by the close of business on the second business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, unless otherwise agreed to by the
Company, the Selling Shareholders and the Representatives.
SECTION 6. Covenants of the Company. The Company covenants and agrees
with each Underwriter that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective. The Company will advise you promptly of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement (and make every reasonable effort to obtain the
withdrawal of such order as early as possible) or of the institution of any
proceedings for that purpose, or of any notification of the suspension of
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, and will also advise you
promptly of any request of the Commission for amendment or supplement of the
Registration Statement, of any preliminary prospectus or of the Prospectus, or
for additional information, and will not file any amendment or supplement to the
Registration Statement, to any preliminary prospectus or to the Prospectus of
which you have not been furnished with a copy prior to such filing or to which
you reasonably object.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act, any event occurs as a result of
which the Prospectus, including any amendments or supplements, would include an
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary
-17-
<PAGE>
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements thereto and including any
revised prospectus which the Company proposes for use by each Underwriter in
connection with the offering of the Shares which differs from the prospectus on
file with the Commission at the time of effectiveness of the Registration
Statement, whether or not such revised prospectus is required to be filed
pursuant to Rule 424(b) to comply with the 1933 Act, the Company promptly will
advise you thereof and will promptly prepare and, if required pursuant to Rule
424(b), file with the Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect such compliance.
(c) Neither the Company nor any of its subsidiaries will, prior to the
earlier of the Second Closing Date or termination or expiration of the related
option, incur any material liability or obligation, direct or contingent, or
enter into any material transaction, other than in the ordinary course of
business, except as contemplated by the Prospectus.
(d) The Company will not declare or pay any dividend or make any other
distribution upon the Common Stock payable to shareholders of record on a date
prior to the earlier of the Second Closing Date or termination or expiration of
the related option, except as contemplated by the Prospectus.
(e) Not later than 90 days after the close of the period covered
thereby, the Company will make generally available to its security holders an
earnings statement (which need not be audited) covering a period of at least 12
months beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of the 1933
Act and Rule 158 thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an underwriter or
dealer, the Company will furnish to you at its expense (and consents to the use
thereof), subject to the provisions of subsection (b) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the purposes
contemplated by the 1933 Act.
(g) The Company will cooperate with the Representatives in qualifying
or registering the Shares for sale under the blue sky laws of such jurisdictions
as you designate, and will continue such qualifications in effect so long as
reasonably
-18-
<PAGE>
required for the distribution of the Shares. The Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not currently qualified or where it
would be subject to taxation as a foreign corporation.
(h) During the period of two years after the date of the Pricing
Agreement, the Company will furnish to each Underwriter a copy (i) as soon as
practicable after the filing thereof, of each report filed by the Company with
any securities exchange or the NASD other than a report filed with the
Commission and (ii) as soon as available, of each report of the Company mailed
to any class of its securityholders; and the Company will notify promptly each
Underwriter of the filing of a report with the Commission so that each
Underwriter can obtain it from the Internet.
(i) The Company will use the net proceeds received by it from the sale
of the Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds."
(j) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule 430A,
then immediately following the execution and delivery of the Pricing Agreement,
the Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b), copies of an amended prospectus,
or, if required by such Rule 430A, a post-effective amendment to the
Registration Statement (including an amended prospectus), containing all
information so omitted.
(k) The Company will comply with all of the provisions of each
undertaking contained in the Registration Statement.
(l) The Company will not, without the prior written consent of the
Representatives, sell, contract to sell or otherwise dispose of any equity
security of the Company (including shares of Common Stock) for a period of 120
days after the effective date of the Registration Statement, other than (i)
Common Stock issued and sold to the Underwriters pursuant to this Agreement, and
(ii) Common Stock issued upon exercises of outstanding stock options granted
under the Company's 1998 Stock Incentive Plan (as such terms are defined in the
Prospectus) in the aggregate not to exceed 15% of the issued and outstanding
shares of Common Stock as of the date an option is granted. The Company will
cause each of its executive officers and directors to deliver to the
Representatives on or before the date of this Agreement an agreement
satisfactory in form and substance to the Representatives and their counsel,
whereby each agrees, for a period of 120 days after the effective date of the
Registration Statement, not to offer, sell or
-19-
<PAGE>
otherwise dispose of any shares of Common Stock without the prior written
consent of the Representatives ("Lock-Up Letter").
SECTION 7. Payment of Expenses. (a) The Company will pay, or reimburse if
paid by the Representatives, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses incident
to the performance by the Company of its obligations under this Agreement and
the Pricing Agreement, including, without limiting the generality of the
foregoing, (i) preparation, printing, filing and distribution (including
postage, air freight charges and charges for counting and packaging) of the
Registration Statement, each preliminary prospectus, the Prospectus, each
amendment and/or supplement to any of the foregoing, and this Agreement, any
Agreement among Underwriters and the Selected Dealers Agreement; (ii) the
furnishing to the Underwriters and dealers of copies of the foregoing materials
(provided, however, that any such copies furnished by the Company more than nine
months after the first date upon which the Shares are offered to the public
shall be at the expense of the Underwriter or dealer so requesting as provided
in paragraphs 6(b) above); (iii) the registrations or qualifications referred to
in paragraph 6(g) above (including reasonable fees and disbursements of counsel
in connection therewith) and expenses of printing and delivering to the
Underwriters copies of the preliminary and final Blue Sky memoranda; (iv) the
review of the terms of the public offering of the Shares by the NASD (including
the filing fees paid to the NASD in connection therewith, which shall not exceed
$10,000); (v) the performance by the Company of its other obligations under this
Agreement, including the fees of the Company's counsel and accountants; (vi) the
issuance of the Shares and the preparation and printing of the stock
certificates representing the Shares including any stamp taxes payable in
connection with the original issuance of the Shares; and (vii) the furnishing to
the Underwriters of copies of all reports and information required by Section
6(h) above, including costs of shipping and mailing.
(b) If the sale to the Underwriters of the Firm Shares on the First
Closing Date is not consummated because (i) this Agreement is terminated by the
Representatives in accordance with the provisions of Section 11(i) hereof, (ii)
any condition of the Underwriters' obligations hereunder is not satisfied, or
(iii) of any refusal, inability or failure on the part of the Company to perform
any agreement herein or to comply with any provision hereof (unless such failure
to satisfy such condition or to comply with any provision hereof is due to the
default or omission of the Underwriters), the Company agrees to reimburse you
upon demand for all accountable and reasonable out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been reasonably
incurred by you and them in connection with the proposed purchase and the sale
of the Shares.
-20-
<PAGE>
(c) The provisions of this Section 7 shall not affect any agreement
between the Company and the Selling Shareholders regarding the allocation or
sharing of the expenses and costs of the public offering and sale of the Shares.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Additional Shares on the Second Closing Date
shall be subject to the accuracy in all material respects of the representations
and warranties on the part of the Company and the Selling Shareholders herein
set forth as of the date hereof and as of the First Closing Date and the Second
Closing Date, as the case may be, to the accuracy of the statements of the
Company and the Selling Shareholders made pursuant to the provisions hereof, to
the performance in all material respects by the Company and the Selling
Shareholders of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 5:00 P.M., Eastern
Time, on the first full business day after the date of this Agreement, or such
later time as shall have been consented to by you but in no event later than
5:00 P.M., Eastern Time, on the third full business day following the date
hereof; and prior to the First Closing Date or the Second Closing Date, as the
case may be, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or, to the knowledge of the Company or you,
shall be contemplated by the Commission. If the Company has elected to rely
upon Rule 430A, the information concerning the initial public offering price of
the Securities and price-related information shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed period and
the Company will provide evidence satisfactory to the Underwriter of such timely
filing (or a post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rules 430A
and 424(b)).
(b) The Shares shall have been qualified for sale under the blue sky
laws of such states as shall have been specified by you.
(c) The legality and sufficiency of the authorization, issuance and
sale of the Shares hereunder, the validity and form of the certificates
representing the Shares, the execution and delivery of this Agreement, the
Pricing Agreement, and all corporate proceedings and other legal matters
incident thereto, and the form of the Registration
-21-
<PAGE>
Statement and the Prospectus (except financial statements) shall have been
approved by your counsel.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any material adverse change, or any development
involving a prospective material adverse change, in or affecting the business or
properties of the Company and its subsidiaries, or Telluride and its
subsidiaries, in each case taken as a whole, whether or not arising in the
ordinary course of business, which, in your reasonable judgment, makes it
impractical to proceed with the public offering or delivery of the Shares as
contemplated hereby or to attempt to enforce contracts for the purchase of the
Shares.
(e) There shall have been furnished to you on the First Closing Date
or the Second Closing Date, as the case may be:
(i) An opinion of Kilpatrick Stockton L.L.P., Atlanta, Georgia,
counsel for the Company, addressed to you and dated the First Closing Date
or the Second Closing Date, as the case may be, to the effect that:
(1) Each of the Company and Telluride is validly existing as
a corporation in good standing under the laws of the State of
Colorado, as the case may be, with the corporate power and authority
to own or lease its properties and conduct its business as described
in the Prospectus; each of the Company and Telluride is a bank holding
company duly registered with the Federal Reserve Board; and each of
the Company and Telluride has been duly qualified to do business as a
foreign corporation under the corporation law of, and is in good
standing as such in, every jurisdiction where the ownership or leasing
of property, or the conduct of its business, requires such
qualification except where the failure so to qualify would not have a
Material Adverse Effect.
(2) Each Bank is a state bank duly chartered and organized
by authority of the CDB, validly existing and in good standing under
the laws of Colorado. Each subsidiary of the Company or Telluride is
validly existing as a corporation in good standing under the laws of
its state of incorporation with the corporate power and authority to
own or lease its properties and conduct its business as described in
the Prospectus; and each subsidiary of the Company or Telluride has
been duly qualified to do business as a foreign corporation under the
corporation law of, and is
-22-
<PAGE>
in good standing as such in, every jurisdiction where the ownership or
leasing of property, or the conduct of its business, requires such
qualification except where the failure so to qualify would not have a
Material Adverse Effect.
(3) The Company has an authorized capitalization as set
forth in the Prospectus and the Shares conform, in all material
respects, to the description thereof contained in the Prospectus.
(4) No consent, approval, authorization or other order of or
filing with, any court, regulatory body, administrative agency or
other governmental body is legally required for the execution,
delivery and performance of this Agreement by the Company, except as
may be required under or by the 1933 Act, the NASDAQ National Market
or the blue sky laws of the various jurisdictions.
(5) Each of this Agreement and the Pricing Agreement has
been duly and validly authorized and executed by the Company and
constitutes a valid and binding obligation of the Company except only
insofar as (i) such agreement may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
laws relating to creditors' rights generally, (ii) the remedy of
specific performance and injunctive and other equitable relief may be
subject to equitable defenses, and (iii) such enforcement may be
subject to any limitations under applicable federal securities laws
relating to indemnification and contribution.
(6) The Registration Statement has become effective under
the 1933 Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or are pending or contemplated by the Commission under the 1933 Act,
and the Registration Statement (including the information deemed to be
part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable), the Prospectus and each
amendment or supplement thereto (except for the financial statements
and other statistical or financial data included therein as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the 1933 Act; and the Firm
Shares to be issued to the Underwriters have
-23-
<PAGE>
been approved for quotation on The Nasdaq National Market upon
official notice of issuance.
(7) There are no contracts or documents required to be
described in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement which are not described or
filed, as required, and such contracts and documents as are summarized
in the Registration Statement or Prospectus are fairly summarized in
all material respects; and there are no statutes or regulations or any
legal or governmental proceedings pending or, to the knowledge of such
counsel, threatened, required to be described in the Prospectus which
are not described as required.
(8) All of the issued and outstanding shares of the
Company's capital stock have been duly authorized, validly issued and
are fully paid and non-assessable and free of preemptive or other
similar rights under the Corporation Law of the State of Colorado, and
to such counsel's knowledge, there are no options, agreements,
contracts or other rights in existence to acquire from the Company any
shares of Common Stock, except as set forth in the Prospectus. Except
as set forth in the Prospectus, to such counsel's knowledge, there are
no holders of the securities of the Company having rights to the
registration thereof. The Company has no subsidiary which conducts
business as a bank under the laws of the State of Colorado or Federal
law, other than WestStar Bank. All of the capital stock of each
subsidiary of the Company, other than WestStar Bank, has been duly
authorized, validly issued and is fully paid and non-assessable. All
of the outstanding capital stock of each of the Banks has been duly
authorized and validly issued and is fully paid and nonassessable.
The Company, directly or indirectly, owns of record, free and clear of
any liens, claims, encumbrances or rights of others, all of the issued
and outstanding shares of each of its subsidiaries, except as
described in the Prospectus. To such counsel's knowledge, there are
no options, agreements, contracts or other rights in existence to
purchase or acquire from the Company or its subsidiaries any issued
and outstanding shares of such subsidiaries.
(9) The Primary Shares to be sold by the Company pursuant to
this Agreement and the Pricing Agreement have been duly authorized
and, when issued and paid for in accordance with this
-24-
<PAGE>
Agreement and the Pricing Agreement, will be validly issued, fully
paid and non-assessable; the holders of the Shares will not be subject
to personal liability under the Corporation Law of the State of
Colorado by reason of being such holders; the Shares are not subject
under the Corporation Law of the State of Colorado to the preemptive
rights of any shareholder of the Company.
(10) This Agreement and the Pricing Agreement have been duly
and validly authorized, executed and delivered by the Company.
(11) The statements in the Prospectus under the captions
"Supervision and Regulation" and "Description of Securities," insofar
as they constitute conclusions of law, are correct in all material
respects.
(12) The execution, delivery and performance by the Company
of this Agreement and the Pricing Agreement have been duly authorized
by all necessary corporate action and do not and will not violate any
provision of the Company's articles of incorporation (as amended) or
bylaws (as amended) and do not and will not result in the breach of,
or violate, any of the terms or provisions of or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its
subsidiaries under any material agreement, franchise, license,
indenture, lease, mortgage, deed of trust, or other instrument known
to such counsel to which the Company or any subsidiary is a party or
by which the Company, any subsidiary or the property of any of them
may be bound or affected, or, to such counsel's knowledge, any law,
order, judgment, decree, rule or regulation applicable to the Company
or any subsidiary of any government, governmental instrumentality,
court or regulatory body, administrative agency or other governmental
body having jurisdiction over the Company or any subsidiary or any of
their respective properties, or any order of any court or governmental
agency or other regulatory authority entered in any proceeding to
which the Company or any subsidiary was or is now a party or by which
it is bound.
(13) There is no material legal proceeding pending or, to
such counsel's knowledge, threatened against the Company except as
disclosed in the Prospectus.
(14) Neither the Company nor any of its subsidiaries is
-25-
<PAGE>
an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(15) That certain Merger Agreement and Plan of
Reorganization Agreement dated April 16, 1998, as amended, between
the Company and Telluride and the transactions contemplated thereby
has been authorized by all necessary corporate action on the part of
the Company, has been executed and delivered by the Company and the
other parties thereto and constitutes a valid and binding obligation
of the Company (assuming the due authorization, execution and delivery
thereof by the other parties thereto) enforceable against the Company
in accordance with its terms, except insofar as (i) such agreement may
be subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws relating to creditors' rights
generally, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding thereafter may be brought.
(16) All offers and sales of equity securities prior to the
date hereof by the Company or any of its subsidiaries, including
securities issued or exchanged in connection with the acquisitions of
Independent and Telluride, were at all relevant times either exempt
from the registration requirements of the 1933 Act and the
registration requirements of all applicable state securities or blue
sky laws, or were duly registered in accordance with the provisions
thereof.
In rendering such opinion, such counsel may rely, provided
that the opinion shall state that you and they are entitled to so
rely, as to factual matters on certificates of the officers and
employees of, and accountants for, the Company. In addition, with
respect to matters related to Independent and Telluride and their
Subsidiaries, such counsel may rely on an opinion of counsel to
Independent and Telluride and their subsidiaries. Such opinion may
contain such other qualifications and assumptions as are reasonably
acceptable to counsel for the Underwriters, including that the opinion
shall be subject to the provisions of the ABA Accord.
In addition, counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
-26-
<PAGE>
representatives of the independent public accountants for the Company,
and representatives of the Underwriters and their counsel, at which
the contents of the Registration Statement, the Prospectus and related
matters were discussed and, although such counsel is not passing upon,
and does not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement
or the Prospectus and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to
factual matters upon the statements of officers and other
representatives of the Company), no facts have come to such counsel's
attention that have led them to believe that the Registration
Statement (other than financial statements, the notes thereto and
related schedules and other financial, statistical and accounting data
included therein or omitted therefrom, as to which such counsel need
express no belief), as amended or supplemented, if applicable, at the
time such Registration Statement or any post-effective amendment
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (other than
information omitted therefrom in reliance on Rule 430A under the 1933
Act), or that the Prospectus (other than financial statements, the
notes thereto and related schedules and other financial, statistical
and accounting data included therein or omitted therefrom, as to which
such counsel need express no view) as amended or supplemented, if
applicable, as of its date and the First Closing Date or the Second
Closing Date, as applicable, contained an untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein not misleading in light of the circumstances
under which they were made.
(ii) Kilpatrick & Stockton, L.L.P., counsel to VBI Employee
Limited Partnership ("VBI"), shall have furnished to you their written
opinion, dated the First Closing Date, to the effect that:
(1) Immediately prior to the date of the Purchase Agreement,
VBI was the sole registered owner of the Secondary Shares. Upon
delivery of such Shares and payment therefor and the release by E. B.
Chester of his proxy with respect to the Secondary Shares, assuming
the Underwriter is a "bona fide purchaser" within the meaning of the
Uniform Commercial Code, the Underwriters will acquire all rights of
VBI in the Secondary Shares, free of any adverse claim, any lien
involving
-27-
<PAGE>
the Company and any restriction on transfer imposed by the Company.
(2) No consent, approval, authorization, order or other
action by, or filing with, any court or other governmental authority
of the United States or any state therein is required of VBI for the
execution and delivery of and performance by VBI of its obligations
under this Agreement except for filings made and approvals required
pursuant to the Securities Act of 1933, as amended and such filings
and approvals as may be required under state securities laws.
(3) The execution, delivery and performance of the
Agreement, and the consummation of the transactions therein
contemplated, will not result in a breach or violation of any (i)
statute, rule, regulation, or order of any court or other governmental
authority of the United States or Colorado known to us to be
applicable to VBI, or (ii) to our knowledge after due inquiry, any
material written agreement or instrument to which VBI is a party or by
which VBI is bound or to which the Shares are subject, which breach,
violation or default would encumber the Shares or render the
transaction contemplated by this Agreement void.
(4) The Agreement has been duly authorized, executed and
delivered by VBI and constitutes a legal, valid and binding obligation
of VBI enforceable against VBI in accordance with its terms, except
insofar as (i) such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
similar law now or hereafter in effect relating to creditor's rights
or debtor's obligations generally, (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses, whether enforcement is sought at law or
in equity, and the discretion of the court before which any proceeding
thereafter may be brought and (iii) such enforcement may be subject to
any limitations under applicable state or federal securities laws
relating to indemnification and contribution.
(5) The Custody Agreement has been duly executed and
delivered by VBI and constitutes a legal, valid and binding obligation
of VBI enforceable against VBI in accordance with its terms except
insofar as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws now or hereafter in effect relating to creditor's rights
or debtor's obligations
-28-
<PAGE>
generally, the remedy of specific performance and injunctive and other
forms of equitable relief which may be subject to equitable defenses
and to the discretion of the court before which any proceedings
thereafter may be brought.
(6) In our capacity as counsel to VBI, we have reviewed the
registration statement on Form S-B2 (Registration No. __________)
filed by the Company with the Securities and Exchange Commission
("Registration Statement"). Although we are not passing upon and do
not assume responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
otherwise indicated herein, we advise you that no facts have come to
our attention which lead us to believe that the information included
under the caption "Principal and Selling Shareholders" with respect
only to information concerning VBI in the Registration Statement and
the prospectus contained therein, as of the date the Registration
Statement was declared effective, contained any untrue statement of
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the information included under the caption
"Principal and Selling Shareholders" with respect only to information
concerning VBI in the prospectus as of the date hereof contains an
untrue statement of material fact 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.
In rendering such opinion, such counsel may rely, provided
that the opinion shall state that they are entitled to so rely, as to
factual matters on certificates of the officers and employees of VBI.
Such opinion may contain such other qualifications and assumptions as
are reasonably acceptable to counsel for the Underwriters.
(iii) Mr. Griffin shall have furnished to you his sworn
affidavit which substantially attests to the items contained in Section
8(e)(ii)(1) through (5).
(iv) Such opinion or opinions of Bracewell & Patterson, L.L.P.,
counsel for the Underwriters, dated the First Closing Date or the Second
Closing Date, as the case may be, to such matters as you may reasonably
require.
-29-
<PAGE>
(v) A certificate of the Company executed by the chief executive
officer and the principal financial officer of the Company, dated the First
Closing Date or the Second Closing Date, as the case may be, to the effect
that:
(1) the representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct, in all
material respects, as of the date of this Agreement and as of the
First Closing Date or the Second Closing Date, as the case may be, and
the Company has complied, in all material respects, with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date; and
(2) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary prospectus
filed as part of the Registration Statement or any amendment thereto;
no stop order suspending the effectiveness of the Registration
Statement has been issued; and to the best knowledge of the respective
signers, no proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this
subsection shall be and constitute a representation and warranty of
the Company as to the facts required in the immediately foregoing
paragraphs (1) and (2) of this subsection to be set forth in said
certificate.
(vi) A certificate of each Selling Shareholder executed by the
Selling Shareholder, dated the First Closing Date, to the effect that the
representations and warranties of the Selling Shareholder set forth in
Section 3 of this Agreement are true and correct, in all material respects,
as of the date of this Agreement and as of the First Closing Date, and the
Selling Shareholder has complied, in all material respects, with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the First Closing Date. The delivery of the
certificate provided for in this subsection shall be and constitute a
representation and warranty of the Selling Shareholder as to the facts
required in this subsection to be set forth in said certificate.
(vii) At the time the Pricing Agreement is executed and also on
the First Closing Date and the Second Closing Date, as the case may be,
there
-30-
<PAGE>
shall be delivered to you letters addressed to you and the Board of
Directors of the Company from Fortner, Bayens, Levkulich & Co., PC; Dalby,
Wendland & Co. PC; and GRA Thompson, White & Co., P.C., independent
accountants, the first one to be dated the date of the Pricing Agreement,
the second one to be dated the First Closing Date and the third one (in the
event of a second closing) to be dated the Second Closing Date, to the
effect set forth in Exhibit B.
(viii) All conditions to the consummation of the transactions
among the Company and Telluride described in the Prospectus under the
caption "Recent and Proposed Mergers" shall have been satisfied in a manner
satisfactory to the Representatives in their reasonable discretion.
(ix) The Representatives shall have received a Lock-Up Letter
from each executive officer and director of the Company and each
shareholder of the Company who own 2% of the issued and outstanding shares
of Common Stock of the Company.
(x) Such further certificates and documents as you may reasonably
request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Bracewell & Patterson, L.L.P., counsel for the Underwriters. The Company and
each Selling Shareholder shall furnish you with such manually signed or
conformed copies of such opinions, certificates, letters and documents as you
reasonably request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company and each Selling
Shareholder without liability on the part of the several Underwriters or each
Selling Shareholder, the Company or any Selling Shareholder, except for the
expenses to be paid or reimbursed by the Company and the Selling Shareholders
pursuant to Sections 7 hereof and except to the extent provided in Section 8
hereof.
SECTION 9. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the 1933 Act or the Exchange Act, from and against any
and all losses, claims, damages, liabilities and expenses whatsoever (including
but not limited to reasonable attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim
-31-
<PAGE>
whatsoever, any and all amounts paid in settlement of any claim or litigation),
joint or several, to which they or any of them may become subject under the 1933
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any untrue statement of
a material fact contained in any preliminary prospectus or the Registration
Statement or the Prospectus or in any amendment or supplement thereto, 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 to make the statements
therein not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained herein
or any failure of the Company to perform its respective obligations hereunder or
under law, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
allegation thereof which has been made therein or omitted therefrom in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of the Representatives expressly for use therein; provided,
however, that the indemnification contained in this paragraph with respect to
any preliminary prospectus shall not inure to the benefit of any Underwriter (or
of any person controlling such Underwriter) with respect to any action or claim
arising from the sale of the Shares by the Underwriter brought by any person who
purchased Shares from the Underwriter to the extent it is determined by a court
of competent jurisdiction in a final non-appealable decision that (i) a copy of
the Prospectus (as amended or supplemented if any amendment or supplements
thereto shall have been furnished to the Underwriter prior to the written
confirmation of the sale involved) shall not have been given or sent to such
person by or on behalf of the Underwriter with or prior to the written
confirmation of the sale involved and (ii) the untrue statement or omission of a
material fact contained in such preliminary prospectus was corrected in the
Prospectus (as amended or supplemented if amended or supplemented as aforesaid).
In addition to its other obligations under this Section 9(a), the Company agrees
that, as an interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 9(a), it will promptly reimburse each Underwriter and the Selling
Shareholder for all reasonable legal expenses as they are incurred in connection
with investigating or defending such claim, action, investigation, inquiry or
other proceeding. To the extent that any such interim reimbursement payment is
held by a court of competent jurisdiction to have been improper, each recipient
thereof will promptly return it to the Company.
(b) The Company agrees to indemnify and hold harmless each Selling
Shareholder and each person, if any, who controls the Selling Shareholder within
the meaning of the 1933 Act or the Exchange Act, from and against any and all
losses,
-32-
<PAGE>
claims, damages, liabilities and expenses whatsoever (including but not limited
to reasonable attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, any and all amounts paid in settlement of
any claim or litigation), joint or several, to which they or any of them may
become subject under the 1933 Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages, liabilities and expenses arise out of or are based
upon any untrue statement of a material fact contained in any preliminary
prospectus or the Registration Statement or the Prospectus or in any amendment
or supplement thereto, 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 to make the statements therein not misleading, or arise out of or are
based in whole or in part on any failure of the Company to perform its
respective obligations hereunder or under the 1933 Act or the Exchange Act,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any such untrue statement or omission or allegation
thereof which has been made therein or omitted therefrom in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of the Selling Shareholder expressly for use therein.
(c) Each Selling Shareholder agrees, severally, to indemnify and hold
harmless the Company, each of its officers and directors who sign the
Registration Statement and each person, if any, controlling the Company within
the meaning of the 1933 Act or the Exchange Act, and to indemnify and hold
harmless each Underwriter and each person, if any, controlling any Underwriter
within the meaning of the 1933 Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to the Underwriters and the Selling
Shareholders, but only with respect to information relating to the Selling
Shareholder furnished in writing to the Company or the Representatives by or on
behalf of the Selling Shareholder expressly for use in the Registration
Statement, the Prospectus, any preliminary prospectus, or any amendment thereof
or supplement thereto.
(d) Each Underwriter agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company within the meaning of the 1933 Act and the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Underwriter, but only with respect to information relating to the
Underwriter furnished in writing to the Company by or on behalf of the
Underwriter expressly for use in the Registration Statement, the Prospectus or
any preliminary prospectus, or any amendment thereof or supplement thereto.
-33-
<PAGE>
(e) If any action or claim shall be brought against any indemnified
party under this Section 9, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 9,
promptly notify the indemnifying party in writing of the commencement thereof.
No indemnification shall be available to any party who shall fail to give notice
as provided in this Section 9(e) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but otherwise the omission so to
notify the indemnifying party will not relieve it from any liability that it may
have to an indemnified party under this Section 9. In case any such action is
brought against an indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. Upon receipt of notice from the
indemnifying party to such indemnified party of its election to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under Section 7
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof unless (i) the indemnifying party has
agreed in writing to pay such fees and expenses, (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the named parties to any such action
(including any impleaded party) include such indemnified party and the
indemnifying party and such indemnified party shall have been advised in writing
by counsel having experience in securities litigation that there may be one or
more legal defenses available to it which are different from or additional to
those available to the indemnifying party (in which case if such indemnified
party notifies the indemnifying party, the indemnifying party shall, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
not more than one separate firm of attorneys for all such indemnified parties)
and which, in the opinion of such counsel, would make it impractical to have
common representation. The indemnifying party shall not be liable for any
settlement of any such action effected without its written consent, but if
settled with its written consent, or if there shall be a final judgment for the
plaintiff in any such action and the time for filing all appeals has expired,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party and any such controlling person from and against any loss or liability by
reason of such settlement or judgment.
-34-
<PAGE>
(f) (i) If the indemnification provided for in this Section 9 is
unavailable as a matter of law to an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (A) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Shareholder and the Underwriter from the offering of the
Shares or (B) if the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (A) above but also the relative fault of
the Company, the Selling Shareholder and of the Underwriter in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The respective relative benefits received by the Company, the Selling
Shareholder and the Underwriter shall be deemed to be in the same proportion, in
the case of the Company, the Selling Shareholder, as the total price paid to the
Company or the Selling Shareholder, for the Shares by the Underwriter (net of
underwriting discounts and commissions but before deducting expenses), and, in
the case of the Underwriter, as the underwriting commissions received by it,
bears to the total of such amounts paid to the Company and received by the
Underwriter as underwriting commissions in each case as contemplated by the
Prospectus. The relative fault of the Company, the Selling Shareholder and of
the Underwriter shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriter and the party's relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omissions.
(ii) The Company, each Selling Shareholder and each Underwriter agree
that it would not be just and equitable if contribution pursuant to this Section
9(f) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
subsection (f)(i). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
subsection (f)(i) shall be deemed to include, subject to the limitations set
forth in this Section 9(f), any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9(f), the
Underwriter shall not be required to contribute any amount in excess of the
amount of the total underwriting commissions received by the Underwriter in
connection with the Shares underwritten by it and distributed to the public. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the 1933 Act) shall
-35-
<PAGE>
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(g) The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Underwriter or any person
controlling the Underwriter, the Selling Shareholder, the Company or its
directors or officers (or any person controlling any such person), (ii)
acceptance of any Shares and payment therefor or hereunder and (iii) any
termination of this Agreement. A successor or assign of the Underwriter, the
Company or its directors or officers and their legal and personal
representatives (or of any person controlling an Underwriter, the Selling
Shareholder or the Company) shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 9.
SECTION 10. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9 and 11 and as to all other provisions upon
execution and delivery of the Pricing Agreement.
SECTION 11. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may also be
terminated by you in your absolute discretion, without liability on your part to
the Company or to any Selling Shareholder, by notice given to the Company, if
prior to the First Closing Date or, with respect to the Additional Shares, on or
prior to any later date on which the Additional Shares are to be purchased, as
the case may be, (i) there has been, since the date of this Agreement or since
the respective dates as of which information is given in the Prospectus any
material adverse change in the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries, or Telluride and its subsidiaries, considered as a whole, whether
or not arising in the ordinary course of business; or (ii) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers Automated Quotation System shall have
been suspended, or if there is a significant decline in the value of securities
generally on such exchanges or such market, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities
generally shall have been required on either of such exchanges or on such
market, by the exchanges, market or by order of the Commission or any other
governmental authority having jurisdiction; or (iii) a general moratorium on
savings bank, savings and loan association or commercial banking activities in
the United States or in New York or Colorado shall have been declared by
-36-
<PAGE>
either Federal or state authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions the
effect of which on the financial markets of the United States is such as to make
it, in your judgment, impracticable or inadvisable to market the Shares or to
enforce contracts for the purchase of Shares. Notice of such cancellation shall
be given to the Company and the Selling Shareholder by telegraph, telephone or
facsimile but shall be subsequently confirmed by letter.
SECTION 12. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, the Selling Shareholders and the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any termination of this Agreement or investigation made by
or on behalf of the Underwriters, the Selling Shareholders or the Company or any
of its or their partners, officers or directors or any controlling person, and
will survive delivery of and payment for the Shares sold hereunder.
SECTION 13. Notices. All communications hereunder will be in writing and,
if sent to the Underwriter will be mailed, delivered or telegraphed and
confirmed to A. G. Edwards & Sons, Inc., One Boston Place, Boston,
Massachusetts 02108, with a copy to Bracewell & Patterson, L.L.P., 711 Louisiana
St., Suite 2900, Houston, Texas 77002, Attention: William T. Luedke IV; if sent
to the Company or VBI will be mailed, delivered or telegraphed and confirmed to
the Company at its corporate headquarters with a copy to Kilpatrick Stockton
L.L.P., Suite 2800, 1100 Peachtree Street, Atlanta, Georgia 30309, Attention:
Jan M. Davidson; if sent to the James M. Griffin will be made, delivered or
telegraphed and confirmed to Mr. Griffin, 108 S. Frontage Road West, Suite 101,
Vail, Colorado 81657.
SECTION 14. Successors. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representative and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 9,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from the
Underwriter merely by reason of such purchase.
SECTION 15. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
-37-
<PAGE>
SECTION 16. Applicable Law. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
California.
-38-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholders and the
Underwriters, all in accordance with its terms.
Very truly yours,
VAIL BANKS, INC.
By:
------------------------------
E. B. Chester, Jr.
VBI EMPLOYEE LIMITED PARTNERSHIP
By:
------------------------------
------------------------------
James M. Griffin
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
A. G. EDWARDS & SONS, INC.
HOEFER & ARNETT INCORPORATED
BY: A. G. EDWARDS & SONS, INC.
By:
-------------------------
Authorized Signatory
For themselves and as Representatives of the
other Underwriters
-39-
<PAGE>
EXHIBIT A
VAIL BANKS, INC.
1,600,000 Shares Common Stock*
PRICING AGREEMENT
__________, 1998
A. G. Edwards & Sons, Inc.
One Boston Place
Boston, Massachusetts 02108
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated ____________, 1998
(the "Underwriting Agreement") relating to the sale by the Company and the
Selling Shareholders and the purchase by the several Underwriters for whom A. G.
Edwards & Sons, Inc. and Hoefer & Arnett Incorporated are acting as
Representatives (the "Representatives"), of the above Shares. All terms herein
shall have the definitions contained in the Underwriting Agreement except as
otherwise defined herein.
Pursuant to Section 4 of the Underwriting Agreement, the Company agrees
with the Representatives as follows:
1. The initial public offering price per share for the Shares shall be
$___.
2. The purchase price per share for the Shares to be paid by each
Underwriter shall be $___ being an amount equal to the initial public offering
price set forth above less $___ per share.
- ----------------------
* Plus an option to acquire up to 240,000 additional shares to cover over
allotments.
-40-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholder and the
Underwriters, all in accordance with its terms.
Very truly yours,
VAIL BANKS, INC.
By:
E. B. Chester, Jr.
VBI EMPLOYEE LIMITED PARTNERSHIP
By:
JAMES M. GRIFFIN
--------------------------------
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
A. G. EDWARDS & SONS, INC.
HOEFER & ARNETT INCORPORATED
By: A. G. EDWARDS & SONS, INC.
By:
--------------------------------
Authorized Representative
For themselves and as Representatives of the other Underwriters
-41-
<PAGE>
EXHIBIT B
Comfort Letter of Fortner, Bayens, Levkulich & Co., PC
(1) They are independent public accountants with respect to the Company and
its subsidiaries within the meaning of the 1933 Act.
(2) In their opinion the consolidated financial statements and any
supplementary financial information and schedules (and all pro forma financial
information) of the Company and its subsidiaries included in the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and its subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to December 31,
1996, a reading of minutes of meetings of the shareholders and directors of the
Company and its subsidiaries since December 31, 1996, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
its subsidiaries (with an indication of the date thereof) and other procedures
as specified in such letter, nothing came to their attention which caused them
to believe that (i) the unaudited consolidated financial statements of the
Company and its subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act or that such unaudited financial statements are not
fairly presented in accordance with generally accepted accounting principles,
and (ii) at a specified date not more than five days prior to the date thereof
in the case of the first letter and not more than two business days prior to the
date thereof in the case of the second and third letters, there was any change
in the capital stock or long-term debt or short-term debt (other than normal
payments) of the Company and its subsidiaries on a consolidated basis or any
decrease in consolidated shareholders' equity as compared with amounts shown on
the latest unaudited balance sheet of the Company included in the Registration
Statement or for the period from the date of such balance sheet to a date not
more than five days prior to the date thereof in the case of the first letter
and not more than two business days prior to the date thereof in the case of the
second and third letters, there were any decreases, as compared with the
corresponding period of the prior year, in consolidated net interest income,
consolidated noninterest income or in the total or per share amounts of net
earnings, except, in all instances, for changes or decreases which the
Prospectus discloses have occurred or may occur or which are set forth in such
letter.
(4) They have carried out specified procedures, which have been agreed to
by the Underwriters, with respect to certain information in the Prospectus
specified by the Underwriters, and on the basis of such procedures, they have
found such information to be in agreement with the general accounting records of
the Company and its subsidiaries.
-42-
