================================================================================
As filed with the Securities and Exchange Commission on __________, 1997
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
ZIONS BANCORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Utah 6712 87-0227400
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<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
One South Main, Suite 1380
Salt Lake City, Utah 84111
(801) 524-4787
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices)
------------------
Harris H. Simmons
President and Chief Executive Officer
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
(801) 524-4787
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copies to:
Brian D. Alprin, Esq. Tuck Young, Esq.
Laurence S. Lese, Esq. Kettelkamp, Young & Kettelkamp, P.C.
Duane, Morris & Heckscher LLP 201 West 8th Street, Suite 540
Suite 700 Pueblo, CO 81003
1667 K Street, N.W. (719) 543-4321
Washington, D.C. 20006-1608
(202) 776-7800
Approximate date of commencement of the proposed sale of the securities to the
public: The date of mailing the Proxy Statement/Prospectus contained herein.
<PAGE>
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
==================================================================================================================================
Proposed
Proposed maximum
maximum aggregate Amount of
Title of securities to Amount to be offering price offering registration
be registered registered per share price(1) fee
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Common Stock, no par 572,836
value Shares NA $8,082,000 $2,385
==================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
calculated in accordance with Rule 457(f)(2) on the basis of the book value
of the outstanding shares of Common Stock, $.01 par value, of Sky Valley
Bank Corp. on September 30, 1997 (the latest practicable date prior to
filing the registration statement) of $8,082,000 such stock to be canceled
upon effectiveness of the Reorganization described herein.
--------------------
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 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
SKY VALLEY BANK CORP.
Proxy Statement
For
Special Meeting of Shareholders
To be Held on _______, 1997
and
ZIONS BANCORPORATION
Prospectus
Up to _______ Shares of
Common Stock
This Proxy Statement/Prospectus is being furnished to the shareholders
of Sky Valley Bank Corp., a Colorado corporation ("the Company"), in connection
with the solicitation of proxies by its Board of Directors for use at a Special
Meeting of Shareholders of the Company to be held on _______, 1997 (the "Special
Meeting") and at any adjournments or postponements thereof. This Proxy
Statement/Prospectus and accompanying form of proxy ("Proxy") are first being
mailed to the shareholders of the Company of record as of _______, 1997 (the
"Record Date") on or about _________, 1997.
At the Special Meeting, the holders of Company common stock, par value
$.01 per share ("Company Common Stock") will consider and vote upon a proposal
to approve and adopt the Agreement and Plan of Reorganization dated as of July
25, 1997, as amended on September 8, 1997, among the Company, The First National
Bank in Alamosa, the Company's wholly-owned subsidiary, a national banking
association organized under the laws of the United States (the "Bank"), Ralph H.
Outcalt ("Outcalt") and Donald J. Wuckert ("Wuckert"), both shareholders of the
Company, Zions Bancorporation, a Utah corporation ("Zions"), Zions' wholly-owned
subsidiary, Val Cor Bancorporation, Inc., a Colorado corporation ("Val Cor"),
and Val Cor's 99.1% owned subsidiary, Valley National Bank of Cortez, a national
banking association organized under the laws of the United States ("Valley"), an
accompanying Agreement of Merger between the Company and Val Cor, and an
Agreement of Merger between the Bank and Valley (collectively the "Plan of
Reorganization"). Pursuant to the Plan of Reorganization, the Company will merge
with and into Val Cor with Val Cor being the surviving corporation (the "Holding
Company Merger") and Valley will merge with and into the Bank, with the Bank
being the surviving banking corporation (the "Bank Merger"; collectively the
"Reorganization").
Upon consummation of the Reorganization, the holders of each
outstanding share of Company Common Stock will receive, in exchange for each
share of Company Common Stock, shares of Zions common stock, no par value
("Zions Common Stock"). At the Effective Date (as defined) of the
Reorganization, the shares of Company Common Stock will be canceled and
immediately converted into the right for holders of Company Common Stock to
receive, in exchange for each share of Company Common Stock, that number of
shares of Zions Common Stock calculated by dividing the Merger Consideration (as
defined) of 572,836 shares of Zions Common Stock by the total number of shares
of Company Common Stock issued and outstanding as of the Effective Date of the
Reorganization. In accordance with this formula, the shareholders of the Company
will receive approximately 260.38 shares of Zions Common Stock for each share of
Company Common Stock. Zions will not issue
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<PAGE>
fractional shares of its common stock in the Reorganization. In lieu of
fractional shares of Zions Common Stock, if any, each shareholder of the Company
who is entitled to a fractional share of Zions Common Stock will receive an
amount of cash equal to the product of such fraction times $33.50. Such
fractional share interest shall not include the right to vote or to receive
dividends or any interest thereon.
On November __, 1997, the closing price of Zions Common Stock was
$_____ per share. On that date the Company had 2,200 shares of its Common Stock
issued and outstanding. Assuming that the Reorganization had been consummated as
of November ___, 1997 and the closing price of Zions Common Stock had been
$____________ on that date, shareholders of the Company under such
circumstances would have received 260.38 shares of Zions Common Stock for each
share of Company Common Stock, or an equivalent value of $ per share of Company
Common Stock.
The Zions Common Stock to be distributed to Company shareholders will
be registered with the Securities and Exchange Commission and for all
shareholders, other than shareholders who are affiliates of the Company or who
become affiliates of Zions, will be immediately tradable. See "Plan of
Reorganization--Restrictions on Resales by Company Affiliates." Zions has filed
this Proxy Statement/Prospectus with the Securities and Exchange Commission as
part of a Registration Statement under the Securities Act of 1933, as amended,
with respect to the shares of Zions Common Stock which may be issued in the
Reorganization to the shareholders of the Company. This Proxy
Statement/Prospectus also constitutes the prospectus of Zions filed as part of
the Registration Statement.
--------------------
FOR THE ACTION OF THE SHAREHOLDERS TO BE EFFECTIVE, HOLDERS OF A
MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY
MUST VOTE IN FAVOR OF THE REORGANIZATION. ALL REGULATORY APPROVALS HAVE BEEN
OBTAINED.
--------------------
THE SHARES OF ZIONS COMMON STOCK TO BE ISSUED IN THE REORGANIZATION
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE SHARES OF ZIONS COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
No person has been authorized to give any information or to make any
representation not contained in this Proxy Statement/Prospectus, and, if given
or made, any such information or representation should not be relied upon as
having been authorized by Zions or the Company. This Proxy Statement/Prospectus
does not constitute an offer or solicitation by any person in any state in which
such offer or solicitation is not authorized by the laws thereof or in which the
person making such offer or solicitation is not qualified to make the same.
Neither the delivery of this Proxy Statement/Prospectus at any time nor the
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<PAGE>
distribution of Zions Common Stock hereunder shall imply that the information
contained herein is correct as of any time subsequent to its date.
The information contained in this Proxy Statement/Prospectus with
respect to Zions has been supplied by Zions. The information contained in this
Proxy Statement/Prospectus with respect to the Company has been supplied by the
Company. Neither Zions nor the Company warrants the accuracy or completeness of
information relating to the other.
Forward-looking Statements
Certain statements contained herein are not based on historical facts,
but are forward-looking statements that are based upon numerous assumptions
about future conditions that could prove not to be accurate. Actual events,
transactions and results may materially differ from the anticipated events,
transactions or results described in such statements. Zions' ability to
consummate such transactions and achieve such events or results is subject to
certain risks and uncertainties. Such risks and uncertainties include, but are
not limited to, the existence of demand for and acceptance of Zions' products
and services, regulatory approvals and developments, economic conditions, the
impact of competition and pricing, results of financing efforts and other
factors affecting Zions' business that are beyond Zions' control. Factors that
could cause future results to vary from current management expectations include,
but are not limited to, general economic conditions, legislative and regulatory
changes, monetary and fiscal policies of the federal government, changes in tax
policies, rates and regulations of federal and local tax authorities, changes in
interest rates, deposit flows, the cost of funds, demand for loan products,
demand for financial services, competition, changes in the quality or
composition of Zions' loan and investment portfolios, changes in accounting
principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting Zions' operations, markets,
products, services and prices.
The date of this Proxy Statement/Prospectus is December ___, 1997.
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<PAGE>
AVAILABLE INFORMATION
Zions has filed with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933 (the "Securities Act") a Registration Statement
on Form S-4 (the "Registration Statement") covering the shares of Zions Common
Stock issuable in the Reorganization. As permitted by the rules and regulations
of the SEC, this Proxy Statement/Prospectus omits certain information, exhibits
and undertakings contained in the Registration Statement. The statements
contained in this Proxy Statement/Prospectus as to the contents of any contract
or other document filed as an exhibit to the Registration Statement are of
necessity brief descriptions and are not necessarily complete. Each such
statement is qualified in its entirety by reference to the copy of such contract
or document filed as an exhibit to the Registration Statement. The Registration
Statement and the exhibits thereto can be inspected at the public reference
facilities of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.,
and copies of such material can be obtained at prescribed rates by mail
addressed to the SEC, Public Reference Section, Washington, D.C. 20549.
Zions is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the SEC. Such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C.; and at the following regional offices of the SEC: 7 World
Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can also be obtained at prescribed rates by mail addressed to the SEC,
Public Reference Section, Washington, D.C. 20549. Zions Common Stock is quoted
on the NASDAQ National Market System (hereinafter, the "NASDAQ-NMS"), and such
reports, proxy statements and other information can also be inspected at the
offices of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. The SEC
maintains a Web site that contains reports, proxy and information statements,
and other information regarding registrants that file electronically with the
SEC (http://www.sec.gov).
This Proxy Statement/Prospectus incorporates by reference certain
documents relating to Zions which are not presented herein or delivered
herewith, including the Plan of Reorganization (as described herein). See
"Information Concerning Zions--Zions Documents Incorporated by Reference."
Copies of such documents are available upon request and without charge to any
person to whom this Proxy Statement/Prospectus has been delivered. Requests for
the Plan of Reorganization or Zions documents should be directed to Zions
Bancorporation, One South Main, Suite 1380, Salt Lake City, Utah 84111,
Attention: Dale M. Gibbons, Senior Vice President, (telephone: 801/524-4787). In
order to ensure timely delivery of the Plan of Reorganization or Zions
documents, any request should be made not later than December __, 1997.
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<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY ...................................................................1
INTRODUCTION...............................................................15
Record Date; Voting Rights........................................15
Purpose of the Special Meeting....................................15
Voting and Revocation of Proxies..................................16
Solicitation of Proxies...........................................16
PLAN OF REORGANIZATION.....................................................17
The Reorganization................................................17
Background of and Reasons for the Reorganization..................19
Voting Agreements.................................................20
Required Vote; Management Recommendation..........................21
No Opinion of a Financial Advisor.................................21
Conversion of Company Shares......................................21
Federal Income Tax Consequences of the Reorganization.............23
Rights of Dissenting Shareholders.................................24
Interests of Certain Persons in the Transaction...................26
Inconsistent Activities...........................................27
Conduct of Business Pending the Reorganization....................28
Conditions to the Reorganization..................................29
Representations and Warranties....................................30
Amendment and Waiver..............................................31
Authorized Termination and Damages for Breach.....................31
Restrictions on Resales by Company Affiliates.....................31
Expenses .........................................................32
Government Approvals..............................................32
Effective Date of the Reorganization..............................32
Accounting Treatment..............................................32
Relationship Between Zions and the Company........................33
Unaudited Pro Forma Combined Financial Information................33
SUPERVISION AND REGULATION.................................................34
Zions .........................................................34
Regulatory Capital Requirements...................................35
Other Regulatory and Supervisory Issues...........................39
Deposit Insurance and Other Assessments...........................40
Interstate Banking................................................41
MONETARY POLICY............................................................42
INFORMATION CONCERNING ZIONS BANCORPORATION................................43
Selected Financial Data...........................................43
Stock Prices and Dividends on Zions Common Stock..................46
Principal Holders of Zions Common Stock...........................46
Zions Documents Incorporated By Reference.........................48
INFORMATION CONCERNING SKY VALLEY BANK CORP................................49
General .........................................................49
Business of the Bank..............................................49
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Lending .........................................................50
Investment Portfolio..............................................52
Deposits .........................................................55
Property .........................................................55
Competition.......................................................55
Legal Proceedings.................................................56
Employees.........................................................56
Regulatory Matters................................................56
Selected Financial Data...........................................56
Stock Prices and Dividends on Company Common Stock................58
Stockholdings of Directors, Officers and Certain Others...........58
Certain Transactions of the Company...............................59
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF SKY VALLEY BANK CORP.................59
COMPARISON OF THE RIGHTS OF SHAREHOLDERS
OF ZIONS AND THE COMPANY..........................................67
LEGAL OPINIONS.............................................................73
EXPERTS ..................................................................73
OTHER MATTERS..............................................................73
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY...........................74
Appendix A - Opinion of Duane Morris & Heckscher LLP as to Tax Matters
Appendix B - Rights of Dissenters under ss.ss. 7-113-201 to 701-113-302 of the
Colorado Business Corporation Act
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<PAGE>
SUMMARY
The following is a brief summary of certain information which may also
be contained elsewhere in this Proxy Statement/Prospectus. This summary is
provided for convenience and should not be considered complete. It is qualified
in its entirety by the more detailed information contained in this Proxy
Statement/Prospectus and in the Appendices hereto.
The Parties
Zions Bancorporation ("Zions") is a bank holding company registered
under the Bank Holding Company Act of 1956, as amended (the "Bank Holding
Company Act"), and organized under the laws of Utah, engaged primarily in the
commercial banking business through its banking subsidiaries. Zions' principal
executive offices are at One South Main, Suite 1380, Salt Lake City, Utah 84111
(telephone: 801/524-4787). Zions is the second largest bank holding company
headquartered in Utah. Zions First National Bank, Salt Lake City, Utah ("ZFNB"),
founded in 1873, is a wholly-owned subsidiary of Zions (except for directors'
qualifying shares) and currently has 112 offices located throughout the state of
Utah as well as fifteen offices in various communities in Idaho, plus one
foreign office, for a total of 128 banking offices, including its Head Office.
ZFNB is the second largest banking organization in the state of Utah. Zions also
owns Nevada State Bank, Las Vegas, Nevada, and National Bank of Arizona, Tucson,
Arizona ("NBA"). NBA currently has 28 offices in Arizona and is the fifth
largest banking organization in Arizona. On May 16, 1997, Zions acquired Aspen
Bancshares, Inc. ("Aspen"), a bank holding company headquartered in Aspen,
Colorado. The operations acquired in the Aspen merger are conducted through 12
offices/branches in western Colorado and one branch in northeastern New Mexico.
As of December 31, 1996, Aspen had total consolidated assets of $451 million,
deposits of $399 million, and shareholders' equity of $31 million. On July 11,
1997, Zions also acquired Zions Bank (formerly Tri-State Bank) in Montpelier,
Idaho. Subsequent to the acquisition by Zions of Zions Bank, Zions Bank acquired
10 branches from Wells Fargo Bank, N.A., located in Idaho, and opened two de
novo branches in Idaho. On July 19, 1997, Zions completed its acquisition of 27
former branches of Wells Fargo Bank in Arizona (11 branches), Idaho (10
branches), Nevada (5 branches), and Utah (1 branch). The acquisition included
$378 million in deposit accounts and the branch offices. On September 20, 1997,
Zions Bank completed its acquisition of four additional branches from Wells
Fargo in Utah. The acquisition included $56 million in deposit accounts and the
branch offices. On August 15, 1997, Zions Bank merged with ZFNB. As a result,
ZFNB now operates 15 branches in Idaho. On October 17, 1997, Zions acquired Sun
State Capital Corporation ("Sun State"), a Nevada bank holding company and
parent company of Sun State Bank. In the transaction, Sun State merged with and
into Zions, and Sun State Bank merged with and into Nevada State Bank. As a
result of the acquisition, Nevada State Bank added four offices in the Las Vegas
and one office in the Reno, Nevada areas to its franchise. As of September 30,
1997, Sun State had total assets of $171.1 million, deposits of $151.0 million,
and shareholders' equity of $13.9 million. Nevada State Bank currently has 37
offices. On November 14, 1997, Zions and GB Bancorporation ("Grossmont"), the
parent company of Grossmont Bank, completed their merger whereby Grossmont
merged with and into Zions. Grossmont Bank had approximately $720 million in
assets and 14 offices in San Diego County, California. On September 24, 1997,
Zions, Vectra Banking Corporation ("Vectra"), and Tri-State Finance Corporation
("Tri-State") announced that definitive agreements had been signed under which
Vectra will merge with and into Zions and Tri-State with and into a subsidiary
of Zions, each
<PAGE>
in exchange for common shares of Zions. At August 31, 1997, Vectra had assets of
$660 million and Tri-State had assets of $130 million. The mergers are
unrelated, are not conditional on each other, and are subject to approval by
banking regulators and the shareholders of Vectra and Tri-State, respectively.
See "Summary--Recent Developments," below. These acquisitions are pending. As of
December 31, 1996 Zions had total consolidated assets of $6.49 billion, deposits
of $4.55 billion, and shareholders' equity of $507.5 million; as of September
30, 1997, Zions had total consolidated assets of $9.06 billion, deposits of
$5.67 billion, and shareholders' equity of $581.1 million. See "Information
Concerning Zions Bancorporation."
Val Cor Bancorporation, Inc. ("Val Cor"), a Colorado corporation, is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended. Zions acquired Val Cor as part of the Aspen acquisition in May 1997.
Val Cor's principal asset is over 99% of the common stock of Valley Bank. Val
Cor's main office is located at 350 W. Montezuma, Cortez, Colorado, and its
telephone number is (970) 565-4411.
Valley National Bank of Cortez ("Valley Bank") is a national banking
association organized in 1979. Valley Bank offers traditional banking services
to customers in its primary market area of Montezuma County, Colorado. Valley
Bank also conducts business through its two branch offices located in Cortez and
Dolores, Colorado. At December 31, 1996, Valley Bank had total assets of $80.2
million, total deposits of $68.8 million, and shareholders' equity of $11.2
million. At September 30, 1997, Valley Bank had total assets of $95.1 million,
total deposits of $70.6 million, and shareholders' equity of $23.6 million.
Valley Bank's main office is located at 350 W. Montezuma, Cortez, Colorado, and
its telephone number is 970-565-4411.
Sky Valley Bank Corp. (the "Company") is a bank holding company
organized under the laws of the State of Colorado in September, 1991. The
Company is registered as a bank holding company with the Board of Governors of
the Federal Reserve System. The Company has one subsidiary, The First National
Bank in Alamosa (the "Bank"). The Company's primary business is the ownership
and management of the Bank.
On September 30, 1997, the Company had outstanding 2,200 shares of
Common Stock which are held of record by 42 shareholders. As of September 30,
1997, Ralph H. Outcalt and Donald J. Wuckert owned in the aggregate
approximately 63.64% of the outstanding shares of the Company stock.
For the first full year of the operations of the Company ended on
December 31, 1992, the Company's net income was $909,000 and total assets were
$70,681,000. For the year ended December 31, 1996, the Company's net income was
$1,466,000, and total assets were $120,437,000. For the nine months ended
September 30, 1997, the Company's net income was $1,206,000 and total assets
were $122,872,000.
The First National Bank in Alamosa (the "Bank") was originally
organized on September 6, 1905 as The American National Bank of Alamosa, a
national banking association and commenced operations in September, 1905. On
January 11, 1955, the name of the Bank was changed to The First National Bank in
Alamosa. Deposits are insured by the Federal Deposit Insurance Corporation
(FDIC). The Bank is examined and regulated by the Office of the Comptroller of
the Currency.
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The Bank currently operates through a main office located at 720 Main
Street, Alamosa, Colorado and two branch offices located in Center, Colorado
(the "Center Branch") and Saguache, Colorado (the "Saguache Branch").
The Bank offers traditional banking services, including checking,
savings, money market accounts, certificates of deposit, IRAs and safe deposit
services. The Bank also offers banking by phone services and direct deposit EFT
services. The Bank offers automatic teller machine (ATM) services at 12
locations through the San Luis Valley of Colorado. The Bank offers a variety of
loan products, including commercial, agricultural, real estate, consumer
mortgage and consumer loans, and equity lines of credit. The Bank also offers a
MasterCard program to its customers.
The Bank concentrates its lending activities generally in the
classifications of commercial, agricultural, and consumer loans. Commercial
loans consist of commercial real estate loans, real estate construction loans,
and land development loans. Commercial loans may also involve furniture,
fixtures, and inventory financing. Agricultural loans consist of loans secured
by agricultural properties, equipment, machinery, livestock, and agricultural
products. Consumer loans consist of residential mortgage loans, motor vehicle
loans, installment loans, personal loans, and the MasterCard program of the
Bank. The substantial majority of the loans of the Bank are generated in the San
Luis Valley area of Colorado.
The Special Meeting; Purpose
The Special Meeting of Shareholders of the Company (the "Special
Meeting") will be held at 9:00 a.m., local time, on ____________ __, 1997 at the
offices of the Company, 720 Main Street, Alamosa, Colorado.
The purpose of the Special Meeting is to consider and vote upon a
proposal to approve the Plan of Reorganization. Only holders of record of Common
Stock, $.01 par value, of the Company ("Company Common Stock") at the close of
business on ____________ __, 1997, the record date, will be entitled to vote at
the Special Meeting. At that date, 2,200 shares of Company Common Stock were
outstanding, each share being entitled to one vote. See "Introduction."
Vote Required for Approval
Approval of the Plan of Reorganization requires the affirmative vote of
a majority of the outstanding shares of Company Common Stock entitled to vote. A
failure to vote, an abstention, or a failure by a broker to vote shares held in
street name will have the same legal effect as a vote against approval of the
Plan of Reorganization. See "Plan of Reorganization--Required Vote; Management
Recommendation."
As of _____________ __, 1997, Messrs. Outcalt and Wuckert
beneficially owned an aggregate of approximately 63.64% of the outstanding
Company Common Stock. As an inducement to Zions to enter into the Plan of
Reorganization, Messrs. Outcalt, Wuckert and three other shareholder-directors
of the Company have entered into agreements with Zions under which they have
agreed, in their capacity as shareholders, to vote their shares in favor of the
Reorganization. These agreements cover an aggregate of approximately 73.18% of
the outstanding Company Common Stock. See "Plan of Reorganization--Voting
Agreements; Information
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Concerning Sky Valley Bank Corporation--Stockholdings of Directors, Officers and
Certain Others." Such a vote will be sufficient to approve the Plan of
Reorganization. If each of these individuals votes his shares in favor of the
Plan of Reorganization as each has agreed, the Plan of Reorganization will be
approved by the Company's shareholders notwithstanding the vote of other
shareholders of the Company.
Proposed Reorganization
At the Special Meeting, the holders of Company Common Stock will be
asked to consider and approve an Agreement and Plan of Reorganization among
Zions, Val Cor, Valley, the Company, the Bank, Messrs. Outcalt and Wuckert, an
Agreement of Merger between the Company and Zions and an Agreement of Merger
between the Bank and Valley (collectively, the "Plan of Reorganization"). The
Plan of Reorganization provides for the merger of the Company into Val Cor,
whereby Val Cor will be the surviving corporation (the "Holding Company
Merger"), and for the merger of Valley into the Bank, with the Bank being the
surviving entity (the "Bank Merger"). See "Plan of Reorganization."
Upon consummation of the Reorganization, the holders of each
outstanding share of Company Common Stock will receive, in exchange for each
share of Company Common Stock, shares of Zions common stock, no par value
("Zions Common Stock"). At the Effective Date of the Reorganization, the shares
of Company Common Stock will be canceled and immediately converted into the
right for holders of Company Common Stock to receive, in exchange for each share
of Company Common Stock, that number of shares of Zions Common Stock calculated
by dividing the Merger Consideration of 572,836 shares of Zions Common Stock by
the total number of shares of Company Common Stock issued and outstanding as of
the Effective Date. In accordance with this formula, the shareholders of the
Company will receive approximately 260.38 shares of Zions Common Stock for each
share of Company Common Stock. Zions will not issue fractional shares of its
common stock in the Reorganization. In lieu of fractional shares of Zions Common
Stock, if any, each shareholder of the Company who is entitled to a fractional
share of Zions Common Stock will receive an amount of cash equal to the product
of such fraction times $33.50. Such fractional share interest will not include
the right to vote or to receive dividends or any interest thereon.
Upon consummation of the Bank Merger, the shares of common stock of
Valley, $5.00 par value ("Valley Common Stock") will be canceled and immediately
converted into the right for holders of Valley Common Stock other than Val Cor
to receive, in exchange for each share of Valley Common Stock held of record by
such stockholder as of the Effective Date, $47.25 in cash. It is anticipated
that Zions, which owns 2,233 shares of Valley Common Stock, will contribute its
Valley Common Stock to Val Cor prior to the Val Cor special meeting. Valley will
call a special meeting of its shareholders to consider and approve the Bank
Merger. Val Cor, a wholly-owned subsidiary of Zions, together with its
affiliates owns approximately 99.7% of the issued and outstanding shares of
Valley Common Stock. Val Cor has indicated that it will vote all of its shares
of Valley Common Stock in favor of and to approve the Bank Merger. Such vote is
sufficient to approve the Bank Merger. If Val Cor votes its shares in favor of
the Bank Merger, approval of the Bank Merger by the Valley shareholders is
assured, notwithstanding the vote of any other Valley shareholder. Receipt of
approval of the Bank Merger by the Office of the Comptroller of the Currency
(the "Comptroller") is a required condition to consummation of the Bank Merger.
The
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Comptroller has approved the Bank Merger. It is anticipated that the Bank Merger
will occur during the first quarter of 1998 and that the Holding Company Merger
will precede the Bank Merger by a very brief period of time, both mergers taking
place on the same day.
On November ____, 1997, the closing price of Zions Common Stock was
$__________ per share and the Company had issued and outstanding 2,200 shares of
its Common Stock. Assuming that the Reorganization had been consummated as of
November __, 1997 and the closing price of Zions Common Stock had been $_______,
shareholders of the Company under such circumstances would have received 260.38
shares of Zions Common Stock for each share of Company Common Stock, or an
equivalent value of $______ per share of Company Common Stock.
Certain Definitions
In connection with the description of the Reorganization in this Proxy
Statement/Prospectus, shareholders of the Company should be aware of the
following terms. The following definitions may not be complete. For a complete
definition of each term, please refer to the Plan of Reorganization.
"Bank Merger" means the merger of the Valley with and into the Bank,
with the Bank being the surviving entity.
"Effective Date" means the date which is the latest of (a) the date
following the day upon which the Company shareholders approve, ratify, and
confirm the transactions contemplated by the Plan of Reorganization; (b) the
date following the day upon which the shareholders of Valley approve, ratify,
and confirm the Bank Merger, as defined herein; (c) the first to occur of (i)
the date thirty days following the date on which the Board of Governors of the
Federal Reserve System or the Federal Reserve Bank of San Francisco acting
pursuant to delegated authority (collectively, the "Board of Governors")
authorizes consummation of the Holding Company Merger, as defined herein; or
(ii) if, pursuant to section 321(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994 (the "Riegle Act"), the Board of Governors
shall have prescribed a shorter period of time with the concurrence of the
Attorney General of the United States, the date on which such shorter period of
time shall elapse; or (iii) the date ten days following the date on which the
Board of Governors indicates its waiver of jurisdiction over the Holding Company
Merger; (d) the first to occur of (1) the date thirty days following the date of
the order of the Comptroller authorizes the Bank Merger, or (2) if, pursuant to
section 321(a) of the Riegle Act, the Comptroller shall have prescribed a
shorter period of time with the concurrence of the Attorney General of the
United States, the date on which such shorter period of time shall elapse; (e)
if such an order shall be required by law, the date ten days following the date
of the order of the Commissioner of Financial Institutions of the State of Utah
(the "Commissioner") approving the transactions contemplated by the Plan of
Reorganization; (f) the date ten days following the date of the order of the
Colorado State Banking Board (the "Board") approving the transactions
contemplated by the Plan of Reorganization; (g) the date upon which any other
material order, approval, or consent of a federal or state regulator of
financial institutions or financial institution holding companies authorizing
consummation of the transactions contemplated by the Plan of Reorganization is
obtained or any waiting period mandated by such order, approval, or consent has
run; (h) ten days after any stay of the approvals of the Board of Governors, the
Comptroller, the Commissioner,
-5-
<PAGE>
or the Board of the transactions contemplated by the Plan of Reorganization,
or any injunction against closing of such transactions is lifted, discharged, or
dismissed; or (i) such other date as shall be mutually agreed upon by Zions and
the Company.
"Holding Company Merger" means the merger of the Company with and into
Val Cor, with Val Cor being the surviving corporation.
"Merger Consideration" means the aggregate of 572,836 shares of Zions
Common Stock to be issued to the holders of Company Common Stock upon
consummation of the Holding Company Merger.
Reasons for the Reorganization
Management and the directors of the Company believe that it is in the
best interest of the Company and its shareholders for the Company to merge with
a larger financial institution in a tax-free reorganization (with respect to the
receipt by the Company shareholders of shares of Zions Common Stock). Management
and the directors of the Company believe that the proposed merger with Zions in
an exchange whereby the Company shareholders will receive Zions Common Stock in
exchange for their Company Common Stock provides the Company's shareholders with
the greatest available monetary value based upon Zions' offer as compared to
previous inquiries received as well as increased liquidity for their investment,
prospects for greater yield of their investment through increased dividends and
prospects for growth in their investment due to the prospects for Zions
generally. In addition, management and the directors of the Company believe the
combined institution will be more competitive in the Company's market area due
to Zions' greater resources. See "Plan of Reorganization--Background of and
Reasons for the Reorganization" for a description of the factors considered by
the Company's board of directors in determining to recommend the Reorganization
to shareholders for their approval. The Company's board of directors believes
that the merger with Zions will realize substantial value for the Company's
shareholders and provides them the option of realizing a significant return on
their original investment and continuing to participate in the development of
banking in Colorado by holding the Zions Common Stock they will receive in the
Reorganization.
For Zions, the Reorganization will provide the opportunity to expand
its franchise into the south-central Colorado market, wherein Zions has not
previously had a presence. Zions proposes to broaden its geographical base in
the Colorado market and thereby diversify its banking operations, and expand the
banking services it is able to provide. The combination of the different skills,
resources and services offered by the Company and Zions, together with the
additional skills and resources available in the broader Zions organization,
will make the resulting banking group better able to effectively compete in its
markets with other full-service financial institutions. See "Plan of
Reorganization--Background of and Reasons for the Reorganization."
Board of Directors Recommendation
The Board of Directors of the Company unanimously believes that the
Reorganization is in the best interests of the shareholders, employees, and
customers of the Company and recommends that the shareholders of the Company
vote
-6-
<PAGE>
"FOR" approval of the Plan of Reorganization. See "Plan of Reorganization--
Background of and Reasons for the Reorganization."
SHAREHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, AND SIGN
THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
Interests of Certain Persons in the Transaction
The Plan of Reorganization provides that, following the Reorganization,
David E. Broyles, currently President and Chief Executive Officer of the Bank,
will become _________ of the Bank. Mr. Broyles will enter into an Employment
Agreement with the Bank effective as of the Effective Date. The Company Board of
Directors was aware of these interests when it considered and approved the Plan
of Reorganization. See "Plan of Reorganization--Interests of Certain Persons in
the Transaction."
The Plan of Reorganization further provides that, following the
Reorganization, Ralph H. Outcalt, currently Chairman of the Board of the Bank,
and Donald J. Wuckert, currently Vice Chairman of the Board of the Bank, will
both become advisors to the Bank. Mr. Outcalt and Mr. Wuckert will each enter
into an Advisory Agreement with the Bank effective as of the Effective Date and
pursuant to these agreements, Messrs. Outcalt and Wuckert will provide advice
and counsel to the management and Board of Directors of the Bank. The Company
Board of Directors was aware of these interests when it considered and approved
the Plan of Reorganization. As referenced above under "Vote Required for
Approval," Messrs. Outcalt and Wuckert and three other shareholder-directors of
the Company have entered into agreements with Zions whereby they agreed in their
capacity as shareholders of the Company to vote all of their shares of Company
Common Stock in favor of the Plan of Reorganization. These five individuals own
approximately 73.18% of the issued and outstanding shares of Company Common
Stock. Such vote will be sufficient to approve the Plan of Reorganization.
Assuming these individuals vote their shares in accordance with the voting
agreements, approval by the Company shareholders of the Plan of Reorganization
is assured, notwithstanding the vote of any other Company shareholder.
Tax Consequences
The Company will receive an opinion from Duane, Morris & Heckscher LLP,
legal counsel to Zions (the "Duane Opinion") that, based upon the facts,
representations, and assumptions set forth or referred to in such opinion, the
Holding Company Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. As a result,
the Company shareholders, who receive Zions Common Stock, will recognize no gain
or loss upon the exchange of their shares of Company Common Stock for Zions
Common Stock in the Holding Company Merger (except with respect to cash received
by such shareholders in lieu of fractional shares). For further discussion, see
"Plan of Reorganization--Federal Income Tax Consequences of the Reorganization."
A copy of the Duane Opinion is attached as Appendix A to this Proxy
Statement/Prospectus.
-7-
<PAGE>
Dissenters' Rights
Under Colorado law, shareholders of the Company will be entitled to
dissenters' rights. The Colorado Business Corporation Act (ss.ss. 7-113-101 et
seq.) permits a shareholder to dissent to a merger and to receive the fair value
for such shares in accordance with procedures established by Colorado law.
Company shareholders will be entitled under Colorado law to exercise their
dissenters' rights with respect to the Plan of Reorganization. Since exercise
and preservation of dissenters' rights are conditioned on strict observance of
the applicable section of the Colorado Business Corporation Act, each Company
shareholder who might exercise dissenters' rights should consult and strictly
observe the statute, a copy of which is attached as Appendix B to this Proxy
Statement/Prospectus. Failure to follow the statutory provisions precisely may
result in loss of such shareholder's dissenters' rights under Colorado law. See
"Plan of Reorganization--Dissenters' Rights," "Comparison of Zions Common Stock
and Company Common Stock--Dissenters' Rights" and Appendix B to this Proxy
Statement/Prospectus.
Conditions; Regulatory Approval
Consummation of the Reorganization is subject to satisfaction of a
number of conditions, including (i) obtaining requisite approval from the
Company shareholders, (ii) obtaining regulatory approvals from the Board of
Governors, the Comptroller, the Commissioner, and the Division, (iii) the
receipt of an opinion of counsel with respect to certain tax aspects of the
Reorganization, (iv) the absence of any material adverse change with respect to
the Company, and (v) the satisfaction of other customary closing conditions. See
"Plan of Reorganization--Conditions to the Reorganization." All regulatory
approvals have been obtained.
Amendment; Termination
Notwithstanding prior shareholder approval, the Plan of Reorganization
may be amended at any time prior to the Effective Date of the Reorganization in
any respect that would not prejudice the economic interests of the Company
shareholders.
The Plan of Reorganization may be terminated and abandoned at any time
prior to the Effective Date, notwithstanding approval of the shareholders, as
follows: (i) by mutual consent of the parties to the Plan of Reorganization;
(ii) unilaterally, by Zions if any of the representations and warranties of the
Company, the Bank, or Messrs. Outcalt or Wuckert was materially incorrect when
made or in the event of a material breach or material failure by the other party
to the Plan of Reorganization of any covenant or agreement contained in the Plan
of Reorganization which has not been, or cannot be, cured within thirty days
after written notice has been given; (iii) unilaterally, by the Company if any
of the representations and warranties of Zions, Val Cor or Valley was materially
incorrect when made or in the event of a material breach or material failure by
the other party to the Plan of Reorganization of any covenant or agreement
contained in the Plan of Reorganization which has not been, or cannot be, cured
within thirty days after written notice has been given; (iv) by either Zions or
the Company if the Reorganization has become inadvisable or impracticable by
reason of federal or state litigation to restrain or invalidate the
-8-
<PAGE>
Reorganization; or (v) by either party on or after March 13, 1998, if the
Effective Date has not occurred on or before that date.
Effective Date of the Reorganization
It is presently anticipated that if the Plan of Reorganization is
approved by the shareholders of the Company, the Reorganization will become
effective in the first quarter of 1998. However, there can be no assurance that
all conditions necessary to the consummation of the Reorganization will be
satisfied or, if satisfied, that they will be satisfied in time to permit the
Reorganization to become effective at the anticipated time. See "Plan of
Reorganization--Effective Date of the Reorganization."
Accounting Treatment
It is intended that the Reorganization will be treated for accounting
purposes as a "pooling of interests" in accordance with ABP Opinion No. 16. See
"Plan of Reorganization--Accounting Treatment."
Comparison of Shareholders' Rights
See "Comparison of Zions Common Stock and Company Common Stock" for a
summary of the material differences between the rights of holders of shares of
Company Common Stock and holders of shares of Zions Common Stock.
"Anti-Takeover" Provisions
The Articles of Incorporation and Bylaws of Zions contain provisions
which may be considered to be anti-takeover in nature, including staggered terms
of office for directors, absence of cumulative voting and special shareholder
vote requirements for certain types of extraordinary corporate transactions.
Additionally, Zions has adopted a shareholders' rights plan which will have the
effect of encouraging entities interested in acquiring Zions to negotiate any
such transactions with Zions' management and of deterring or discouraging
unfriendly takeovers by making any such takeover substantially more expensive to
the entity sponsoring the unfriendly takeover. See "Comparison of Zions Common
Stock and Company Common Stock."
Exchange of Certificates
Instructions on how to effect the exchange of Company Common Stock
certificates for Zions Common Stock certificates or for cash in lieu of
fractional shares of Zions Common Stock will be sent, as promptly as practicable
after the Reorganization becomes effective, to each shareholder of record of the
Company. Shareholders should not send in stock certificates until they receive
written instructions to do so.
Trading Markets; Pre-Announcement Prices
The outstanding shares of Zions Common Stock currently are traded on
the Nasdaq National Market ("NASDAQ-NMS") under the symbol "ZION." The shares of
Zions Common Stock to be issued in the Reorganization will be listed on NASDAQ-
NMS, subject to official notice of issuance. The closing sale price for Zions
-9-
<PAGE>
Common Stock on the NASDAQ-NMS on July 24, 1997, the last trading day prior to
the first public announcement of the Reorganization, was $35.50.
The outstanding shares of Company Common Stock are not listed or traded
on any market or stock exchange. Such shares when traded are traded infrequently
in privately-negotiated transactions. The Company has no reliable information as
to the prices at which the shares have traded. See "Information Concerning Sky
Valley Bank Corp.--Stock Prices and Dividends on Company Common Stock."
Selected Financial Information
The following table sets forth certain historical financial information
for Zions and the Company. With respect to pro forma combined financial
information for Zions giving effect to the Reorganization using the pooling of
interests method of accounting, see "Plan of Reorganization--Unaudited Pro Forma
Combined Financial Information." This information is based on the respective
historical financial statements of Zions incorporated herein by reference and of
the Company which are included in this Proxy Statement/Prospectus and should be
read in conjunction with such statements and information and the related notes.
-10-
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Zions
Earnings
Net interest income........... $ 225,404 $ 189,207 $ 260,473 $ 227,094 $ 198,606 $ 174,657 $ 157,282
Provision for loan losses..... 2,905 2,200 3,540 2,800 2,181 2,993 10,929
Net income.................... 84,121 74,495 101,350 81,328 63,827 58,205 47,209
Per Share
Net income ................... $ 1.41 $ 1.26 $ 1.71 $ 1.38 $ 1.09 $ 1.02 $ .86
Cash Dividends................ .35 .32 .43 .35 .29 .25 .19
Statement of Condition at Period
End
Assets........................ $ 9,059,721 $ 6,783,341 $ 6,484,964 $ 5,620,646 $4,934,095 $4,801,054 $4,107,924
Deposits...................... 5,666,336 4,572,555 4,552,017 4,097,114 3,705,976 3,432,289 3,075,110
Long-term debt................ 251,134 55,702 251,620 56,229 58,182 59,587 99,223
Shareholders' equity.......... 581,129 490,485 507,452 428,506 365,770 312,592 260,070
Sky Valley (Unaudited)
Earnings
Net interest income........... $ 3,808 $ 3,593 $ 4,831 $ 4,108 $ 3,628 $ 2,779 $ 2,456
Provision for loan losses..... 108 101 131 142 110 107 44
Net income.................... 1,206 1,042 1,465 1,062 912 699 909
Per Share
Net income ................... $ 548.10 $ 473.42 $ 666.14 $ 482.72 $ 414.58 $ 332.86 $ 454.50
Cash Dividends................ 120.00 112.50 150.00 140.00 132.50 140.95 112.50
Statement of Condition at Period
End
Assets........................ $ 122,872 $ 120,180 $ 120,437 $ 114,863 $ 89,641 $ 80,104 $ 70,681
Deposits...................... 108,609 106,961 106,466 102,302 78,152 71,782 65,502
Long-term debt................ 573 600 593 620 644 293 0
Shareholders' equity.......... 8,082 6,807 7,163 6,294 5,272 4,998 4,048
</TABLE>
Comparative Per Share Data
The following table sets forth for the periods indicated historical
earnings, book values and dividends per share for Zions and Company Common
Stock. The following data are based on the respective historical financial
statements of Zions incorporated herein by reference and of the Company included
herein and should be read in conjunction with such financial statements and such
information and the related notes to each.
-11-
<PAGE>
<TABLE>
<CAPTION>
Nine Months ended
September 30, Year Ended December 31,
---------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income Per Common Share
Zions......................... $ 1.41 $ 1.26 $ 1.71 $ 1.38 $ 1.09 $ 1.02 $ .86
Sky Valley.................... 548.10 473.42 666.14 482.72 414.58 332.86 454.50
Book Value Per Common Share
Zions......................... $ 9.78 $ 8.30 $ 8.61 $ 7.36 $ 6.28 $ 5.50 $ 4.74
Sky Valley.................... 3,673.70 3,105.38 3,256.04 2,861.10 2,396.23 2,271.92 2,023.77
Cash Dividends Declared Per Common
Share
Zions(1)...................... $ .35 $ .32 $ .43 $ .35 $ .29 $ .25 $ .19
Sky Valley.................... 120.00 112.50 150.00 140.00 132.50 140.95 112.50
</TABLE>
- ----------------------
(1) While Zions is not obligated to pay cash dividends, the Board of Directors
presently intends to continue its policy of paying quarterly cash
dividends. Future dividends will depend, in part, upon the earnings and
financial condition of Zions.
Unaudited Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information
reflects the application of the pooling of interests method of accounting. The
following tables, which show comparative historical per Common Share data for
Zions and the Company (separately and pro forma combined) and equivalent pro
forma per share data for the Company, should be read in conjunction with the
financial information as incorporated herein by reference to other documents and
as included herein. The pro forma data in the table, presented as of and for
each of the years ended December 31, 1996 as of and for the nine months ended
September 30, 1997, are presented for comparative and illustrative purposes only
and are not necessarily indicative of the combined financial position or results
of operations in the future or what the combined financial position or results
of operations would have been had the Reorganization been consummated during the
period or as of the date for which the information in the table is presented:
-12-
<PAGE>
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ ----------------------------------
Zions and
Sky Valley Sky Valley
Pro-Forma Equivalent
Per Common Share Zions Sky Valley Combined(4) Pro-Forma(5)
- ---------------- ----- ---------- ----------- ------------
<S> <C> <C> <C> <C>
NET INCOME(1)
For the years ended
December 31, 1996 $ 1.71 $ 666.14 $ 1.72 $ 447.85
December 31, 1995 1.38 482.72 1.39 361.93
December 31, 1994 1.09 414.58 1.10 286.42
For the nine months
ended September 30, 1997 1.41 548.10 1.41 367.14
CASH DIVIDENDS(2)
For the years ended
December 31, 1996 $ .43 $ 150.00 $ .43 $ 111.96
December 31, 1995 .35 140.00 .35 91.13
December 31, 1994 .29 132.50 .29 75.51
For the nine months
ended September 30, 1997 .35 120.00 .35 91.13
BOOK VALUE:(3)
As of December 31, 1996 $ 8.61 $3,256.04 $ 8.65 $2,252.29
As of December 31, 1995 7.36 2,861.10 7.39 1,924.21
As of December 31, 1994 6.28 2,396.23 6.31 1,643.00
As of September 30, 1997 9.78 3,673.70 9.82 2,556.93
</TABLE>
- ----------------------
(1) Net Income per share is based on weighted average common and common
equivalent shares outstanding.
(2) Pro forma cash dividends represent historical cash dividends of Zions.
(3) Book value per common share is based on total period-end of shareholders'
equity.
(4) Pro-forma combined net income per share represents historical net income of
Zions and the Company computed using historical weighted average common and
common equivalent shares of Zions adjusted by computed common and common
equivalent shares to be issued in the transaction. Pro-forma combined book
value per share represents historical total shareholders' equity of Zions
computed using Zions' historical common shares outstanding adjusted by
computed common shares to be issued in the transaction.
(5) Pro forma equivalent amounts are computed by multiplying the pro forma
combined amounts by the exchange ratio of 260.38 shares of Zions Common
Stock for each share of Company Common Stock.
-13-
<PAGE>
Recent Developments
On November 14, 1997, GB Bancorporation ("Grossmont"), the parent
company of Grossmont Bank, merged with and into Zions, with Grossmont
shareholders receiving common shares of Zions. Grossmont Bank had approximately
$780 million in assets and 14 offices in San Diego County, California. It is
both the largest and oldest independent bank in the San Diego area. The merger
is structured to be tax-free and was accounted for as a pooling-of-interests.
Zions owned approximately 4.5% of Grossmont since October 1995. Zions has
exchanged 4.7 million shares of Zions Common Stock for the remaining 95.5% of
Grossmont common stock that it did not own. Zions will incur approximately $2
million ($0.03 per share) in merger related charges in conjunction with this
transaction.
On September 24, 1997, Zions, Vectra Banking Corporation ("Vectra"),
and Tri-State Finance Corporation ("Tri-State") announced that definitive
agreements have been signed under which Vectra will merge with and into Zions
and Tri-State with and into a subsidiary of Zions, both in exchange for common
shares of Zions. At August 31, 1997 Vectra had assets of $660 million and
Tri-State had assets of $130 million. The mergers, which are unrelated and not
conditional on each other, are subject to the approval of banking regulators and
the shareholders of Vectra and Tri-State, respectively. The transactions are
expected to close in early 1998. The mergers are structured to be tax-free and
are intended to be accounted for as poolings-of-interests. The agreement with
Vectra provides for the exchange of each common share of Vectra for 0.685 common
shares of Zions and each preferred share of Vectra for approximately 7.75 common
shares of Zions. The merger is subject to a floor arrangement which would be
triggered if Zions' stock price both declines and results in a price at closing
which has decreased more than 18% relative to the KBW 50 index. Vectra has given
Zions an option to acquire up to 19.9% of Vectra's common stock which is
exercisable in certain circumstances related generally to the acquisition of
Vectra by a third party. The agreement with Tri-State provides for the exchange
of 710,000 common shares of Zions for all of the outstanding stock of Tri-State,
which is privately held. Based upon Zions' stock price of $41 per share, in
aggregate the transactions are valued at approximately $200 million, which is
3.8 times the combined book value or 18.5 times their estimated 1998 earnings.
Vectra has 18 offices in Colorado and Tri-State has three offices in Colorado.
The mergers are expected to be immediately accretive to Zions' earnings per
share. Zions will incur $1.2 million in merger-related charges in the first
quarter of 1998 in conjunction with closing these transactions.
-14-
<PAGE>
SKY VALLEY BANK CORP.
Proxy Statement
for
Special Meeting of Shareholders
of Sky Valley Bank Corp.
to be held on
___________, 1997
and
ZIONS BANCORPORATION
Prospectus
Up to ___________ Shares of
Common Stock
INTRODUCTION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation by the Board of Directors of Sky Valley Bank Corp. (the "Company")
of proxies to be voted at the Special Meeting of Shareholders of the Company to
be held on _________, 1997 and at any postponements or adjournments thereof. The
Special Meeting will be held at 9:00 a.m., local time, at the offices of the
Company, 720 Main Street, Alamosa, Colorado. The approximate date on which this
Proxy Statement/Prospectus will first be mailed to the shareholders of the
Company is _________, 1997.
Record Date; Voting Rights
The Board of Directors of the Company has fixed the close of business
on _______________, 1997 as the record date for determining the shareholders of
the Company entitled to notice of and to vote at the Special Meeting or any
postponements or adjournments thereof. At that date, 2,200 shares of Common
Stock, $.01 par value, of the Company ("Company Common Stock") were outstanding,
held by approximately 42 shareholders of record. Each such share of Company
Common Stock entitles its holder of record at the close of business on the
record date to one vote on each matter properly submitted to the shareholders
for action at the Special Meeting. See "Plan of Reorganization -- Required Vote;
Management Recommendation."
Purpose of the Special Meeting
At the Special Meeting, the holders of Company Common Stock will be
asked to consider and vote upon a proposal to approve an Agreement and Plan of
Reorganization dated as of July 25, 1997, as amended on September 8, 1997, among
the Company, the Company's wholly-owned subsidiary, The First National Bank in
Alamosa, a national banking association organized under the laws of the United
States (the "Bank"), Ralph H. Outcalt ("Outcalt") and Donald J. Wuckert
("Wuckert"), both shareholders of the Company, Zions Bancorporation, a Utah
corporation ("Zions"), Zions' wholly-owned subsidiary, Val Cor Bancorporation,
Inc., a Colorado corporation ("Val Cor"), and Val Cor's 99.1% owned subsidiary,
Valley National Bank of Cortez, a national banking association organized under
the laws of the United States ("Valley"), and accompanying Agreement of Merger
between the Company and Val Cor, and an Agreement of Merger between the Bank and
-15-
<PAGE>
Valley (collectively the "Plan of Reorganization"). As more fully described
below under "Plan of Reorganization," the Plan of Reorganization provides that
the Company will merge with and into Val Cor, with Val Cor being the surviving
corporation (the "Holding Company Merger") and Valley will merge with and into
the Bank, with the Bank being the surviving banking corporation (the "Bank
Merger"; collectively the "Reorganization"). Upon consummation of the
Reorganization, the holders of each outstanding share of Company common stock
will receive, in exchange for each share of Company common stock, their pro rata
share of the Merger Consideration, consisting of shares of Zions Common Stock,
no par value ("Zions Common Stock"). Upon consummation of the Reorganization,
the shares of Company Common Stock shall be canceled and immediately converted
into the right for holders of Company Common Stock to receive, in exchange for
each share of Company Common Stock, that number of shares of Zions Common Stock
calculated by dividing the Merger Consideration of 572,836 shares of Zions
Common Stock by the total number of share of Company Common Stock issued and
outstanding as of the Effective Date (as defined in "Summary" above) of the
Reorganization. In accordance with this formula, the shareholders of the Company
will receive approximately 260.38 shares of Zions Common Stock for each share of
Company Common Stock.
On November __, 1997, the closing price of Zions Common Stock was
$________ per share. On that date the Company had issued and outstanding 2,200
shares of its Common Stock. Assuming that the Reorganization had been
consummated as of November __, 1997 and the closing price of Zions Common Stock
had been $__________ on that date, shareholders of the Company under such
circumstances would have received 260.38 shares of Zions Common Stock for each
share of Company Common Stock, or an equivalent value of $___ per share of
Company Common Stock.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY BELIEVES THAT THE
REORGANIZATION IS IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE COMPANY AND
RECOMMENDS THAT THE COMPANY SHAREHOLDERS VOTE TO APPROVE THE PLAN OF
REORGANIZATION.
Voting and Revocation of Proxies
All properly executed proxies not theretofore revoked will be voted at
the Special Meeting or any postponements or adjournments thereof in accordance
with the instructions thereon. Company proxies which have been properly executed
but which contain no voting instructions will be voted in favor of approval of
the Plan of Reorganization. As to any other matter brought before the Special
Meeting and submitted to a shareholder vote, proxies will be voted in accordance
with the judgment of the proxyholders named thereon.
A shareholder who has executed and returned a proxy may revoke it at
any time before it is voted by filing with the Secretary of the Company written
notice of such revocation or a later dated proxy or by attending the Special
Meeting and voting in person. Attendance at the Special Meeting will not, of
itself, constitute a revocation of a proxy.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees
of the Company may solicit proxies from the shareholders of the Company in
person
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<PAGE>
or by telephone or otherwise for no additional compensation. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward proxy
soliciting materials to beneficial owners of shares held of record by them and
will be reimbursed for their reasonable expenses. The Company will pay all
expenses in connection with the printing and solicitation of proxies for the
Special Meeting. Zions will pay for all costs attributable to registering the
Zions Common Stock under applicable federal and state law. See "Plan of
Reorganization--Expenses."
PLAN OF REORGANIZATION
This section of the Proxy Statement/Prospectus describes certain
important aspects of the Plan of Reorganization. The following description does
not purport to be complete and is qualified in its entirety by reference to the
Plan of Reorganization. The Plan of Reorganization has been filed with the SEC
as an exhibit to the Registration Statement. The Plan of Reorganization is
incorporated into this Proxy Statement/Prospectus by reference to such filing
and is available upon request to Dale M. Gibbons, Senior Vice President, Zions
Bancorporation. See "Available Information."
The Reorganization
The Plan of Reorganization provides for the merger of the Company into
Val Cor, with Val Cor being the surviving corporation (the "Holding Company
Merger"), and for the merger of Valley into the Bank, with the Bank being the
surviving entity (the "Bank Merger"). Val Cor is a bank holding company
incorporated in Colorado. Val Cor is a wholly-owned subsidiary of Zions. The
principal subsidiaries of Zions are Zions First National Bank with 112 offices
located throughout the state of Utah, as well as 15 offices in various
communities in Idaho and one foreign office, Nevada State Bank with 37 offices
in Nevada, and National Bank of Arizona with 28 offices in Arizona.
Additionally, in May 1997, Zions acquired Aspen Bancshares, Inc., whose
operations are conducted through 12 offices/branches in western Colorado and one
branch in northeastern New Mexico; on July 11, 1997, Zions also acquired Zions
Bank (formerly Tri-State Bank) in Montpelier, Idaho. Subsequent to the
acquisition by Zions of Zions Bank, Zions Bank acquired 10 branches from Wells
Fargo Bank, N.A., located in Idaho, and opened two de novo branches in Idaho;
Zions Bank currently operates 15 branches in Idaho; and in July 1997, Zions
completed its purchase of 27 former branches of Wells Fargo Bank in Arizona (11
branches), Idaho (10 branches), Nevada (5 branches), and Utah (1 branch). On
September 20, 1997, Zions Bank completed its acquisition of four additional
branches from Wells Fargo in Utah.
Val Cor, a Colorado corporation, is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended. Zions acquired Val Cor
in May 1997 as a part of the Aspen acquisition. Val Cor's principal asset is
over 99% of the common stock of Valley Bank.
Valley is a national banking association organized in 1979. Valley Bank
offers traditional banking services to customers in its primary market area of
Montezuma County, Colorado. Valley Bank also conducts business through its two
branch offices located in Cortez and Dolores, Colorado.
The Company is a bank holding company incorporated in Colorado. The
Company operates through its wholly-owned subsidiary, The First National Bank in
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Alamosa (the "Bank"). The Bank offers traditional community banking services in
the San Luis Valley area of Colorado through three branches in Colorado, the
main office located at 720 Main Street, Alamosa, Colorado, and two branch
offices located in Center, Colorado (the "Center Branch") and in Saguache,
Colorado (the "Saguache Branch").
Upon consummation of the Reorganization, the holders of each
outstanding share of Company Common Stock will receive, in exchange for each
share of Company Common Stock, their pro rata share of the Merger Consideration,
consisting of 572,836 shares of Zions Common Stock. The shares of Company Common
Stock will be canceled and immediately converted into the right for holders of
Company Common Stock to receive, in exchange for each share of Company Common
Stock, that number of shares of Zions Common Stock calculated by dividing the
Merger Consideration of 572,836 shares of Zions Common Stock by the total number
of shares of Company Common Stock issued and outstanding as of the Effective
Date of the Reorganization or approximately 260.38 shares of Zions Common Stock
for each share of Company Common Stock. Zions will not issue fractional shares
of its Common Stock in the Reorganization. In lieu of fractional shares of Zions
Common Stock, if any, each shareholder of the Company who is entitled to a
fractional share of Zions Common Stock will receive an amount of cash equal to
the product of such fraction times $33.50. Such fractional share of interest
will not include the right to vote or to receive dividends or any interest
thereon.
On November __, 1997, the closing price of Zions Common Stock was
$_____ per share. On that date the Company had issued and outstanding 2,200
shares of its Common Stock. Assuming that the Reorganization had been
consummated as of November , 1997 and the closing price of Zions Common Stock
had been $_____ on that date, shareholders of the Company under such
circumstances would have received 260.38 shares of Zions Common Stock for each
share of Company Common Stock, or an equivalent value of $__________ per share
of Company Common Stock.
The Board of Directors of Valley has called a special meeting of Valley
shareholders to be held on December __, 1997. At the Valley special meeting, the
Valley shareholders will consider and vote upon an agreement to merge whereby
Valley will be merged with and into the Bank, with the Bank being the surviving
entity (the "Bank Merger"). The Valley shareholders will also be asked to
consider and approve an amendment (the "Amendment") to Valley's articles of
association to change the name of Valley to Bank Colorado, National Association.
Val Cor together with its affiliates owns approximately 99.7% of the issued and
outstanding shares of common stock of Valley and has indicated that it will vote
all of its shares of Valley Common Stock in favor of the Bank Merger and the
Amendment. Such vote will be sufficient to approve the Bank Merger and the
Amendment. Assuming that Val Cor votes all of its shares in favor of the Bank
Merger and the Amendment, approval of the Bank Merger and the Amendment by the
Valley shareholders is assured, notwithstanding the vote of other Valley
shareholders. Consummation of the Bank Merger is conditioned upon its receiving
approval by the Comptroller, which has been received. The Bank Merger is
anticipated to close during the first quarter of 1998. The parties plan to close
the Holding Company Merger immediately prior to closing of the Bank Merger.
Consummation of the Bank Merger is conditioned upon consummation of the Holding
Company Merger. Upon consummation of the Bank Merger, the shares of Valley
Common Stock will be canceled and immediately converted into the right for
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holders of Valley Common Stock, other than Val Cor, to receive in exchange for
each share of Valley Common Stock held of record by such shareholder as of the
Effective Date (as defined) $47.25 in cash. It is anticipated that Zions, which
owns 2,233 shares of Valley Common Stock, will contribute its Valley Common
Stock to Val Cor prior to the Valley special meeting.
Background of and Reasons for the Reorganization
Sky Valley.
Background.
During the past two years, the Company received a few inquiries from
various large regional financial institutions which expressed an interest in
acquiring the Company. On each of those occasions, the inquiries did not proceed
because the Board determined that the Company should continue to operate as an
independent firm. In May 1997, Donald J. Wuckert was contacted by Harris H.
Simmons, president of Zions, who expressed on behalf of Zions an interest in
acquiring the Company if the Board of Directors of the Company ever determined
it was in the best interest of the Company to merge with or sell to a larger
banking institution. Mr. Wuckert informed the Board of Directors of the Company
of this contact which led to various Company board discussions as to the
desirability of remaining independent or merging with a larger bank holding
company. At meetings in July 1997, the Company Board considered its strategic
options, the bank acquisition market in Colorado, the competitive banking
environment in Colorado, and the prospects for remaining independent. After
considering the terms of the offer of Zions, the Company Board determined to
continue discussions with Zions with the goal of negotiating a definitive merger
agreement. On July 25, 1997, the Company entered into the Plan of Reorganization
with Zions.
The Company Board's Reasons for the Reorganization. The Company Board
believes that the Reorganization is fair to, and in the best interests of, the
Company and its shareholders. Accordingly, the Board unanimously approved the
Plan of Reorganization and recommends that the Company shareholders vote FOR the
approval and adoption of the Plan of Reorganization.
In reaching its determination that the Reorganization is fair to, and
in the best interests of, the Company and its shareholders, the Board considered
a number of factors including, without limitation, the following:
o the current condition and growth prospects of the Company and
the Bank, their historical results of operations and their
prospective results of operations were the Company to remain
independent;
o the economic, business and competitive climate for banking and
financial institutions in Colorado, with special consideration
given to recent transactions that have increased the
competitive environment in the financial services and banking
industry, including the adoption by Congress of interstate
branch banking;
o the monetary value of the stock offered to the Company
shareholders by Zions (i) in absolute terms, (ii) as compared
to the value of other inquiries received by the Company by
qualified and informed
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potential acquirers, whose offers were each less than Zions'
offer, and (iii) as compared to recent mergers and
acquisitions involving other banking and financial
institutions in Colorado;
o the potential market value, liquidity and dividend yield of Company
Common Stock if the Company were to remain independent;
o the historically greater liquidity and dividend yield represented
by the Zions Common Stock to be received in the Reorganization;
o the greater financial and management resources and customer
product offerings of Zions which could increase the
competitiveness of the combined institution in the Company's
market area and its ability to serve the depositors, customers
and communities currently served by the Company;
o the historical results of operations and financial condition of
Zions and the future prospects for Zions, including anticipated
benefits of the Reorganization;
o the future growth prospects of Zions following the Reorganization;
and
o the fact that the Reorganization will be a tax-free
reorganization to the Company shareholders for federal income
tax purposes with respect to shareholders of the Company who
receive shares of Zions Common Stock in the Reorganization
(but not with respect to any cash received in the
Reorganization).
THE COMPANY BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE PLAN OF REORGANIZATION.
Zions. For Zions, the Reorganization will provide the opportunity to
continue its recent expansion. In acquiring the Company, Zions will be expanding
its presence in the south-central Colorado market in the Alamosa County region.
The expansion will be evidenced by Zions' both broadening its geographical base
into this market and expanding the banking services it is able to provide.
Additionally, the Zions' expansion in the Alamosa County, Colorado region will
allow Zions further to diversify its banking operations.
The acquisition by Zions of the Company will bring together the
different skills and resources of the two organizations and, together with the
additional skills and resources available in the broader Zions organization,
will result in the ability to make a wider spectrum of banking services
available to consumers, businesses and professionals in the Company's geographic
area.
Voting Agreements
In connection with the Plan of Reorganization, Messrs. Outcalt, Wuckert
and three other shareholder-directors of the Company, whose common share
holdings aggregate approximately 73.18% of the outstanding Company Common Stock
as of _________, 1997, have entered into agreements with Zions under which they
have agreed, in their capacity as shareholders, to vote their shares in favor of
the Plan of Reorganization and to support the Plan of Reorganization and to
recommend
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its adoption by the other shareholders of the Company. Such vote will be
sufficient to approve the Plan of Reorganization. If these individuals vote
their shares of Company Common Stock in accordance with the requirements of the
voting agreements, approval of the Reorganization by the Company shareholders is
assured, notwithstanding the vote of other Company shareholders.
The voting agreements are applicable to the shareholders only in their
capacities as shareholders and do not legally affect the exercise of their
responsibilities if a member of the Board of Directors of the Company. The
shareholder-directors also agreed in their capacity as directors, until the
earlier of consummation of the Reorganization or termination of the Plan of
Reorganization, to refrain from soliciting or, subject to their fiduciary duties
to shareholders, negotiating or accepting any offer of merger, consolidation, or
acquisition of any of the shares or all or substantially all of the assets of
the Company or any of its subsidiaries.
The form of the voting agreements has been filed with the SEC as an
exhibit to the Registration Statement and is incorporated herein by reference.
The foregoing summary of the agreements is qualified in its entirety by
reference to such filing.
Required Vote; Management Recommendation
Approval of the Plan of Reorganization requires the affirmative vote of
the holders of a majority of the outstanding shares of Company Common Stock
entitled to vote at the Special Meeting. Because approval requires the
affirmative votes of a majority of all outstanding shares of Company Common
Stock, a failure to vote, an abstention, or a broker's failure to vote shares
held in street name will have the same legal effect as a vote against approval
of the Plan of Reorganization. See "Voting Agreements" immediately above for a
discussion of the ownership of Company Common Stock by the five
shareholder-directors of the Company. THE BOARD OF DIRECTORS OF THE COMPANY
UNANIMOUSLY RECOMMENDS THAT THE COMPANY SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
PLAN OF REORGANIZATION.
The Board of Directors of Zions has approved the Plan of
Reorganization: In addition, Zions, as the sole shareholder of Val Cor, has
approved the merger of Val Cor with the Company (the "Holding Company Merger").
Under the Utah Business Corporation Act no approval of the Plan of
Reorganization by the shareholders of Zions is required.
No Opinion of a Financial Advisor
The Company's Board of Directors has not retained an independent
financial advisor to evaluate the Merger Consideration offered to the Company
shareholders by Zions. However, management and the directors of the Company
believe that the Merger Consideration to be paid pursuant to the Plan of
Reorganization is fair to the shareholders of the Company from a financial point
of view. See "Plan of Reorganization--Background of and Reasons for the
Reorganization."
Conversion of Company Shares
Under the Plan of Reorganization, holders of shares of Company Common
Stock will receive shares of Zions Common Stock. Upon consummation of the
Reorganization, the shares of Company Common Stock will be canceled and
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immediately converted into the right for holders of Company Common Stock to
receive, in exchange for each share of Company Common Stock, that number of
shares of Zions Common Stock calculated by dividing the Merger Consideration of
572,836 shares of Zions Common Stock by the total number of shares of Company
Common Stock issued and outstanding as of the Effective Date of the
Reorganization. In accordance with this formula, the shareholders of the Company
will receive approximately 260.38 shares of Zions Common Stock for each share of
Company Common Stock. Zions will not issue fractional shares of its common stock
in the Reorganization. In lieu of fractional shares of Zions Common Stock, if
any, each shareholder of the Company who is entitled to a fractional share of
Zions Common Stock will receive an amount of cash equal to the product of such
fraction times $33.50. Such fractional share interest will not include the right
to vote or to receive dividends or any interest thereon.
On November ___, 1997, the closing price of Zions Common Stock was
$__________ per share. On that date the Company had issued and outstanding 2,200
shares of its Common Stock. Assuming that the Reorganization had been
consummated as of November ___, 1997 and the closing price of Zions Common Stock
had been $_________ on that date, shareholders of the Company under such
circumstances would have received 260.38 shares of Zions Common Stock for each
share of Company Common Stock, or an equivalent value of $_____________ per
share of Company Common Stock.
Exchange of Stock Certificates. Zions First National Bank, a national
banking association with its head office located in Salt Lake City, Utah and a
subsidiary of Zions ("Zions Bank"), the exchange agent designated by the parties
in the Plan of Reorganization (the "Exchange Agent"), will, promptly after the
Effective Date, mail to each holder of one or more stock certificates formerly
representing shares of Company Common Stock except to such holders who shall
have waived the notice of exchange, a notice specifying the Effective Date and
notifying such holder to surrender his or her certificate or certificates to
Zions Bank for exchange. Such notice will be mailed to holders by regular mail
at their addresses on the records of the Company. Company shareholders should
not send in their certificates until they receive such written instructions.
However, certificates should be surrendered promptly after instructions to do so
are received.
Any dividends declared on Zions Common Stock after the Effective Date
of the Reorganization will apply to all whole shares of Zions Common Stock into
which shares of Company Common Stock will have been converted in the
Reorganization. However, no former Company shareholder will be entitled to
receive any such dividend until such shareholder's Company Common Stock
certificates have been surrendered for exchange as provided in the letter of
transmittal sent by the Exchange Agent. Upon such surrender, the shareholder
will be entitled to receive all such dividends payable on the whole shares of
Zions Common Stock represented by the surrendered certificate(s) (without
interest thereon and less the amount of taxes, if any, which may have in fact
been imposed or paid thereon).
Payment for Fractional Shares. No fractional shares of Zions Common
Stock will be issued in connection with the Reorganization. Instead, each
Company shareholder who surrenders for exchange Company Common Stock
certificates representing a fraction of a share of Zions Common Stock will
receive, in addition to a certificate for the whole shares of Zions Common Stock
represented
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by the surrendered certificates, cash in an amount equal to the product of such
fraction times $33.50. Such fractional share interest will not include the right
to vote or to receive dividends or any interest thereon.
Unexchanged Certificates. On the Effective Date of the Reorganization,
the stock transfer books of the Company will be closed, and no further transfers
of Company Common Stock will be made or recognized. Certificates for Company
Common Stock not surrendered for exchange will entitle the holder to receive,
upon surrender as provided in the letter of transmittal, a certificate for whole
shares of Zions Common Stock, plus payment of any amount for a fractional share
or dividends to which such holder is entitled as outlined above, and without any
interest thereon.
Federal Income Tax Consequences of the Reorganization
The following discussion is a summary of the material federal income
tax consequences of the merger of the Company with and into Val Cor (herein, the
"Merger") to the Company and to the existing shareholders of the Company, but
does not purport to be a complete analysis of all the potential tax effects of
the Merger. The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, Internal Revenue Service ("IRS")
rulings and judicial decisions now in effect, all of which are subject to change
at any time by legislative, judicial, or administrative action. Any such change
may be applied retroactively. No information is provided herein with respect to
foreign, state or local tax laws or estate and gift tax considerations.
Shareholders of the Company are urged to consult their own tax advisors as to
specific tax consequences to them of the Merger.
The Company will receive an opinion from Duane, Morris & Heckscher LLP,
legal counsel to Zions (the "Duane Opinion") that, based upon the facts and
representations set forth or referred to in such opinion, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. No ruling will be requested from the IRS with
respect to the federal income tax consequences of the Merger. An opinion of
counsel only represents counsel's best judgment and is not binding on the IRS or
the courts. Accordingly, no assurance can be given that the IRS will agree with
counsel's conclusions, that the IRS will not challenge the tax treatment of the
Merger, or that such a challenge, if made, will not be successful.
Based upon the facts and representations which will be set forth or
referred to in the Duane Opinion, such opinion will provide, among other things,
(i) the Merger will qualify as a "reorganization" under Section 368(a)(1) of the
Code and Zions, Val Cor and the Company will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code; (ii) the
Company will recognize no gain or loss upon the transfer of substantially all of
its assets to Val Cor in exchange for Zions Common Stock and Val Cor's
assumption of the liabilities of the Company; (iii) no gain or loss will be
recognized by either Zions or Val Cor upon the acquisition by Val Cor of
substantially all of the assets of the Company in exchange for Zions Common
Stock, and the assumption of the liabilities of the Company; (iv) the basis of
the Company's assets in the hands of Val Cor will be the same as the basis of
those assets in the hands of the Company immediately prior to the Merger; (v)
the holding period of the Company's assets received by Val Cor will include the
period during which such assets were held by the Company immediately prior to
the Merger; (vi) no gain or loss will be recognized by a shareholder of the
Company upon the receipt of Zions Common Stock solely in exchange for his or her
Company Common Stock; (vii) the basis of the Zions Common Stock received by a
shareholder of the Company pursuant to the Merger (including any fractional
share interest to which that shareholder may be entitled) will be the same as
the basis of the Company Common Stock exchanged therefor; (viii) the holding
period of the Zions Common Stock received by a shareholder of the Company
pursuant to the Merger (including any fractional share interest to which that
shareholder may be entitled) will include the holding period of the Company
Common Stock exchanged therefor, provided the Company Common Stock is held as a
capital asset by the shareholder on the Effective Date; (ix) a shareholder of
the Company who receives cash in lieu of a fractional share of Zions Common
Stock will recognize gain or loss equal to the difference between the cash
received and the shareholder's basis in that fractional share, and that gain or
loss will be capital gain or loss if the fractional share would have been a
capital asset in the hands of the shareholder; and (x) cash received by a
shareholder of the Company who has perfected dissenters' rights under the
provisions of sections 7-113-101 et seq. of the Colorado Business Corporation
Act as to his or her Company Common Stock will be treated as a distribution in
redemption of such shares, subject to the provisions and limitations of Section
302 of the Code.
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The foregoing is intended only as a summary of certain federal income
tax consequences of the Reorganization under existing law and regulations, as
presently interpreted by judicial decisions and administrative rulings, all of
which are subject to change without notice, and any such change might be
retroactively applied to the Reorganization. Among other things, the summary
does not address state income tax consequences, local taxes, or the federal or
state income tax considerations that may affect the treatment of a shareholder
who acquired his Company Common Stock pursuant to an employee stock option or
other special circumstances. Accordingly, it is recommended that Company
shareholders consult their own tax advisors for specific advice concerning their
own tax situations, potential changes in the applicable tax law and all federal,
state and local tax matters in connection with the Reorganization.
A copy of the Duane Opinion rendered as to the material federal income
tax consequences relating to the Reorganization is attached and set forth in
Appendix A of the Proxy Statement/Prospectus.
Rights of Dissenting Shareholders
A holder of shares of Company Common Stock is entitled to exercise the
rights of a dissenting shareholder under the Colorado Business Corporation Act,
ss.ss. 7-113-101 et seq., to object to the Plan of Reorganization and make
written demand that the Company pay in cash the fair value of the shares of
Company Common Stock held as determined in accordance with such statutory
provisions. The following summary does not purport to be a complete statement of
the provisions of Colorado law and is qualified in its entirety by reference to
such statutory provisions, which are set forth in full as Appendix B to this
Proxy Statement/Prospectus.
Colorado law requires that holders of Company Common Stock follow
certain prescribed procedures in the exercise of their statutory right to
dissent in connection with the Reorganization. The failure by a shareholder to
follow such procedures on a timely basis and in the precise manner required by
Colorado law may result in a loss of that shareholder's dissenters' rights.
Overview. Holders of Company Common Stock have the right under the
Colorado Business Corporation Act to dissent from the Reorganization and obtain
payment of the fair value of their shares. Fair value means the value of the
shares immediately before the Effective Date, excluding any appreciation or
depreciation in anticipation of the corporate action except to the extent
exclusion would be inequitable. If Val Cor and a shareholder who has exercised
his or her right to dissent (a "Dissenting Shareholder") are not able to agree
on a fair value, Val Cor must petition a court in Alamosa County, Colorado for a
determination of fair value.
Procedure for Dissenting. A shareholder wishing to dissent from the
Reorganization must deliver to the Company, before the Special Meeting, written
notice of his or her intent to demand payment for his or her shares if the
Reorganization is consummated. The written notice should be sent to the Company
at 720 Main Street, Alamosa, Colorado 81101 long enough before the Special
Meeting so that the Company receives it before the Special Meeting. A
shareholder wishing to dissent must also not vote in favor of the
Reorganization. If a shareholder's written notice of intent to demand payment is
not received by the Company before the Special Meeting, or if the shareholder
votes in favor of
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the Reorganization, such shareholder will not have the right to dissent and will
be required to participate in the Reorganization.
Within 10 days after the Effective Date, Val Cor will deliver to each
Dissenting Shareholder a written notice instructing the Dissenting Shareholder
to demand payment and send his or her Company Common Stock certificates to Val
Cor. The notice will include a form for demanding payment and will show the
deadline for submitting the payment demand form and the Company Common Stock
certificates. The form will also show the date that the Reorganization was first
announced to the news media or the shareholders, and the Dissenting Shareholder
will be required to state whether or not he or she acquired his or her shares
before that date.
The Dissenting Shareholder must then properly complete and sign the
payment demand form, and submit it to Val Cor along with his or her Company
Common Stock certificates by the deadline shown in the notice from Val Cor. If
the payment demand form and the Company Common Stock certificates are not
submitted by the deadline, the shareholder will no longer be a Dissenting
Shareholder and will not be entitled to receive payment of the fair value of his
or her shares under the dissenters' rights provisions of Colorado law. Such a
shareholder will be required to participate in the Reorganization. The payment
demand form and Company Common Stock certificates should be sent to Val Cor at
350 W. Montezuma, Cortez, Colorado 81321.
Payment for Shares. Within 30 days after receiving a Dissenting
Shareholder's payment demand form and Company Common Stock certificates, Val Cor
will pay such Dissenting Shareholder Val Cor's estimate of the fair value of the
Company Common Stock for which certificates were submitted, plus accrued
interest. Accompanying the payment will be financial information for the Company
as of December 31, 1996 and for the year then ended, as well as the latest
available interim financial information. Also accompanying the payment will be a
statement of Val Cor's estimate of the fair value of the shares, an explanation
of how the interest was calculated, a statement of the Dissenting Shareholder's
rights if such shareholder is dissatisfied with Val Cor's payment, and a copy of
the relevant Colorado statute.
If a Dissenting Shareholder estimates the fair value of his or her
shares and the amount of accrued interest to be higher than the amount paid by
Val Cor, the Dissenting Shareholder may send a notice to Val Cor demanding
payment of the difference between the Dissenting Shareholder's estimate and the
amount paid by Val Cor. The Dissenting Shareholder may reject the offer and
demand payment of the Dissenting Shareholder's estimate of the fair value of his
or her shares and accrued interest. If a Dissenting Shareholder does not send a
notice demanding payment within 30 days after Val Cor has made its payment or
offer, the Dissenting Shareholder will not have the right to receive any amount
in excess of the fair value plus interest already paid or offered by Val Cor.
Court Proceeding to Determine Fair Value. If a demand for payment
remains unsettled for 60 days following Val Cor's receipt of the demand, Val Cor
may petition a court in Alamosa County to determine the fair value of the shares
and accrued interest. Court costs will be paid by Val Cor unless the court finds
that one or more Dissenting Shareholders acted arbitrarily, vexatiously or not
in good faith in demanding payment, in which case some or all court costs may be
allocated to such Dissenting Shareholder or Shareholders. Attorneys' and
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experts' fees may be assessed against Val Cor if the court finds that Val Cor
did not comply with the applicable statute or acted arbitrarily, vexatiously or
not in good faith, or such fees may be assessed against one or more Dissenting
Shareholders if the same acted arbitrarily, vexatiously or not in good faith.
Holders of Company Common Stock considering seeking appraisal by
exercising their dissenters' rights should be aware that the fair value of their
Company Common Stock determined pursuant to Colorado law could be more than, the
same as, or less than their pro rata share of the Merger Consideration that they
are entitled to receive pursuant to the Plan of Reorganization if they do not
seek appraisal of their Company Common Stock.
THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE
PROCEDURES TO BE FOLLOWED BY HOLDERS OF COMPANY COMMON STOCK DESIRING TO
EXERCISE APPRAISAL RIGHTS AND, IN VIEW OF THE FACT THAT EXERCISE OF SUCH RIGHTS
REQUIRES STRICT ADHERENCE TO THE RELEVANT PROVISIONS OF THE COLORADO BUSINESS
CORPORATION ACT, EACH SHAREHOLDER WHO MAY DESIRE TO EXERCISE APPRAISAL RIGHTS IS
ADVISED INDIVIDUALLY TO CONSULT THE LAW (AS SET FORTH IN APPENDIX B TO THIS
PROXY STATEMENT/PROSPECTUS) AND COMPLY WITH THE PROVISIONS THEREOF.
HOLDERS OF COMPANY COMMON STOCK WISHING TO EXERCISE DISSENTERS' RIGHTS
ARE ADVISED TO CONSULT THEIR OWN COUNSEL TO ENSURE THAT THEY FULLY AND PROPERLY
COMPLY WITH THE REQUIREMENTS OF COLORADO LAW.
Interests of Certain Persons in the Transaction
The Plan of Reorganization provides that after the Reorganization
becomes effective, David E. Broyles, currently president and chief executive
officer of the Bank, will become ___________ of the Bank. Mr. Broyles will enter
into an Employment Agreement with the Bank effective as of the Effective Date.
The Board of Directors of the Company was aware of these interests when it
considered and approved the Plan of Reorganization. The terms of the agreement
will continue until the third anniversary of the commencement of the agreement.
The agreement provides that Mr. Broyles will receive an initial annual salary
not less than the aggregate salary paid to Mr. Broyles by the Bank as of
December 31, 1996. Mr. Broyles will be considered annually for a discretionary
bonus based upon his performance, and will be entitled to other benefits
normally afforded executive employees, including employee benefit and stock
option plans participation, retirement and life insurance policies, and
consideration for periodic raises or bonuses, based upon performance and
responsibility.
The employment agreement provides for severance benefits for Mr.
Broyles upon the termination of his employment agreement for reasons other than
his death or disability or "for cause" (as defined in his employment agreement).
In the event of termination for reasons other than set forth in the preceding
sentence, Mr. Broyles will receive salary (as defined in the employment
agreement) payable at the rate established in his employment agreement for the
year in which termination occurs, until the third anniversary of the
commencement of the agreement. Mr. Broyles will also receive such rights as he
will have accrued as of the termination date of his employment under the terms
of any plans or arrangements in which he participates, reimbursement for
expenses accrued as of such termination date, and the cash equivalent of paid
annual leave and sick leave accrued as of such termination date.
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<PAGE>
Under his employment agreement, Mr. Broyles has agreed that he will not
during the term of five years commencing with his employment by the Bank
pursuant to the employment agreement (i) engage in the banking business other
than on behalf of the Bank or its affiliates within a prescribed market area;
(ii) directly or indirectly own, manage, operate, control, be employed by, or
provide management or consulting services in any capacity to any firm,
corporation, or other entity (other than the Bank or its affiliates) engaged in
the banking business in such market area, or (iii) directly or indirectly
solicit or otherwise intentionally cause any employee, officer, or member of the
respective Boards of Directors of Zions or the Bank or any of their affiliates
to engage in any action prohibited under (i) or (ii) above. The employment
agreement has described the prescribed market area as Alamosa County, Colorado.
The Plan of Reorganization further provides that after the
Reorganization becomes effective, Mr. Outcalt, currently chairman of the board
of the Bank, and Mr. Wuckert, currently vice chairman of the board of the Bank,
will both become advisors to the Bank. Messrs. Outcalt and Wuckert will each
enter into an advisory agreement with the Bank effective as of the Effective
Date. The Company Board of Directors was aware of these interests when it
considered and approved the Plan of Reorganization. The terms of each agreement
will continue until the third anniversary of the commencement of each respective
agreement. The advisory agreements provide that Messrs. Outcalt and Wuckert will
each receive an annual salary in the amount of $45,000. Messrs. Outcalt and
Wuckert will each be entitled to use an office to be equipped with a telephone
at the Bank's offices in Alamosa, Colorado, to be available to them at any time
during business hours and to receive normal and reasonable secretarial
assistance. Messrs. Outcalt and Wuckert will also be entitled to health, vision
and dental insurance coverage and the premiums of such insurance shall be paid
by the Bank.
The advisory agreements provide for severance benefits for Messrs.
Outcalt and Wuckert upon the termination of their advisory agreements for
reasons other than death or disability or "for cause" (as defined in the
advisory agreements). In the event of termination for reasons other than set
forth in the preceding sentence, each of Messrs. Outcalt and Wuckert will
receive compensation (as defined in the advisory agreements) due him under his
agreement for the full term of the agreement.
Under the advisory agreements, Messrs. Outcalt and Wuckert have agreed
that they will not during the term of three years commencing with their
employment by the Bank (i) engage in the banking business other than on behalf
of the Bank or its affiliates within a prescribed market area; (ii) directly or
indirectly own, manage, operate, control, be employed by, or provide management
or consulting services in any capacity to any firm, corporation, or other entity
(other than the Bank or its affiliates) engaged in the banking business in such
market area, or (iii) directly or indirectly solicit or otherwise intentionally
cause any employee, officer, or member of the respective Boards of Directors of
Zions or the Bank or any of their affiliates to engage in any action prohibited
under (i) or (ii) above. The advisory agreements have described the prescribed
market area as Alamosa County, Colorado.
Inconsistent Activities
The Company has agreed in the Plan of Reorganization that unless and
until the Reorganization has been consummated or the Plan of Reorganization has
been
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terminated in accordance with its terms, neither the Company nor the Bank will
(i) solicit or encourage any inquiries or proposals by any third person to
acquire more than 1% of the Company Common Stock or any capital stock of the
Bank or any significant portion of the Company's or the Bank's assets (whether
by tender offer, merger, purchase of assets or otherwise), (ii) afford any third
party which may be considering any such transaction access to its properties,
books or records except as required by law, (iii) enter into any discussions,
negotiations, agreement or understanding with respect to any such transaction or
(iv) authorize or permit any of its directors, officers, employees or agents to
do any of the foregoing. If the Company or the Bank becomes aware of any offer
or proposed offer to acquire any of its shares or any significant portion of its
assets or of any other matter which could adversely affect the Plan of
Reorganization, the Holding Company Merger, or the Bank Merger, the Company and
the Bank are required to give immediate notice thereof to Zions and to keep
Zions informed of the matter.
Conduct of Business Pending the Reorganization
The Plan of Reorganization contains covenants, representations and
warranties by the Company and the Bank as to matters which are typical in
transactions similar to the Reorganization.
Prior to the Effective Date, the Company and the Bank have each agreed
that neither will without Zions' prior written consent: (i) declare or pay cash
dividends or property dividends with the exception of customary periodic cash
dividends paid by the Company or the Bank in a manner consistent with past
practice;(ii) declare or distribute any stock dividend, authorize any stock
split, authorize, issue or make any distribution of its capital stock or other
securities except for the issuance of Company Common Stock already subscribed
for or upon exercise of existing stock options, or grant any options to acquire
such securities; (iii) except as contemplated by the Plan of Reorganization,
merge into, consolidate with or sell its assets to any other person, or enter
into any other transaction or agree to effect any other transaction not in the
ordinary course of its business or engage in any discussions concerning such a
possible transaction; (iv) convert the charter or form of entity of the Bank to
any other charter or form of entity; (v) make any direct or indirect redemption,
purchase or other acquisition of any of its capital stock; (vi) incur any
liability or obligation, make any commitment or disbursement, acquire or dispose
of any property or asset, make any agreement or engage in any transaction,
except in the ordinary course of its business; (vii) subject any of its
properties or assets to any lien, claim, charge, option or encumbrance, except
in the ordinary course of its business; (viii) institute or agree to any
increase in the compensation of any employee, except for ordinary increases in
accordance with past practices not to exceed (when aggregated with all other
such increases) 4.5% per annum of the aggregate payroll as of April 1, 1997;
(ix) create or modify any pension or profit-sharing plan, bonus, deferred
compensation, death benefit or retirement plan, or the level of benefits under
any such plan, or increase or decrease any severance or termination pay benefit
or any other fringe benefit; (x) except to directly facilitate the
Reorganization, enter into any employment or personal services contract with any
person; (xi) purchase any loans or loan-participation interests from, or
participate in any loan originated by any person other than the Company or the
Bank.
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<PAGE>
The Company and the Bank have also agreed to carry on their businesses
and manage their assets and property diligently in the same manner as they have
previously done and to use their best efforts to preserve their business
organization. Pending completion of Reorganization or termination of the Plan of
Reorganization, the Company and the Bank have agreed to provide Zions with
certain information and reports and access to other information.
Conditions to the Reorganization
The obligations of the Company, the Bank, Zions, Val Cor and Valley to
consummate the Reorganization are subject to, among other things, the
satisfaction of the following conditions: (i) the parties shall have received
all orders, consents and approvals from all requisite governmental authorities
for the completion of the Reorganization; (ii) certain litigation, as specified
in the Plan of Reorganization, shall not have been instituted or threatened;
(iii) Zions shall have determined to its satisfaction that the Reorganization
contemplated by the Plan of Reorganization will be treated for accounting
purposes as a "pooling of interests" in accordance with APB Opinion No. 16; (iv)
the registration statement to be filed by Zions pursuant to the Securities Act
in connection with the registration of the shares of Zions Common Stock to be
used as consideration in connection with the Reorganization shall have become
effective under the Securities Act, and Zions shall have received all required
state securities law permits and other required authorizations or confirmations
of the availability of exemption from registration requirements necessary to
issue Zions Common Stock in the Reorganization, and neither the registration
statement nor any such required permit, authorization or confirmation shall be
subject to a stop-order or threatened stop-order by the SEC or any state
securities authority; (v) the Company and Zions shall have determined that the
Reorganization shall qualify as a tax free reorganization under the Code and the
regulations and rulings promulgated thereunder; and (vi) there shall be no
adverse legislation or government regulation which would make the transaction
contemplated impossible.
The obligations of Zions, Val Cor and Valley to consummate the
Reorganization are subject to satisfaction or waiver of certain additional
conditions, including: (i) the shareholders of the Company and the Bank shall
have authorized the Holding Company Merger and Bank Merger, respectively; (ii)
all representations and warranties made by the Company, the Bank, and Messrs.
Outcalt and Wuckert in the Plan of Reorganization shall be true and correct in
all material respects on the Effective Date and the Company, the Bank, and
Messrs. Outcalt and Wuckert shall have performed in all material respects all of
their respective obligations under the Plan of Reorganization on or prior to the
Effective Date; (iii) Kettelkamp, Young & Kettelkamp, P.C., special counsel to
the Company, shall have rendered a legal opinion to Zions in form and substance
as set forth in the Plan of Reorganization; (iv) Zions, Val Cor and Valley shall
have received a favorable opinion from litigation counsel for the Company and
the Bank substantially in form and substance as set forth in the Plan of
Reorganization; (v) the Company shall have delivered to Zions all regulatory
authorizations entitling the Bank to operate its branches; (vi) during the
period from March 31, 1997 to the Effective Date, there shall have been no
material adverse change in the financial position or results of operations of
the Company or the Bank nor shall the Company or the Bank have sustained any
material loss or damage to its properties which materially affects its ability
to conduct its business; (vii) on and as of the Effective Date the consolidated
net worth of the
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Company as determined in accordance with generally accepted accounting
principles shall not be less than the sum of (a) $7,478,526, and (b) the
aggregate contributions to capital caused by the payments accompanying the
exercise of any stock options on or after March 31, 1997; (viii) on and as of
the Effective Date, the aggregate reserve for loan losses of the Bank as
determined in accordance with generally accepted accounting principles shall not
be less than $849,545; (ix) the CRA rating of the Bank shall be no lower than
"satisfactory";(x) Mr. Broyles shall have entered into an employment agreement
with the Bank in the form set forth in the Plan of Reorganization; and (xi)
Messrs. Outcalt and Wuckert shall have each entered into an advisory agreement
with the Bank in the form set forth in the Plan of Reorganization.
The obligations of the Company and the Bank to consummate the
Reorganization are subject to the satisfaction or waiver of certain additional
conditions, including: (i) the shareholders of Valley shall have authorized the
Bank Merger; (ii) all representations and warranties made by Zions, Val Cor and
Valley in the Plan of Reorganization shall be true and correct in all material
respects on the Effective Date and Zions, Val Cor and Valley shall have
performed all of their respective obligations under the Plan of Reorganization
on or prior to the Effective Date; (iii) receipt of a legal opinion of Duane,
Morris & Heckscher LLP, special counsel to Zions, in form and substance as set
forth in the Plan of Reorganization; (iv) during the period from March 31, 1997
to the Effective Date, there shall be no material adverse change in the
financial position or results of operations of Zions nor shall Zions have
sustained any material loss or damage to its properties which materially affects
its ability to conduct its business; and (v) Zions Common Stock shall be quoted
on NASDAQ or shall be listed on a national securities exchange.
Representations and Warranties
The representations and warranties of Zions, Val Cor, Valley, the
Company, the Bank, and Messrs. Outcalt and Wuckert contained in the Plan of
Reorganization relate, among other things, to the organization and good standing
of the parties; the capitalization of the parties; the authorization by the
parties of the Plan of Reorganization and the absence of conflict with laws or
other agreements; the accuracy and completeness of the financial statements and
other information furnished to the other party; the absence of material adverse
changes since March 31, 1997 with respect to Zions, the Company and the Bank;
the absence of undisclosed liabilities; and compliance with laws. The Company
has additionally warranted that there has been since March 31, 1997 no material
deterioration in the quality of its consolidated loan portfolio and no material
increase in the consolidated level of its nonperforming assets or non-accrual
loans or in the level of its consolidated provision for credit losses or its
consolidated reserve for possible credit losses. The Company has also warranted
that its consolidated reserve for possible credit losses is adequate to absorb
reasonably anticipated losses in the consolidated loan and lease portfolios of
the Company in view of the size and character of such portfolios, current
economic conditions, and other factors.
Zions and the Company have additionally warranted that there are no
facts known to them respectively which reasonably might materially adversely
affect their respective business, assets, liabilities, financial condition,
results of operations or prospects which have not been disclosed in their
respective financial statements or a certificate delivered to the other party.
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<PAGE>
Amendment and Waiver
Notwithstanding prior approval by the shareholders of the Company or
Valley, the Plan of Reorganization may be amended in any respect by written
agreement between the parties, except that after such shareholder approval no
amendment may prejudice the economic interests of the shareholders of the
Company or Valley unless shareholder approval of the amendment is procured.
Zions or the Company may also, at any time prior to the Effective Date, waive
any condition or term of the Plan of Reorganization provided that any such
waiver must be in writing signed by the party entitled to the benefit thereof
and will be permitted only if it will not have a materially adverse effect on
the benefits intended under the Plan of Reorganization to the shareholders of
its or his corporation.
Authorized Termination and Damages for Breach
The Plan of Reorganization may be terminated and abandoned at any time
prior to the Effective Date, notwithstanding approval of the shareholders of the
Company and Valley, as follows: (i) by mutual consent of the parties to the Plan
of Reorganization; (ii) unilaterally, by Zions if any of the representations and
warranties by the Company, the Bank, or Messrs. Outcalt or Wuckert was
materially incorrect when made or in the event of a material breach or material
failure by the other party of any covenant or agreement which has not been, or
cannot be, cured within thirty days after written notice has been given; (iii)
unilaterally, by the Company if any of the representations and warranties of
Zions, Val Cor or Valley was materially incorrect when made or in the event of a
material breach or material failure by the other party to the Plan of
Reorganization of any covenant or agreement contained in the Plan of
Reorganization which has not been, or cannot be, cured within thirty days after
written notice has been given; (iv) by either the Company or Zions if the
Reorganization has become inadvisable or impracticable by reason of federal or
state litigation to restrain or invalidate the transactions contemplated by the
Plan of Reorganization; or (v) by any party on or after March 13, 1998, if the
Effective Date has not occurred on or before that date.
If either party terminates the Plan of Reorganization because any of
the representations and warranties of a party was materially incorrect when
made, or because of a material breach or material failure by a party of a
covenant or agreement made under the Plan of Reorganization, then such party
whose representations and warranties were materially incorrect or who materially
breached or failed to perform its covenant or agreement shall be liable to the
other party or parties to the Plan of Reorganization not affiliated with it in
the amount of $250,000.
Restrictions on Resales by Company Affiliates
The shares of Zions Common Stock issuable in the Reorganization have
been registered under the Securities Act, and such shares will generally be
freely tradable by Company shareholders who receive Zions shares as a result of
the Reorganization. However, the registration does not cover resales by Company
shareholders who may be deemed to control, controlled by, or be under common
control with the Company or Zions and who therefore may be deemed "affiliates"
of the Company or Zions as that term is defined in Rule 144 under the Securities
Act. Such affiliates are not permitted to sell their shares of Zions Common
Stock acquired in the Reorganization except pursuant to (i) an effective
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<PAGE>
registration statement under the Securities Act covering the shares to be sold;
(ii) the conditions contemplated by Rules 144 and 145 under the Securities Act;
or (iii) another applicable exemption from the registration requirements of the
Securities Act. The management of the Company will notify those persons who it
believes may be such affiliates.
Expenses
Each party to the Plan of Reorganization will pay its own expenses,
including those of its own counsel, accountants, and tax advisors, incurred in
connection with the Plan of Reorganization. The Company will pay the cost of
printing and delivering this Proxy Statement/Prospectus and other material to
the Company shareholders. Valley will pay the cost of printing and delivering
this Proxy Statement/Prospectus and other material to the Valley shareholders.
Zions will pay the costs attributable to registering its stock issuable pursuant
to this Proxy Statement/Prospectus under federal and state securities laws. The
cost of the Duane Opinion has been apportioned between Zions and the
shareholders of the Company by a reduction of the number of shares to be issued
in the Reorganization in the amount of 299 shares of Zions Common Stock which,
based on the valuation of $33.50 per share of Zions Common Stock used by the
parties to the Plan of Reorganization for other purposes, have a value of
approximately $10,000 or one-half of the cost of the Duane Opinion. All of the
information in this Proxy Statement/Prospectus is set forth net of this
reduction.
Government Approvals
Applications for approval (or requests for waiver of application
requirements) of the Reorganization must be made to, and approvals and consents
must be obtained from, appropriate federal, Utah, and Colorado regulators,
including the Board of Governors, the Comptroller, the Commissioner, and the
Board. Submissions have been made to each of these regulatory authorities.
Federal law prohibits consummation of the Reorganization until thirty days after
the approvals of the federal regulators have been obtained, except that this
period may be shortened with the concurrence of the Attorney General of the
United States. All regulatory approvals have been obtained.
Effective Date of the Reorganization
It is presently anticipated that if the Plan of Reorganization is
approved by the shareholders of the Company, the Reorganization will become
effective in the first quarter of 1998. However, as noted above, consummation of
the Reorganization is subject to the satisfaction of a number of conditions,
some of which cannot be waived. There can be no assurance that all conditions to
the Reorganization will be satisfied or, if satisfied, that they will be
satisfied in time to permit the Reorganization to become effective in the first
quarter of 1998. In addition, as also noted above, Zions and the Company retain
the power to abandon the Reorganization or to extend the time for performance of
conditions or obligations necessary to its consummation, notwithstanding prior
shareholder approval.
Accounting Treatment
The Reorganization will be treated for accounting purposes as a
"pooling of interests" in accordance with ABP Opinion No. 16. A condition to
consummation
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of the Plan of Reorganization is that Zions shall have received a letter to the
above effect from KPMG Peat Marwick, LLP, certified public accountants. This
method of accounting views the Reorganization as a uniting of the separate
ownership interests through an exchange of shares. As such, the pro forma
financial information represents the combined historical financial data of Zions
and the Company, subject only to certain adjustments described in the notes to
the data presented.
Relationship Between Zions and the Company
Neither Zions nor the Company is aware of any material relationship
between Zions, its directors or officers or their affiliates, and the Company,
its directors or executive officers or their affiliates, except as contemplated
by the Plan of Reorganization or as described herein.
Unaudited Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information
reflects the application of the pooling of interests method of accounting. The
following tables, which show comparative historical per Common Share data for
Zions and the Company (separately and pro-forma combined) and equivalent
pro-forma per share data for the Company, should be read in conjunction with the
financial information included herein or incorporated herein by reference to
other documents. The pro-forma data in the table, presented as of and for the
year ended December 31, 1996, and as of and for the nine months ended September
30, 1997, are presented for comparative and illustrative purposes only and are
not necessarily indicative of the combined financial position or results of
operations in the future or what the combined financial position or results of
operations would have been had the Reorganization been consummated during the
periods or as of the dates for which the information in the table is presented.
Historical Pro Forma
-------------------- ------------------------
Zions and
Sky Valley Sky Valley
Pro-Forma Equivalent
Per Common Share Zions Sky Valley Combined(4) Pro-Forma(5)
- ---------------- ----- ---------- ----------- ------------
NET INCOME(1)
For the years ended
December 31, 1996 $ 1.71 $ 666.14 $ 1.72 $ 447.85
December 31, 1995 1.38 482.72 1.39 361.93
December 31, 1994 1.09 414.58 1.10 286.42
For the nine months
ended September 30, 1997 1.41 548.10 1.41 367.14
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Historical Pro Forma
-------------------- ------------------------
Zions and
Sky Valley Sky Valley
Pro-Forma Equivalent
Per Common Share Zions Sky Valley Combined(4) Pro-Forma(5)
- ---------------- ----- ---------- ----------- ------------
CASH DIVIDENDS(2)
For the years ended
December 31, 1996 $ .43 $ 150.00 $ .43 $ 111.96
December 31, 1995 .35 140.00 .35 91.13
December 31, 1994 .29 132.50 .29 75.51
For the nine months
ended September 30, 1997 .35 120.00 .35 91.13
BOOK VALUE:(3)
As of December 31, 1996 $ 8.61 $3,256.04 $ 8.65 $2,252.29
As of December 31, 1995 7.36 2,861.10 7.39 1,924.21
As of December 31, 1994 6.28 2,396.23 6.31 1,643.00
As of September 30, 1997 9.78 3,673.70 9.82 2,556.93
- ---------------
(1) Net Income per share is based on weighted average common and common
equivalent shares outstanding.
(2) Pro forma cash dividends represent historical cash dividends of Zions.
(3) Book value per common share is based on total period-end of shareholders'
equity.
(4) Pro forma combined net income per share represents historical net income of
Zions and the Company computed using historical weighted average common and
common equivalent shares of Zions adjusted by computed common and common
equivalent shares to be issued in the transaction. Pro forma combined book
value per share represents historical total shareholders' equity of Zions
computed using Zions' historical common shares outstanding adjusted by
computed common shares to be issued in the transaction.
(5) Pro forma equivalent amounts are computed by multiplying the pro forma
combined amounts by the exchange ratio of 260.38 shares of Zions Common
Stock for each share of Company Common Stock.
SUPERVISION AND REGULATION
The information contained in this section summarizes portions of the
applicable laws and regulations relating to the supervision and regulation of
Zions and its subsidiaries. These summaries do not purport to be complete, and
they are qualified in their entirety by reference to the particular statutes and
regulations described.
Zions
Zions is a bank holding company within the meaning of the Bank Holding
Company Act and is registered as such with the Board of Governors. Under the
current terms of that Act, Zions' activities, and those of companies which it
controls or in which it holds more than 5% of the voting stock, are limited to
banking or managing or controlling banks or furnishing services to or performing
services for its subsidiaries, or any other activity which the Board of
Governors determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. In making such
determinations, the Board of Governors is required to consider whether the
performance of such activities by a bank holding company or its subsidiaries can
reasonably be expected to produce benefits to the public such as greater
convenience, increased competition or gains in efficiency that outweigh possible
adverse effects, such as undue
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concentration of resources, decreased or unfair competition, conflicts of
interest or unsound banking practices.
Bank holding companies, such as Zions, are required to obtain prior
approval of the Board of Governors to engage in any new activity or to acquire
more than 5% of any class of voting stock of any company. Pursuant to the
Riegle-Neal Interstate Branching and Efficiency Act of 1994, as amended
("Riegle-Neal Act"), subject to approval by the Board of Governors, bank
holding companies are authorized to acquire either control of, or substantial
assets of, a bank located outside the bank holding company's home state. These
acquisitions are subject to limitations, the most significant of which include
adequate capitalization and management of the acquiring bank holding company,
existence of the acquired bank for up to five years before purchase where
required under state law, existence of state laws that condition acquisitions on
institutions making assets available to a "state-sponsored housing entity," and
limitations on control by the acquiring bank holding company of not more than
10% of the total amount of deposits in insured depository institutions in the
United States or not more than 30% of the deposits in insured depository
institutions within that state. States may impose more stringent deposit
concentration limits, so long as those limits apply to all bank holding
companies equally. The Riegle-Neal Act reaffirms the right of states to
segregate and tax separately incorporated subsidiaries of a bank or bank holding
company. The Riegle-Neal Act also affects interstate branching and mergers. See
"Interstate Banking" below.
The Board of Governors is authorized to adopt regulations affecting
various aspects of bank holding companies. Pursuant to the general supervisory
authority of the Bank Holding Company Act and directives set forth in the
International Lending Supervision Act of 1983, the Board of Governors has
adopted capital adequacy guidelines prescribing both risk-based capital and
leverage ratios.
Regulatory Capital Requirements
Risk-Based Capital Guidelines. The Board of Governors has established
risk-based capital guidelines for bank holding companies. The guidelines define
Tier 1 Capital and Total Capital. Tier 1 Capital consists of common and
qualifying preferred shareholders' equity and minority interests in equity
accounts of consolidated subsidiaries, less goodwill and 50% (and in some cases
up to 100%) of investment in unconsolidated subsidiaries. Total Capital consists
of Tier 1 Capital plus qualifying mandatory convertible debt, perpetual debt,
certain hybrid capital instruments, certain preferred stock not qualifying as
Tier 1 Capital, subordinated and other qualifying term debt up to specified
limits, and a portion of the allowance for credit losses, less investments in
unconsolidated subsidiaries and in other designated subsidiaries or other
associated companies at the discretion of the Board of Governors, certain
intangible assets, a portion of limited-life capital instruments approaching
maturity and reciprocal holdings of banking organizations' capital instruments.
The Tier 1 component must constitute at least 50% of qualifying Total Capital.
Risk-based capital ratios are calculated with reference to
risk-weighted assets, which include both on-balance sheet and off-balance sheet
exposures. The risk-based capital framework contains four risk weight categories
for bank holding company assets -- 0%, 20%, 50% and 100%. Zero percent
risk-weighted assets include, generally, cash and balances due from federal
reserve banks and obligations unconditionally guaranteed by the U.S. government
or its agencies.
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Twenty percent risk-weighted assets include, generally, claims on U.S. banks and
obligations guaranteed by U.S. government sponsored agencies as well as general
obligations of states or other political subdivisions of the United States.
Fifty percent risk-weighted assets include, generally, loans fully secured by
first liens on one-to-four family residential properties, subject to certain
conditions. All assets not included in the foregoing categories are assigned to
the 100% risk-weighted category, including loans to commercial and other
borrowers. As of year-end 1992, the minimum required ratio for qualifying Total
Capital became 8%, of which at least 4% must consist of Tier 1 Capital. At
December 31, 1996, Zions' Tier 1 and Total Capital ratios were 14.38% and
18.31%, respectively.
The current risk-based capital ratio analysis establishes minimum
supervisory guidelines and standards. It does not evaluate all factors affecting
an organization's financial condition. Factors which are not evaluated include
(i) overall interest rate exposure; (ii) quality and level of earnings; (iii)
investment or loan portfolio concentrations; (iv) quality of loans and
investments; (v) the effectiveness of loan and investment policies; (vi) certain
risks arising from nontraditional activities; and (vii) management's overall
ability to monitor and control other financial and operating risks, including
the risks presented by concentrations of credit and nontraditional activities.
The capital adequacy assessment of federal bank regulators will, however,
continue to include analyses of the foregoing considerations and in particular,
the level and severity of problem and classified assets. Market risk of a
banking organization -- risk of loss stemming from movements in market prices --
is not evaluated under the current risk-based capital ratio analysis (and is
therefore analyzed by the bank regulators through a general assessment of an
organization's capital adequacy) unless trading activities constitute 10 percent
or $1 billion or more of the assets of such organization. Such an organization
(unless exempted by the banking regulators) and certain other banking
organizations designated by the banking regulators must, beginning on or before
January 1, 1998, include in its risk-based capital ratio analysis charges for,
and hold capital against, general market risk of all positions held in its
trading account and of foreign exchange and commodity positions wherever
located, as well as against specific risk of debt and equity positions located
in its trading account. Currently, Zions does not calculate a risk-based capital
charge for its market risk.
The following table presents Zions' regulatory capital position at
September 30, 1997 under the risk-based capital guidelines.
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Risk-Based Capital
(Dollars in thousands)
Percent
of Risk-
Adjusted
Amount Assets
------ ------
Tier 1 Capital............................. $ 596,625 12.45%
Minimum Requirement........................ 191,706 4.00
--------- -------
Excess................................... $ 404,919 8.45%
========= =======
Total Capital.............................. $ 725,036 15.13%
Minimum Requirement........................ 383,412 8.00
--------- -------
Excess................................... $ 341,624 7.13%
========= =======
Risk-Adjusted Assets,
net of goodwill, excess deferred
tax assets and excess allowance.......... $4,792,652 100.00%
========== =======
Minimum Leverage Ratio. The Board of Governors has adopted capital standards and
leverage capital guidelines that include a minimum leverage ratio of 3% Tier 1
Capital to total assets (the "leverage ratio"). The leverage ratio is used in
tandem with a risk-based ratio of 8% that took effect at the end of 1992. At
September 30, 1997, Zions' leverage ratio was 6.96%.
The Board of Governors has emphasized that the leverage ratio
constitutes a minimum requirement for well-run banking organizations having
well-diversified risk, including no undue interest rate exposure, excellent
asset quality, high liquidity, good earnings, and a composite rating of 1 under
the Interagency Bank Rating System. Banking organizations experiencing or
anticipating significant growth, as well as those organizations which do not
exhibit the characteristics of a strong, well-run banking organization described
above, will be required to maintain strong capital positions substantially above
the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Board of Governors has indicated that it will consider
a "tangible Tier I Capital Leverage Ratio" (deducting all intangibles) and other
indices of capital strength in evaluating proposals for expansion or new
activities.
The following table presents Zions' leverage ratio at September 30,
1997. A leverage ratio of 3% will be the minimum required for the most highly
rated banking organizations, and according to the Board of Governors, other
banking organizations would be expected to maintain capital at higher levels.
-37-
<PAGE>
(Dollars in thousands)
------------------------
Percent
of Average
Assets, Net
Amount of Goodwill
------ -----------
Tier 1 Capital............................. $ 596,625 6.96%
Minimum Requirement........................ 257,122 3.00
---------- --------
Excess..................................... $ 339,503 3.96%
========== =========
Average Assets, net of goodwill and
deferred tax assets...................... $8,570,738 100.00%
========== =========
Other Issues and Developments Relating to Regulatory Capital. Pursuant
to such authority and directives set forth in the International Lending
Supervision Act of 1983, the Comptroller, the FDIC and the Board of Governors
have issued regulations establishing the capital requirements for banks under
federal law. The regulations, which apply to Zions' banking subsidiaries,
establish minimum risk-based and leverage ratios which are substantially similar
to those applicable to Zions.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") requires the federal banking regulators to take "prompt corrective
action" in respect of banks that do not meet minimum capital requirements and
imposes certain restrictions upon banks which meet minimum capital requirements
but are not "well capitalized" for purposes of FDICIA. FDICIA establishes five
capital tiers: "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized."
Implementing regulations adopted by the federal banking agencies define the
capital categories for banks which will determine the necessity for prompt
corrective action by the federal banking agencies. A bank may be placed in a
capitalization category that is lower than is indicated by its capital position
if it receives an unsatisfactory examination rating with respect to certain
matters except that it may not be categorized as critically undercapitalized
unless actually indicated by its capital position.
Failure to meet capital guidelines could subject a bank to a variety of
restrictions and enforcement remedies. All insured banks are generally
prohibited from making any capital distributions and from paying management fees
to persons having control of the bank where such payments would cause the bank
to be undercapitalized. Holding companies of critically undercapitalized,
significantly undercapitalized and certain undercapitalized banks are required
to obtain the approval of the Board of Governors before paying capital
distributions to their shareholders. Moreover, a bank that is not well
capitalized is generally subject to various restrictions on "pass through"
insurance coverage for certain of its accounts and is generally prohibited from
accepting brokered deposits and offering interest rates on any deposits
significantly higher than the prevailing rate in its normal market area or
nationally (depending upon where the deposits are solicited). Such banks and
their holding companies are also required to obtain regulatory approval prior to
their retention of senior executive officers.
-38-
<PAGE>
Banks which are classified undercapitalized, significantly
undercapitalized or critically undercapitalized are required to submit capital
restoration plans satisfactory to their federal banking regulator and guaranteed
within stated limits by companies having control of such banks (i.e., to the
extent of the lesser of five percent of the institution's total assets at the
time it became undercapitalized or the amount necessary to bring the institution
into compliance with all applicable capital standards as of the time the
institution fails to comply with its capital restoration plan, until the
institution is adequately capitalized on average during each of four consecutive
calendar quarters), and are subject to regulatory monitoring and various
restrictions on their operations and activities, including those upon asset
growth, acquisitions, branching and entry into new lines of business and may be
required to divest themselves of or liquidate subsidiaries under certain
circumstances. Holding companies of such institutions may be required to divest
themselves of such institutions or divest themselves of or liquidate
nondepository affiliates under certain circumstances. Critically
undercapitalized institutions are also prohibited from making payments of
principal and interest on debt subordinated to the claims of general creditors
as well as to the mandatory appointment of a conservator or receiver within 90
days of becoming critically undercapitalized unless periodic determinations are
made by the appropriate federal banking agency, with the concurrence of the
FDIC, that forbearance from such action would better protect the affected
deposit insurance fund. Unless appropriate findings and certifications are made
by the appropriate federal banking agency with the concurrence of the FDIC, a
critically undercapitalized institution must be placed in receivership if it
remains critically undercapitalized on average during the calendar quarter
beginning 270 days after the date it became critically undercapitalized.
Other Regulatory and Supervisory Issues
Pursuant to FDICIA, the federal banking agencies have adopted
regulations or guidelines prescribing standards for safety and soundness of
insured banks and in some instances their holding companies, including standards
relating to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, fees and benefits, asset quality and earnings, as well as other
operational and managerial standards deemed appropriate by the agencies. Upon a
determination by a federal banking agency that an insured bank has failed to
satisfy any such standard, the bank will be required to file an acceptable plan
to correct the deficiency. If the bank fails to submit or implement an
acceptable plan, the federal banking agency may, and in some instances must,
issue an order requiring the institution to correct the deficiency, restrict its
asset growth or increase its ratio of tangible equity to assets, or imposing
other operating restrictions.
FDICIA also contains provisions which, among other things, restrict
investments and activities as principal by state nonmember banks to those
eligible for national banks, impose limitations on deposit account balance
determinations for the purpose of the calculation of interest, and require the
federal banking regulators to prescribe, implement or modify standards for
extensions of credit secured by liens on interests in real estate or made for
the purpose of financing construction of a building or other improvements to
real estate, loans to bank insiders, regulatory accounting and reports, internal
control reports, independent audits, exposure on interbank liabilities,
contractual arrangements under which institutions receive goods, products or
-39-
<PAGE>
services, deposit account-related disclosures and advertising as well as to
impose restrictions on federal reserve discount window advances for certain
institutions and to require that insured depository institutions generally be
examined on-site by federal or state personnel at least once every 12 months.
In connection with an institutional failure or FDIC rescue of a
financial institution, the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA") grants to the FDIC the right, in many
situations, to charge its actual or anticipated losses against commonly
controlled depository institution affiliates of the failed or rescued
institution (although not against a bank holding company itself).
The nature of the banking and financial services industry, as well as
banking regulation, may be further affected by various legislative and
regulatory measures currently under consideration. The most important of such
measures include legislation designed to permit increased affiliations between
commercial and financial firms (including securities firms) and
federally-insured banks, reduce regulatory burdens on financial institutions and
eliminate or revise the features of the specialized savings association charter.
It is impossible to predict whether or in what form these proposals may be
adopted in the future and, if adopted, what the effect of their adoption will be
on the Zions or its subsidiaries.
Deposit Insurance and Other Assessments
Insured banks (including the bank subsidiaries of Zions) are required
to make quarterly deposit insurance assessment payments to the Bank Insurance
Fund (the "BIF"), and most savings associations to the Savings Association
Insurance Fund (the "SAIF"), under a risk-based assessment system established by
the FDIC. (In addition, certain banks must also pay deposit insurance
assessments to the SAIF and certain savings associations, to the BIF alone or to
both funds.) Under this system, each institution's insurance assessment rate is
determined by the risk assessment classification into which it has been placed
by the FDIC. The FDIC places each insured institution in one of nine risk
assessment classifications based upon its level of capital and supervisory
evaluations by its regulators: "well capitalized," "adequately capitalized" or
"less than adequately capitalized" institutions, with each category of
institution divided into subcategories of institutions which are either
"healthy," of "supervisory concern" or of "substantial supervisory concern."
Those institutions deemed weakest by the FDIC are subject to the highest
assessment rates; those deemed strongest are subject to the lowest assessment
rates. The FDIC establishes semi-annual assessment rates with the objective of
enabling the affected insurance fund to achieve or maintain a
statutorily-mandated target reserve ratio of 1.25% of insured deposits. In
establishing assessment rates, the FDIC Board of Directors is required to
consider (i) expected operating expenses, case resolution expenditures and
income of the FDIC; (ii) the effect of assessments upon members' earnings and
capital; and (iii) any other factors deemed appropriate by it.
Until December 31, 1997, both BIF- and SAIF-assessable deposits will be
subject to an assessment schedule providing for an assessment range of 0% to
.27% (with intermediate rates of .03%, .10%, .17% and .24%, depending upon an
institution's supervisory risk group). Both BIF and SAIF assessment rates are
subject to semi-annual adjustment by the FDIC Board of Directors within a range
-40-
<PAGE>
of up to five basis points without public comment. The FDIC Board of Directors
also possesses authority to impose special assessments from time to time.
In addition to the payment of deposit insurance assessments, depository
institutions are required to make quarterly assessment payments to the FDIC on
both their BIF and SAIF assessable deposits which will be paid to the Financing
Corporation to enable it to pay interest and certain other expenses on bonds
which it issued pursuant to FIRREA to facilitate the resolution of failed
savings associations. Pursuant to the Federal Home Loan Bank Act, the Financing
Corporation, with the approval of the FDIC Board of Directors, establishes
assessment rates based upon estimates of (i) expected operating expenses, case
resolution expenditures and income of the Financing Corporation; (ii) the effect
of assessments upon members' earnings and capital; and (iii) any other factors
deemed appropriate by it. Additionally, the Financing Corporation is required to
assess BIF-assessable deposits at a rate one-fifth the rate applicable to
SAIF-assessable deposits until the first to occur of the merger of the BIF and
SAIF funds or January 1, 2000. Assessment rates for the second semi-annual
period of 1997 have been set at .63 basis points annually for BIF-assessable
deposits and 3.15 basis points annually for SAIF-assessable deposits, subject to
quarterly review and adjustment.
Interstate Banking
Existing laws and various regulatory developments have allowed
financial institutions to conduct significant activities on an interstate basis
for a number of years. During recent years, a number of financial institutions
have expanded their out-of-state activities and various states and the Congress
have enacted legislation intended to allow certain interstate banking
combinations.
The Riegle-Neal Act dramatically affects interstate banking activities.
As discussed previously, the Riegle-Neal Act allows the Board of Governors to
approve the acquisition by a bank holding company of control or substantial
assets of a bank located outside the bank holding company's home state. Since
June 1, 1997, and earlier where permitted by applicable state law, an insured
bank has been authorized to apply to the appropriate federal agency for
permission to merge with an out-of-state bank and convert the branch offices of
the out-of-state bank to those of its own or, alternatively, convert its branch
offices to those of the out-of-state bank, unless its home state or the home
state of the out-of-state bank had adopted qualifying legislation barring this
form of interstate expansion by June 1, 1997.
Interstate mergers authorized by the Riegle-Neal Act are subject to
conditions and requirements, the most significant of which include adequate
capitalization and management of the acquiring bank or bank holding company,
existence of the acquired bank for up to five years before purchase where
required under state law, and limitations on control by the acquiring bank
holding company of not more than 10% of the total amount of deposits in insured
depository institutions in the United States or not more than 30% of the
deposits in insured depository institutions within that state. States may impose
more stringent deposit concentration limits, so long as those limits apply to
all bank holding companies equally. Additional requirements placed on mergers
include conformity with state law branching requirements and compliance with
"host state" merger filing requirements to the extent that those requirements do
-41-
<PAGE>
not discriminate against out-of-state banks or out-of-state bank holding
companies.
The Riegle-Neal Act also permits banks to establish and operate a "de
novo branch" in any state that expressly permits all out-of-state banks to
establish de novo branches in such state, if the law applies equally to all
banks. (A "de novo branch" is a branch office of a national bank or state bank
that is originally established as a branch and does not become a branch as a
result of an acquisition, conversion, merger, or consolidation.) Utilization of
this authority is conditioned upon satisfaction of most of the conditions
applicable to interstate mergers under the Riegle-Neal Act, including adequate
capitalization and management of the branching institution, satisfaction with
certain filing and notice requirements imposed under state law and receipt of
federal regulatory approvals.
Pursuant to FIRREA, bank holding companies may acquire savings
associations (including savings and loan associations and federal savings banks)
without geographic restriction under the Bank Holding Company Act.
Bank holding companies whose home state is Utah are authorized to
acquire control of depository institutions and depository institution holding
companies located in other states. Colorado law authorizes an out-of-state bank
holding company, with the prior approval of the Board, to acquire a Colorado
bank holding company whose operations are principally conducted within the state
irrespective of the number of years the depository institution subsidiaries of
the Colorado bank holding company have been in operation provided that at the
time of acquisition, the out-of-state bank holding company will not control more
than 25 percent of the aggregate deposits made in federally-insured banks,
savings and loan associations, federal savings banks, industrial banks, bank
holding companies, thrift holding companies and industrial bank holding
companies located in the state.
MONETARY POLICY
The earnings of Zions and the Company are directly affected by the
monetary and fiscal policies of the federal government and governmental
agencies. The Board of Governors has broad powers to expand and constrict the
supply of money and credit and to regulate the reserves which its member banks
must maintain based on deposits. These broad powers are used to influence the
growth of bank loans, investments and deposits, and may affect the interest
rates which will prevail in the market for loans and investments and deposits.
Governmental and Federal Reserve Board monetary policies have had a significant
effect on the operating results of commercial banks in the past and are expected
to do so in the future. The future impact of such policies and practices on the
growth or profitability of Zions and the Company cannot be predicted.
-42-
<PAGE>
INFORMATION CONCERNING ZIONS BANCORPORATION
Selected Financial Data
The following unaudited table of selected financial data should be read
in conjunction with the related notes included herein and Zions' consolidated
financial statements and the related notes thereto incorporated by reference
herein. The per share information presented reflects Zions' May 9, 1997 stock
split. See "Zions Documents Incorporated by Reference."
-43-
<PAGE>
ZIONS BANCORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share and ratio data)
<TABLE>
<CAPTION>
As of, and for the Nine As of, and for the
Months Ended September 30, Year Ended December 31,
-------------------------- ---------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
- ----------------
Taxable-equivalent net interest income $ 230,406 $ 194,081 $ 267,583 $ 232,417 $ 203,313 $ 178,636 $ 160,854
Net interest income 225,404 189,207 260,473 227,094 198,606 174,657 157,282
Noninterest income 100,309 81,596 110,891 88,014 73,202 79,880 62,849
Provision for loan losses 2,905 2,200 3,540 2,800 2,181 2,993 10,929
Noninterest expense(1) 193,861 155,578 214,332 190,030 174,900 167,750 139,069
Income taxes 44,826 38,530 52,142 40,950 30,900 27,248 22,924
Income before cumulative effect of
changes in accounting principles 84,121 74,495 101,350 81,328 63,827 56,546 47,209
Cumulative effect of changes in
accounting principles(2) - - - - - 1,659 -
Net income 84,121 74,495 101,350 81,328 63,827 58,205 47,209
COMMON STOCK DATA
- -----------------
Earnings per common share:
Income before cumulative effect of
changes in accounting principles $ 1.41 $ 1.26 $ 1.71 $ 1.38 $ 1.09 $ .99 $ .86
Net income 1.41 1.26 1.71 1.38 1.09 1.02 .86
Dividends paid per share .35 .32 .43 .35 .29 .25 .19
Dividend payout ratio (%) 24.63% 24.86% 24.66% 25.27% 27.06% 21.81% 20.31%
Book value per share at period end 9.78 8.30 8.61 7.36 6.28 5.50 4.74
Market to book value at period end (%) 383.44% 266.49% 301.89% 272.59% 142.83% 168.11% 200.53%
Weighted average common and common
equivalent shares outstanding
during the period 59,792,000 59,072,000 59,228,000 58,868,000 58,404,000 57,120,000 55,160,000
Common shares outstanding
at period end 59,426,300 59,068,860 58,918,880 58,223,680 58,238,208 56,805,468 54,910,176
AVERAGE BALANCE SHEET DATA
- --------------------------
Money market investments $ 1,545,892 $ 926,035 $ 909,470 $ 936,846 $ 869,709 $ 788,694 $ 469,062
Securities 2,282,914 1,807,806 1,827,300 1,632,253 1,545,704 1,209,165 927,976
Loan and leases, net 3,773,847 3,055,062 3,126,899 2,599,071 2,574,995 2,222,182 2,104,679
Total interest-earning assets 7,602,653 5,788,903 5,863,669 5,168,170 4,990,408 4,220,041 3,501,717
Total assets 8,259,593 6,297,615 6,377,695 5,658,690 5,456,613 4,643,918 3,807,832
Interest-bearing deposits 3,795,194 3,289,330 3,324,536 3,021,060 2,744,976 2,449,275 2,356,384
Total deposits 4,899,591 4,203,711 4,258,270 3,858,271 3,583,094 3,178,926 2,912,860
FHLB advances and other borrowings 136,204 98,781 96,496 114,270 151,164 195,097 128,856
Long-term debt 251,199 55,938 58,466 57,506 59,493 75,623 82,219
Total interest-bearing liabilities 6,476,829 4,821,129 4,872,070 4,320,229 4,197,865 3,556,746 2,962,079
Shareholders' equity 543,606 455,492 468,573 397,268 339,181 286,331 240,411
PERIOD END BALANCE SHEET DATA
- -----------------------------
Money market investments $ 1,407,200 $ 992,846 $ 613,429 $ 687,251 $ 403,446 $ 597,680 $ 616,180
Securities 2,584,089 1,886,533 1,809,688 1,540,489 1,663,433 1,258,939 981,695
Loans and leases, net 4,190,664 3,313,932 3,452,543 2,806,956 2,391,278 2,486,346 2,107,433
Allowance for loan losses 70,290 69,337 69,954 67,555 67,018 68,461 59,807
Total assets 9,059,721 6,783,341 6,484,964 5,620,646 4,934,095 4,801,054 4,107,924
Total deposits 5,666,336 4,572,555 4,552,017 4,097,114 3,705,976 3,432,289 3,075,110
FHLB advances and other borrowings 266,750 90,997 87,194 101,084 127,319 288,249 205,222
Long-term debt 251,134 55,702 251,620 56,229 58,182 59,587 99,223
Shareholders' equity 581,129 490,485 507,452 428,506 365,770 312,592 260,070
</TABLE>
-44-
<PAGE>
<TABLE>
<CAPTION>
As of, and for the
Nine Months Ended As of, and for the
September 30, Year Ended December 31,
------------------ ---------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonaccrual loans $10,617 $10,139 $11,526 $ 7,438 $13,635 $23,364 $21,556
Restructured loans 693 204 857 249 567 4,006 4,003
Other real estate owned and other
nonperforming assets 4,734 256 138 1,609 4,741 3,267 5,971
Total nonperforming assets 16,044 10,599 12,521 9,296 18,943 30,637 31,530
Accruing loans past due 90 days or more 7,997 8,740 3,553 5,232 3,041 10,821 6,409
SELECTED RATIOS
- ---------------
Net interest margin(3) 4.05% 4.48% 4.56% 4.50% 4.07% 4.23% 4.59%
Return on average assets 1.36% 1.58% 1.59% 1.44% 1.17% 1.25% 1.24%
Return on average common equity 20.69% 21.85% 21.63% 20.47% 18.82% 20.33% 19.64%
Ratio of average common equity to
average assets 6.58% 7.23% 7.35% 7.02% 6.22% 6.17% 6.31%
Tier I risk-based capital - period end 12.45% 11.05% 14.38% 11.38% 11.81% 10.85% 10.23%
Total risk-based capital - period end 15.13% 13.67% 18.31% 14.23% 14.96% 14.12% 15.13%
Leverage ratio - period end 6.96% 6.47% 8.77% 6.28% 6.24% 5.44% 6.21%
Ratio of nonperforming assets to total
assets - period end .18% .16% .19% .17% .38% .64% .77%
Ratio of nonperforming assets to net
loans and leases and other real estate
owned and other nonperforming assets
at period end .38% .32% .36% .33% .79% 1.23% 1.49%
Ratio of net charge-offs (recoveries)
to average loans and leases .22% .13% .12% .10% .19% (.23)% .44%
Ratio of allowance for loan losses
to net loans and leases outstanding
at period end 1.68% 2.09% 2.03% 2.41% 2.80% 2.75% 2.84%
Ratio of allowance for loan losses to
nonperforming loans at period end 621.49% 670.38% 564.92% 878.82% 471.89% 250.13% 234.00%
</TABLE>
- ----------
(1) Noninterest expenses for the year ended December 31, 1993 included a
one-time expense of $6,022,000 in the first quarter of 1993, related to the
early extinguishment of debt which was necessitated by the decision in
March 1993, to notify holders of floating rate notes totaling $37,450,000
and industrial revenue bonds totaling $4,720,000 that the debt would be
redeemed during the second quarter of 1993. The expense consisted of
marking to market an interest rate exchange agreement entered into several
years ago in conjunction with the issuance of the floating rate notes and
writing off deferred costs associated with the notes and bonds. Early
redemption of the bonds and notes in the second quarter of 1993, allowed
Zions to avail itself of lower cost funding.
(2) Cumulative effect of changes in accounting principles for the year ended
December 31, 1993 resulted from the cumulative effect of changes in
accounting principles in the first quarter of 1993, arising from the
adoption as of January 1, 1993, of Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other than Pensions," and SFAS No. 109, "Accounting for Income
Taxes." The election of immediate recognition of the cumulative effect
(transition obligation) of such change in accounting method for
postretirement benefit other than pensions of SFAS No. 106 decreased pretax
and after-tax net income by $5,760,000 and $3,631,000, respectively. In
addition to the $2,129,000 deferred tax benefit resulting from the adoption
of SFAS No. 106 the election to apply SFAS No. 109 prospectively and not
restate prior years resulted in net deferred tax benefits of $5,290,000 for
the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of other assets and liabilities.
(3) Net interest margin represents net interest income on a taxable-equivalent
basis as a percentage of average earning assets.
-45-
<PAGE>
Stock Prices and Dividends on Zions Common Stock
Zions Common Stock is traded in the over-the-counter market under the
symbol "ZION" and is listed in the NASDAQ National Market System. The following
table has been adjusted to reflect Zions' May 9, 1997 stock split and sets forth
the high and low daily sales prices for Zions Common Stock for the periods
indicated, in each case as reported by NASDAQ, and the cash dividends per share
declared on Zions Common Stock for such periods.
Cash
Dividends
High Low Declared
---- --- --------
1995
First Quarter .................... $10.13 $ 8.88 $ .075
Second Quarter ................... 12.50 9.53 .0875
Third Quarter .................... 15.38 12.38 .0875
Fourth Quarter ................... 20.28 15.22 .1025
--------
$ .3525
1996
First Quarter .................... $19.81 $16.69 $ .1025
Second Quarter ................... 19.75 17.00 .1025
Third Quarter .................... 22.44 18.00 .11
Fourth Quarter ................... 26.00 21.69 .11
---------
$ .425
=========
1997
First Quarter .................... $33.25 $25.69 $ .11
Second Quarter ................... 37.63 28.38 .12
Third Quarter .................... 41.13 34.69 .12
Fourth Quarter (through
November 14, 1997).. ........... 40.19 37.63 --
On July 24, 1997, the last NASDAQ-NMS trading day prior to the public
announcement of the Reorganization, the closing sale price for the Zions Common
Stock was $35.50. On November __, 1997, the last trading date before this Proxy
Statement/Prospectus was sent to the printers, the closing sale price for the
Zions Common Stock was $_________. On November __, 1997, there were shares of
Zions Common Stock outstanding, held by approximately _____ shareholders of
record.
While Zions is not obligated to pay cash dividends, Zions' Board of
Directors presently intends to continue the policy of paying quarterly cash
dividends. Future dividends will depend, in part, upon the earnings and
financial condition of Zions.
Principal Holders of Zions Common Stock
The following table sets forth as of September 30, 1997, the record and
beneficial ownership of Zions Common Stock by the principal common shareholders
of Zions.
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<PAGE>
No. of % of
Name and Address Type of Ownership Shares Class
- ---------------- ----------------- ------ -----
Roy W. Simmons Record and Beneficial 2,291,911 3.82%
One South Main Beneficial(1) 1,991,376 3.32%
Salt Lake City, Utah 84111 --------- ----
4,283,287 7.14%
Zions First National Bank Record(2) 4,581,822 7.60%
One South Main
Salt Lake City, Utah 84111
- ----------
(1) Represents Roy W. Simmons' ownership interest in 1,991,376 shares held by a
company in which Mr. Simmons serves as a director.
(2) These shares are owned of record as of September 30, 1997, by Zions First
National Bank, a subsidiary of Zions, in its capacity as fiduciary for
various trust and advisory accounts. Of the shares shown, Zions First
National Bank has sole voting power with respect to a total of 3,286,821
shares (5.45% of the class) it holds as trustee for the Zions
Bancorporation Employee Stock Savings Plan, the Zions Bancorporation
Employee Investment Savings Plan, and the Zions Bancorporation Profit
Sharing Plan. Zions First National Bank also acts as trustee for the Zions
Bancorporation Dividend Reinvestment Plan, which holds 998,864 shares
(1.66% of the class) and the Zions Bancorporation PAYSOP Plan, which holds
296,137 shares (.49% of the class) as to which Zions First National Bank
does not have or share voting power.
Set forth below is the beneficial ownership, as of September 30, 1997,
of Zions' common stock by each of Zions' directors, and all directors and
officers as a group.
No. of Shares % of
Directors Beneficially Owned Class
- --------- ------------------ -----
Jerry C. Atkin 8,800 * (1)
R.D. Cash 26,000 * (1)
Grant R. Caldwell 6,000 * (1)
Richard H. Madsen 197,372 * (1)
Roger B. Porter 2,000 * (1)
Robert G. Sarver 300,194 * (1)
Harris H. Simmons 2,400,179(2) 4.00
L. E. Simmons 2,219,837(2) 3.70
Roy W. Simmons 4,283,287(2) 7.14
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<PAGE>
I. J. Wagner 284,000(2) * (1)
Dale W. Westergard 163,022 * (1)
All directors and officers
as a group (31 persons) 7,243,523 12.02
- ----------
(1) Immaterial percentage of ownership.
(2) Totals include 1,991,376 shares attributed to each individual through
serving as a director in a company holding such shares in Zions. Of such
1,991,376 shares attributed to Harris H. Simmons, Mr. Simmons holds an
option to acquire 186,792 shares, all of which are vested and presently
exercisable.
Zions Documents Incorporated By Reference
The following documents previously filed by Zions with the SEC pursuant
to the Exchange Act are hereby incorporated by reference in this Proxy
Statement/Prospectus:
1. Zions' Annual Report on Form 10-K for the year ended December 31,
1996 ("Zions Form 10-K");
2. Zions' Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997;
3. Zions' Current Reports on Form 8-K filed by Zions on March 11,
1997, July 9, 1997, and October 3, 1997; and
4. Zions' Form 8-A Registration Statement dated October 10, 1996.
For the convenience of the Company shareholders, a copy of Zions' 1996
Annual Report to Shareholders ("Zions Annual Report") and Zions' press release
relating to the quarter ended September 30, 1997 ("Press Release") are being
mailed to the Company shareholders along with this Proxy Statement/Prospectus.
The Zions Annual Report and the Press Release are not part of this Proxy
Statement/Prospectus. The Zions Annual Report does not contain all of the
information contained in the Zions Form 10-K. The Company shareholders who wish
to obtain copies of any Zions document incorporated by reference herein may do
so by following the instructions under "Available Information" above.
All documents filed by Zions with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the Effective Date shall be deemed to be
incorporated by reference in this Proxy Statement/Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
-48-
<PAGE>
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Proxy Statement/Prospectus.
INFORMATION CONCERNING SKY VALLEY BANK CORP.
General
Sky Valley Bank Corp. (the "Company") is a bank holding company
organized under the laws of the State of Colorado in September, 1991. The
Company is registered as a bank holding company under the Bank Holding Company
Act. The Company has one subsidiary, The First National Bank in Alamosa (the
"Bank"). The Company's primary business is the ownership and management of the
Bank.
On September 30, 1997, the Company had outstanding 2,200 shares of
Common Stock which are held of record by 42 shareholders. As of September 30,
1997, Ralph H. Outcalt and Donald J. Wuckert owned in the aggregate
approximately 63.64% of the outstanding shares of the Company stock.
On a consolidated basis, for the first full year of the operations of
the Company ended on December 31, 1992, the Company's net income was $909,000
and total assets were $70,681,000. For the year ended December 31, 1996, the
Company's net income was $1,466,000, and total assets were $120,437,000. For the
nine months ended September 30, 1997, the Company's net income was $1,206,000
and total assets were $122,872,000.
The Company owns the Branch office building in Center, Colorado located
at 2060 East Highway 112. The building has 4 offices, 1 conference room, 1 vault
with safe deposit boxes, 6 teller windows, and a 4-lane drive-up facility,
walk-up window, and an ATM facility with 24-hour access. On September 1, 1994,
the Company leased to the Bank the office building and improvements under a
20-year lease with monthly rental payments.
Business of the Bank
The First National Bank in Alamosa (the "Bank") was originally
organized on September 6, 1905 as The American National Bank of Alamosa, a
national banking association and commenced operations in September, 1905. On
January 11, 1955, the name of the Bank was changed to The First National Bank in
Alamosa. Deposits are insured by the Federal Deposit Insurance Corporation
(FDIC). The Bank is examined and regulated by the office of the Comptroller of
Currency.
The Bank currently operates through a main office located at 720 Main
Street, Alamosa, Colorado and two branch offices located in Center, Colorado
(the "Center Branch") and Saguache, Colorado (the "Saguache Branch").
The Bank owns a two-story office building located at 720 Main Street in
Alamosa, Colorado and a branch office building located at 400 4th Street in
Saguache, Colorado. The 720 Main Street building has 12 teller windows, a 6-lane
drive-up facility, 14 individual offices, 2 conference rooms, 1 Board room and 1
ATM facility with 24-hour access. The Saguache Branch has 3 teller windows, a
vault, and safe deposit boxes. The Bank operates through a branch office
facility in Center, Colorado located at 2060 East Highway 112 owned by the
Company. The Center Branch has 4 offices, 1 conference room, 1 vault with safe
deposit boxes, 6 teller windows, a 4-lane drive-up facility, walk-up window, and
an ATM facility with 24-hour access.
-49-
<PAGE>
The Bank offers traditional banking services, including checking,
savings, money market accounts, certificates of deposit, IRAs and safe deposit
services. The Bank also offers banking by phone services and direct deposit EFT
services. The Bank offers automatic teller machine (ATM) services at 12
locations through the San Luis Valley of Colorado. The Bank offers a variety of
loan products, including commercial, agricultural, real estate, consumer
mortgage and consumer loans, and equity lines of credit. The Bank also offers a
MasterCard program to its customers.
Assets in the last 10 years has grown from $34 million as of December
31, 1986 to $120 million as of December 31, 1996. As of September 30, 1997,
total assets were $122.4 million. The year ending December 31, 1996 the Bank's
net income after taxes was $1,477,000 compared to a year earlier of net income
as of December 31, 1995 of $1,090,000. For the nine months ending September 30,
1997 net income was $1,234,000 compared to the nine months ending September 30,
1996 of $1,050,000. Net interest income for the nine months ending September 30,
1997 was $3,847,000 compared to the nine months ending September 30, 1996 of
$3,626,000.
Lending
The Bank concentrates its lending activities generally in the
categories of commercial, agricultural, and consumer loans. Commercial loans
consist of commercial real estate loans, real estate construction loans, and
land development loans. Commercial loans may also involve furniture, fixtures,
and inventory financing. Agricultural loans consist of loans secured by
agricultural properties, equipment, machinery, livestock, and agricultural
products. Consumer loans consist of residential mortgage loans, motor vehicle
loans, installment loans, personal loans, and the MasterCard program of the
Bank.
The substantial majority of the loans of the Bank are generated in the
San Luis Valley area of Colorado. The following table sets forth the amounts of
loans outstanding by category as of the dates included:
-50-
<PAGE>
OUTSTANDING LOANS
(IN THOUSANDS)
<TABLE>
<CAPTION>
09/30/97 % TOTAL 09/30/96 % TOTAL 12/31/96 % TOTAL 12/31/95 % TOTAL
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL $26,224 34.88% $24,592 37.16% $25,426 37.76% $21,884 35.99%
CML RE $19,372 25.76% $16,820 25.42% $16,735 24.85% $14,583 23.99%
CML OTHER $6,852 9.11% $7,772 11.74% $8,691 12.91% $7,301 12.01%
AGRICULTURE $32,701 43.49% $27,992 42.30% $27,867 41.39% $25,566 42.05%
AG RE $15,089 20.07% $12,751 19.27% $12,659 18.80% $12,717 20.92%
AG OTHER $17,612 23.42% $15,241 23.03% $15,208 22.59% $12,849 21.13%
CONSUMER $16,267 21.63% $13,591 20.54% $14,040 20.85% $13,348 21.95%
PERSONAL $9,149 12.17% $8,601 13.00% $8,477 12.59% $8,543 14.05%
MASTERCARD $667 0.89% $605 0.91% $649 0.96% $625 1.03%
MORTGAGE $6,451 8.58% $4,385 6.63% $4,914 7.30% $4,180 6.88%
GROSS LOANS $75,192 $66,175 $67,333 $60,798
LOAN LOSS ALLOW $878 $800 $850 $764
NET LOANS $74,314 $65,375 $66,483 $60,034
CHANGE $8,939 13.62% $5,341 8.90% $6,449 10.74% $14,505 31.86%
</TABLE>
<TABLE>
<CAPTION>
12/31/94 % TOTAL 12/31/93 % TOTAL 12/31/92 % TOTAL
===================================================================================================
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL
CML RE $17,416 37.72% $13,163 37.72% $10,628 38.91%
CML OTHER $10,203 22.10% $7,666 21.97% $5,305 15.39%
AGRICULTURE $7,213 15.62% $5,497 15.75% $6,535 23.52%
AG RE $19,524 42.29% $14,590 41.81% $10,611 38.84%
AG OTHER $10,587 22,93% $7,150 20.49% $3,306 12.10%
CONSUMER $8,937 19.36% $7,440 21.32% $7,305 26.74%
PERSONAL $9,228 19.99% $7,141 20.46% $6,078 22.25%
MASTERCARD $6,273 13.59% $5,460 15.65% $5,681 20.80%
MORTGAGE $633 1.37% $615 1.76% $397 1.45%
GROSS LOANS $2,322 5.03% $1,066 3.05% $0 0.00%
LOAN LOSS ALLOW $46,168 $34,894 $27,317
NET LOANS $639 $526 $501
CHANGE $45,529 $34,368 $26,816
$11,161 32.47% $7,550 28.15%
</TABLE>
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<PAGE>
The total loan balance increased $6,449,000 in 1996 over 1995 and
$14,505,000 in 1995 over 1994. The 1996 ending year total loan balance of
$66,488,000 was 10.75% higher than the balance of $60,034,000 on the same date
in 1995. The 1995 ending year balance was 31.86% higher than the balance of
$45,528,000 for the same date in 1994. On December 31, 1996, the loan-to-deposit
ratio was 62.32% compared with 58.55% on December 31, 1995 and 58.12% on
December 31, 1994. These changes resulted from increased loan growth. The total
loan balance for the nine months ended September 30, 1997 reflected an increase
of $7,831,000, or a 11.78% increase from December 31, 1996. The loan-to-deposit
ratio also increased to 68.46% as of September 30, 1997.
The Bank relies substantially on local promotional activities and
personal service to compete with other financial institutions. The Bank makes
loans to borrowers whose applications include a sound purpose, a viable
repayment source and plan, and generally secured by collateral. The Bank has
established a written loan policy for each of its categories of loans which is
reviewed periodically by the Board of Directors. The loan portfolio is reviewed
periodically by the Loan Committee of the Bank to maximize collections of past
due loans and to undertake other actions necessary to maintain a good quality
loan portfolio.
As of September 30, 1997, 34.88% of the total loan portfolio involved
commercial loans. Of the commercial loans, 73.88% of the commercial loan
portfolio was secured by real estate. Commercial loan-to-value ratios are
generally 50% to 75%.
As of September 30, 1997, approximately 37.16% of the total loan
portfolio involved agricultural loans. Of the agricultural loans, 46.15% of the
agricultural loan portfolio was secured by real estate. Agricultural
loan-to-value ratios are generally 50% to 75%.
As of September 30, 1997, approximately 21.63% of the total loan
portfolio involved consumer loans. Of the consumer loans, 39.66% of the consumer
loans involved owner-occupied one- to four-family residential loans. Consumer
loan-to-value ratios are generally 50% to 90%.
The Bank uses only state licensed or certified appraisers in connection
with its appraisal reports on real estate related transactions. In general, an
independent appraisal is required on all loans secured by real estate that are
in excess of $250,000 unless the transaction meets one of the exemptions
contained in Part 323 of the FDIC's Rules and Regulations. Appraisers are
selected based upon their qualifications, with emphasis on their education and
experience related to the competency provisions of the Uniform Standards of
Professional Appraisal Practice.
Investment Portfolio
The Bank's investment portfolio consists primarily of U.S. agency
securities. Government regulations limit the type and quality of investments in
which the Bank may invest its funds.
The Bank has established a written investment policy that is reviewed
by the Board of Directors at least annually and was last approved on March 19,
1997.
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<PAGE>
The policy identifies investment criteria and states specific objections in
terms of risk, interest rate sensitivity and liquidity.
The Bank has established an Executive Committee that is comprised of
Ralph H. Outcalt, Donald J. Wuckert, and David E. Broyles. The Executive
Committee monitors the Bank's investment portfolio to ensure compliance with
guidelines.
Investment securities held to maturity are carried at cost, adjusted
for the accretion of discounts and amortization of premiums using the interest
method. Amortization and accretion are recognized as adjustments to interest
income.
The following tables present the mix of the investment portfolio along
with the book and market values of those components as of September 30, 1997 and
September 30, 1996 and as of December 31, 1996 and December 31, 1995.
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<PAGE>
THE FIRST NATIONAL BANK IN ALAMOSA
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996 December 31, 1996
------------------ ------------------ -----------------
Amortized Market Amortized Market Amortized Market
Cost Cost Cost Cost Cost Cost
---------- ------- ---------- ------- ---------- -------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Securities held to maturity
U.S. Treasury 0 0 0 0 0 0
U.S. Agencies 500 475 20,264 19,514 0 0
States and Political Subdivisions 0 0 580 586 0 0
Other 0 0 0 0 0 0
Total Securities Held to Maturity 500 475 20,844 20,100 0 0
Securities Available for Sale
U.S. Treasury 4,247 4,240 4,742 4,692 4,744 4,715
U.S. Agencies 28,246 27,668 12,889 12,702 33,074 32,548
States and Political Subdivisions 335 340 0 0 365 372
Other 418 400 812 777 813 787
Total Securities Available for Sale 33,246 32,648 18,443 18,171 38,996 38,422
Total Securities 33,746 33,123 39,287 38,271 38,996 38,22
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------- -----------------
Amortized Market Amortized Market
Cost Cost Cost Cost
---------- ------- ---------- ------
(Amounts in thousands)
<S> <C> <C> <C> <C>
Securities held to maturity 0 0 2,750 2,555
U.S. Treasury 17,006 16,518 20,620 19,280
U.S. Agencies 686 696 777 756
States and Political Subdivisions 0 0 0 0
Other
17,692 17,214 24,147 22,591
Total Securities Held to Maturity
Securities Available for Sale 7,710 7,333 1,734 1,629
U.S. Treasury 7,701 7,701 4,342 4,171
U.S. Agencies 0 0 253 251
States and Political Subdivisions 1,312 1,304 1,312 1,189
Other
16,723 16,738 7,641 7,240
Total Securities Available for Sale
34,415 33,952 31,788 29,831
Total Securities
</TABLE>
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<PAGE>
Deposits
Growth in deposits is the primary source of funds used by the Bank for
lending and other general business purposes. The Bank may derive additional
funds from principal repayments on loans, the sale of loans and investment
securities and borrowings from correspondent banks. The level of deposit
liabilities can vary significantly and is influenced by prevailing interest
rates, money market conditions, general economic conditions and competition.
The Bank offers a full range of depository accounts including checking,
savings, money market accounts, certificates of deposit and Individual
Retirement Accounts. Management believes that the customers provide a strong and
relatively stable core deposit base.
Average deposits were 22.8% higher in 1996 than in 1995 and were 15.73%
higher in 1995 than in 1994. Total deposits at year-end 1996 were $106,466,000,
4.07% higher than year-end 1995 total deposits of $102,302,000, which were 30.9%
higher than the year-end 1994 deposit totals of $78,152,000. Average deposits
during the first three-quarters of 1997 reflect an increase of $3,617,000 or
3.50% increase over the 1996 average deposits. The average deposit mix remained
relatively consistent during the first three-quarters of 1996 and the first
three-quarters of 1997. However, the interest-bearing demand accounts decreased
from 29.34% to 26.50% of total deposits.
Property
The Bank operates in three locations with the main office located at
720 Main Street, Alamosa, Colorado, and two branch offices located in Center,
Colorado (the "Center Branch") and Saguache, Colorado (the "Saguache Branch").
The following are descriptions of the three locations:
Location Sq. Ft. Owned/Leased Conveniences
- -------- ------- ------------ ------------
First National Bank
in Alamosa 13,764 Owned by Bank Handicap Access
720 Main Street 6 Drive-up lanes
Alamosa, CO 81101 1 ATM facility
Center Branch 3,354 Owned by Company Handicap Access
2060 East Highway 112 4 Drive-up lanes
Center, CO 81125 1 ATM facility
Saguache Branch 2,200 Owned by Bank
400 4th Street
Saguache, CO 81149
Competition
The Bank has competition within the San Luis Valley from established
non-bank institutions and a variety of small community banks. In addition to the
competition from other community bank institutions, competition is from savings
and loan companies, credit unions, Farm Credit Services, Production Credit
Associations, and other types of financial service companies.
-55-
<PAGE>
The primary factors affecting competition for deposits are interest
rates, cost of services, the quality and range of financial products offered,
and the convenience of locations and office hours. The primary factors in
competing for loans are interest rates, loan origination fees and the quality
and range of lending products offered. Other factors which affect competition
include the general availability and reliability of lendable funds, general and
local economic conditions and the quality of service and loan approval
turn-around provided to customers.
The Bank operates a traditional community bank and relies substantially
on its local promotional activities, personal contact by its officers,
directors, employees and shareholders, personal service, convenience, courier
service, and its reputation with customers and communities that the Bank serves.
Legal Proceedings
The Bank is not presently involved in any legal proceedings that the
management of the Bank believes to be material to its financial condition or
results of operations. Since the nature of the business of the Bank involves
granting loans and providing financial services, the Bank is involved in various
legal proceedings that may be considered as arising in the ordinary course of
the business of the Bank that includes the collection of loans, foreclosure on
security and as a creditor in bankruptcy proceedings.
Employees
As of September 30, 1997, the Bank employed 49 persons on a full time
basis and 3 persons on a part time basis. Customers of the Bank at the three
branches are served by 39 full time employees and 3 part time employees at the
Alamosa Branch, 8 full time employees at the Center Branch, and 2 full time
employees at the Saguache Branch. The employees of the Bank are not parties to
any collective bargaining agreement. The Bank provides a variety of employee
benefits and believes employee relations are good.
Regulatory Matters
As a registered bank holding company under the Bank Holding Company
Act, the Company is subject to regulations and supervision of the Board of
Governors. The Bank Holding Company Act requires the Company to file reports
with the Board of Governors and provide any additional information requested by
the Board of Governors.
The Bank is a national banking association organized under the laws of
the United States. The Bank is a member of the Federal Reserve System and its
deposits are insured by the FDIC. The Bank is subject to regulation, supervision
and regular examination by the Office of the Comptroller of the Currency.
Selected Financial Data
The following selected financial information should be read in
conjunction with the Company's consolidated financial statements and the related
notes and with management of the Bank's discussion and analysis of financial
condition and results of operations, which are included in this Proxy
Statement/Prospectus. The following financial information presented for the
1997, 1996, and 1995 periods is unaudited. Such information has not been
audited because it would be impractical to do so. The following financial
information presented for the 1994, 1993, and 1992 periods is audited.
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<PAGE>
SKY VALLEY BANK CORP.
SELECTED CONSOLIDATED FINANCIAL DATA
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
As of, and for the Nine As of, and for the
Months Ended Sept. 30, Year Ended December 31,
---------------------- --------------------------------------------------------
(Dollars and outstanding shares in thousands, 1997 1996 1996 1995 1994 1993 1992
except per share and ratio data) ---------- ---------- ---------- ---------- ---------- --------- --------
(Unaudited) (Unaudited) (Unaudited)
EARNINGS SUMMARY
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $ 3,808 $ 3,593 $ 4,831 $ 4,108 $ 3,628 $ 2,779 $ 2,456
Provision for loan losses 108 101 131 142 110 107 44
Noninterest income 576 553 738 818 610 786 1,092
Noninterest expense 2,327 2,301 3,923 3,658 3,216 2,759 2,595
Net income 1,206 1,042 1,465 1,062 912 699 909
COMMON STOCK DATA
- -----------------
Earnings per common share 548.10 473.42 666.14 490.03 414.58 332.86 454.50
Book value per share at period end 3,673.70 3,105.38 3,256.04 2,861.10 2,396.23 2,271.92 2,023.77
Weighted average common shares
outstanding during the period 2,200 2,200 2,200 2,200 2,200 2,200 2,000
AVERAGE BALANCE SHEET DATA
- --------------------------
Securities 37,371 37,939 38,180 33,334 33,336 34,220 29,794
Loans and leases, net 70,728 60,965 62,381 51,391 40,310 29,482 25,507
Total interest-earning assets 111,985 105,211 106,011 87,718 74,821 65,785 58,513
Total assets 121,669 116,051 116,375 96,502 82,776 73,530 65,322
Interest-bearing deposits 95,093 90,742 91,229 70,816 62,766 59,427 53,589
Total deposits 107,044 102,807 103,427 82,172 73,084 67,282 60,409
END OF PERIOD BALANCE SHEET DATA
- --------------------------------
Securities 33,890 39,429 38,422 34,882 31,942 34,184 34,535
Loans and leases, net 75,228 66,238 66,521 60,076 45,550 34,373 26,824
Allowance for loan losses 878 823 845 764 639 501
Total assets 122,872 120,180 120,437 114,863 89,641 80,104 70,681
Total deposits 108,609 106,961 106,466 102,302 78,152 71,782 65,502
Shareholders' equity 8,082 6,807 7,163 6,294 5,272 4,998 4,048
Nonperforming assets:
Nonaccrual loans and loans past due 90
days or more 794 258 83 661 112 227 360
Other real estate owned 0 0 0 17 112 75 79
Total nonperforming assets 794 258 83 678 224 302 439
SELECTED RATIOS
- ---------------
Net interest margin 4.583 4.573 4.5767 4.6757 4.8588 4.2299 4.5811
Return on average assets 1.36% 1.20% 1.26 1.11 1.12 .99 1.89
Ratio of ending equity to ending assets 6.578 5.664 5.94 5.47 5.88 6.24 5.72
Ratio of nonperforming assets to total assets .65% .22% .07% .59% .25% .37% .62%
Ratio of allowance for loan losses to
net loans and leases outstanding at
period end 1.16% 1.24% 1.27% 1.27% 1.40% 1.53% 1.86%
Ratio of allowance for loan losses to
nonperforming loans 111% 319% 1018% 112% 285% 174% 114%
</TABLE>
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<PAGE>
Stock Prices and Dividends on Company Common Stock
The Company's Common Stock is not listed with a national securities
exchange or quoted on any automated quotation system. The Common Stock
occasionally trades through private negotiated transactions between individuals.
As a result, no established public trading market for Company Common Stock
presently exists. Over the years little trading has occurred in the stock.
Reliable information concerning the prices at which the Company's stock has
traded in private, negotiated transactions is not publicly available or
generally known to the Company. On occasion, the Company has become aware of the
trading price of its stock in private transactions. Information concerning those
trading prices has been omitted based on the Company's belief that such prices
are not necessarily representative of the market price for the Common Stock
during any particular period. Since July 25, 1997, the date the Plan of
Reorganization was publicly announced, there have been no known trades in the
Company's stock.
In 1995 the Company paid cash dividends totaling $140.00 per share
($35.00 per quarter) of Company Common Stock, while in 1996 the Company paid
cash dividends of $147.50 per share ($37.50 per quarter) of Company Common
Stock. During the first nine months of 1997, the Company has paid $117.50 cash
dividends on the Company Common Stock.
As of the date of this Proxy Statement/Prospectus, there were 42 record
holders of Company Common Stock.
Stockholdings of Directors, Officers and Certain Others
On November __, 1997, there were 2,200 shares of the Company's common
stock outstanding. Only shareholders of record as of ___________, 1997, will be
entitled to vote at the Special Meeting and each share is entitled to one vote.
As of ___________, 1997, Messrs. Outcalt and Wuckert in the aggregate owned
approximately 63.64% of the outstanding shares of the Company Common Stock.
Messrs. Outcalt and Wuckert have agreed to vote their shares in favor of the
Plan of Reorganization.
The following table sets forth information with respect to the
beneficial ownership of the common stock of the Company as of ____________,
1997, by (i) each person known by the Company to own beneficially more than 5%
of the outstanding common stock, (ii) each current director of the Company, and
(iii) all executive officers and directors of the Company as a group. Except as
otherwise indicated, each of the persons named below has sole voting and
investment power with respect to the common stock owned by them.
Name (and address of 5% Percent
Beneficial Owners) Number of Shares of Class
------------------ ---------------- --------
Ralph H. Outcalt 700 31.82%
P.O. Box 1277
Alamosa, CO 81101
Donald J. Wuckert 700 31.82%
8 Bellwood
Alamosa, CO 81101
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<PAGE>
Charley Hayashida 220 10%
P.O. Box 8
Alamosa, CO 81101
Clyde R. Jones 182 8.27%
120 North Broadway
Monte Vista, CO 81144
David Broyles 17 0.77%
George Woodard 11 0.50%
All executive officers and
directors as a group (5 persons) 1,610 73.18%
Certain Transactions of the Company
The Bank has had banking transactions in the ordinary course of its
business with directors, officers, principal shareholders and their associates
on the same terms, including interest rates and collateral on loans, as those
prevailing at the same time for comparable transactions with unaffiliated
parties. To the extent that such transactions consisted of extensions of credit,
they did not, in the opinion of management, involve more than a normal risk of
collectibility or present other unfavorable features. As of September 30, 1997,
the Company's directors, executive officers, employees and their affiliates were
indebted to the Bank in the aggregate amount of $900,598, none of which such
loans were delinquent.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
SKY VALLEY BANK CORP.
The following analysis of the Company's financial condition and results
of operations for the nine months ended September 30, 1997, and 1996 and for the
years ended December 31, 1996, 1995 and 1994 should be read in conjunction with
the unaudited Consolidated Financial Statements of the Company and notes
thereto, and information presented elsewhere herein. Average balance sheet data
are based on monthly averages, except that average non-interest-bearing demand
deposit accounts for September 30, 1997 are averages of period-ending balances
for December of 1996 and March and June of 1997.
Financial Condition
For the nine months ended September 30, 1997, the Bank's net income
after taxes was $1,234,000 compared to September 30, 1996 of $1,050,000 for an
increase of 17.45%. Net Interest Margin was $3,847,000 and $3,626,000,
respectively. Return on Assets was 1.36% for the nine months ended September 30,
1997 and 1.20% for the nine months ended September 30, 1996. Return on Equity
was 21% for the
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<PAGE>
nine months ended September 30, 1997 and 20% for the nine months ended September
30, 1996.
For the year ended December 31, 1996, the Bank's net income after taxes
was $1,477,000 compared to the year ended December 31, 1995 of $1,089,000, for a
35.6% increase. Net Interest Margin grew from $4,108,000 in 1995 to $4,875,000
in 1996, or an increase of 18.7%. Return on Assets was 1.26% for the year ended
December 31, 1996 and 1.11% for the year ended December 31, 1995. Return on
Equity was 22.3% and 18.9%, respectively.
The Bank's equity was $7,981,000 at September 30, 1997 and $6,794,000
at September 30, 1996. This is an increase in equity of $1,188,000, or 17.5%. At
year end 1996, the Bank's equity was $7,128,000 compared to year end 1995 of
$6,257,000. This was an increase in equity of $871,000, or 14%.
Gross loans at September 30, 1997 were $75,228,000 compared to your
earlier of $66,238,000. This is an increase of $8.9 million, or 13.5%. Gross
loans at December 31, 1996 were $67,366,000 compared to December 31, 1995 of
$60,840,000 for an increase of $6,526,000, or 10%.
Capital Ratios meet the minimum guidelines for a "well capitalized
bank" as defined by the Federal Deposit Insurance Corporation (FDIC) as of
September 30, 1997.
<TABLE>
<CAPTION>
(IN $000)
At September 30, At December 31,
---------------- ---------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Interest Margin $3,846 $3,626 $4,875 $4,108 $3,628
Net Income $1,234 $1,050 $1,477 $1,089 $929
Non-Interest Income $499 $482 $688 $769 $593
Total Securities $37,720 $42,229 $38,422 $34,881 $31,941
Total Loans $75,228 $66,237 $67,366 $60,840 $46,189
Total Assets $122,422 $119,798 $120,058 $114,460 $89,210
Total Equity $7,981 $6,794 $7,128 $6,257 $5,220
Capital Ratios
- --------------
Risked Based 10.88% 10.08% 10.41% 9.73% 10.42%
Tier 1 Capital 9.79% 8.97% 9.28% 8.62% 9.32%
Leverage Ratio 7.14% 6.16% 6.47% 5.86% 6.30%
Tangible Equity 6.47% 5.52% 5.82% 5.23% 5.85%
</TABLE>
The following tables provide condensed average balance sheets together
with analyses of the Company's net interest income, net interest spread, net
interest rate margin and net interest margin for the periods included.
-60-
<PAGE>
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
------------------------------- -------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning Assets
Securities--taxable $ 37,296 $1,795 6.417% $ 37,189 $1,912 6.855%
Securities--non-taxable 699 38 7.248% 1,307 51 5.203%
Money market instruments 0 0 0.000% 0 0 0.000%
Federal funds sold 4,747 194 5.449% 7,102 293 5.501%
Loans 70,728 5,153 9.714% 60,965 4,534 9.916%
Less allowance for loan losses 862 795
Less unrealized loss on securities
available for sale [623] [557]
Net interest-earning assets 111,985 105,211
Noninterest-earning assets 9,234 10,458
Total assets 121,219 115,669
Liabilities
Interest-bearing DDA 28,363 508 2.388% 30,166 545 2.409%
MMDA 15,976 494 4.123% 15,116 446 3.934%
Saving accounts 7,468 191 3.410% 6,968 164 3.138%
Time deposits $100,000 and over 18,308 822 5.986% 19,050 834 5.837%
Other time deposits 24,978 1,104 5.893% 19,442 853 5.850%
Total interest-bearing liabilities 95,093 90,742
Noninterest-bearing DDA 11,952 12,065
Total deposits 107,045 102,807
Net interest income 3,808 3,626
Interest rate spread
Net interest rate margin 4.142 4.219
Net interest margin 4.583 4.574
</TABLE>
- ----------
* Net interest margin and the average ratios are annualized.
-61-
<PAGE>
Sky Valley Balance Sheet Items
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
-------------------------------- ---------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning Assets
Securities--taxable 36,960 2,561 6.92 32,054 2,217 6.92
Securities--non-taxable 1,220 72 5.90 1,290 70 5.43
Money market instrument 0 0 0 0 0
Federal funds sold 6,256 343 5.48 3,685 211 5.73
Loans 62,381 6,167 9.89 51,391 5,207 10.13
Less allowance for loan losses [806] N/A N/A [702] N/A N/A
Net interest-earning assets 106,011 87,718
Noninterest-earning assets 10,364 8,784
Total Assets 116,375 96,502
Liabilities
Interest-bearing DDA 29,860 718 2.40 21,786 705 3.24
MMDA 15,051 597 3.97 12,766 511 4.00
Saving accounts 7,019 224 3.19 5,324 190 3.57
Time deposits $100,000 and over 19,513 1,145 5.87 12,304 744 6.05
Other time deposits 19,786 1,152 5.82 18,636 1,079 5.79
Short-term debt 5,152 320 6.21 5,028 314 6.25
Total interest-bearing
liabilities 91,469 71,067
Noninterest-bearing DDa 12,198 11,356
Total deposits and short-term
debt 103,667 82,423
Net interest income 4,831 4,108
Interest rate spread
Net interest rate margin
Net interest margin 4.5767 4.6757
</TABLE>
December 31, 1994
----------------------------------
Average Average
Balance Interest Rate
------- -------- ----
(Amounts in thousands)
Interest-earning Assets
Securities--taxable 31,708 1,914 6.03
Securities--non-taxable 1,628 50 3.07
Money market instrument 0 0 0
Federal funds sold 1,761 68 3.86
Loans 40,310 3,831 9.50
Less allowance for loan losses [586] N/A N/A
Net interest-earning assets 74,821
Noninterest-earning assets 7,955
Total Assets 82,776
Liabilities
Interest-bearing DDA 21,700 493 2.27
MMDA 10,750 354 3.29
Saving accounts 4,367 127 2.91
Time deposits $100,000 and over 8,325 363 4.36
Other time deposits 17,624 776 4.40
Short-term debt 3,601 207 5.75
Total interest-bearing
liabilities 63,028
Noninterest-bearing DDa 10,318
Total deposits and short-term
debt 73,346
Net interest income 3,628
Interest rate spread
Net interest rate margin
Net interest margin 4.8588
-62-
<PAGE>
Allowance and Provision for Loan Losses; Non-Performing Loans.
The following tables provide analyses of the Company's
allowance for loan losses, including allocations of the allowance among
types of loans, as of the dates indicated:
-63-
<PAGE>
CHARGEOFF/RECOVERY SUMMARY
<TABLE>
<CAPTION>
SEPT. 30, DECEMBER 31,
--------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE 850 764 764 639 526 501 500
LOANS CHARGED OFF
COMMERCIAL
CM RE 0 11 10 8 0 41 2
CML OTHER 11 0 7 0 0 19 25
ARGICULTURE
AG RE 0 0 0 0 0 40 8
AG OTHER 0 0 0 0 1 0
CONSUMER
PERSONAL 74 23 22 12 13 25 25
MASTERCARD 11 9 11 12 4 0 0
MORTGAGE 0 0 0 0 0 0 0
TOTAL CHARGE OFFS 96 43 50 32 18 125 60
RECOVERIES
COMMERCIAL
CM RE 0 0 0 2 5 7 10
CML OTHER 0 0 0 4 10 2 0
AGRICULTURE
AG RE 0 0 0 0 0 34 0
AG OTHER 12 0 1 0 0 0 0
CONSUMER
PERSONAL 4 1 2 8 6 0 6
MASTERCARD 0 0 1 1 0 0 0
MORTGAGE 0 0 0 0 0 0 0
TOTAL RECOVERIES 16 1 4 15 21 43 16
NET CHARGE OFF 80 42 46 17 -3 82 44
ADD'L PROVISIONS 108 101 136 142 110 107 45
BALANCE 878 823 854 764 639 526 501
RATIO OF NET C/O 0.1145% 0.0698% 0.737% 0.0331% -0.0074% 0.2736% 0.1694%
TO AVG LN
AVG LN $69,866 $60,170 $62,375 $51,382 $40,280 $29,970 $25,980
</TABLE>
-64-
<PAGE>
The First National Bank in Alamosa
Allocation of the Allowance for Loan Losses
September 30
------------
1997 1996
---- ----
COMMERCIAL
CML-RE 170 19.36% 169 20.53%
CML-OTHER 92 10.48% 110 13.37%
AGRICULTURAL
AG-RE 192 21.87% 100 12.15%
AG-OTHER 276 31.44% 201 24.42%
CONSUMER
PERSONAL 76 8.66% 109 13.24%
MASTERCARD 32 3.64% 34 4.13%
MORTGAGE 40 4.56% 40 4.86%
UNALLOCATED 0 0.00% 60 7.29%
TOTAL 878 823
<TABLE>
<CAPTION>
December 31
-----------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL 170 20.00% 174 22.77% 180 28.17% 0 0.00% 0 0.00%
CML-RE 110 12.94% 108 14.14% 61 9.55% 0 0.00% 0 0.00%
CML-OTHER
AGRICULTURAL 150 17.65% 92 12.04% 72 11.27% 0 0.00% 0 0.00%
AG-RE 225 26.47% 183 23.95% 158 24.73% 0 0.00% 0 0.00%
AG-OTHER
CONSUMER 106 12.47% 109 14.27% 113 17.68% 0 0.00% 0 0.00%
PERSONAL 45 5.29% 7 0.92% 18 2.82% 0 0.00% 0 0.00%
MASTERCARD 40 4.71% 20 2.62% 15 2.35% 0 0.00% 0 0.00%
MORTGAGE 4 0.47% 71 9.29% 22 3.44% 526 100.00% 501 100.00%
UNALLOCATED 850 764 639 526 501
TOTAL
</TABLE>
-65-
<PAGE>
COMPARISON OF THE RIGHTS OF SHAREHOLDERS
OF ZIONS AND THE COMPANY
General
Upon consummation of the Reorganization, shareholders of the Company, a
Colorado corporation, will become shareholders of Zions, a Utah corporation.
Thus, the Utah Revised Business Corporation Act and Zions' Articles of
Incorporation ("Articles") and Bylaws will govern the rights of the Company
shareholders who become Zions shareholders. In addition, since the Articles and
Bylaws of Zions and the Company are not the same, the Reorganization will result
in certain differences in the rights of the holders of Company Common Stock.
Following is a summary of certain significant differences.
General. Each holder of Company Common Stock is entitled to one vote
for each share held and for each fractional share held a corresponding
fractional vote on all matters submitted to the shareholders for a vote. Holders
of a majority of the voting power of the Company constitute a quorum for the
transaction of business. Each holder of Zions Common Stock is generally entitled
to one vote for each share held of record on all matters submitted to a
shareholder vote, and holders of a majority of the outstanding shares of Zions
Common Stock constitute a quorum for the transaction of business.
Cumulative Voting. Neither Company shareholders nor Zions shareholders
have cumulative voting rights in the election of directors.
Special Votes for Certain Transactions. The Articles of Zions contain
provisions requiring special shareholder votes to approve certain types of
transactions. In the absence of these provisions, either the transactions would
require approval by a majority of the shares voted at a meeting or no
shareholder vote would be required.
Zions' Articles require that certain "business transactions" between
Zions or a subsidiary and a "related person" be approved by the affirmative
votes of the holders of not less than 80 percent of the voting power of all
outstanding voting stock of Zions. A "related person" is generally defined by
Zions' Articles to mean a person, corporation, partnership, or group acting in
concert that beneficially owns 10 percent or more of the voting power of Zions'
outstanding voting stock.
The "business transactions" with a "related person" which are subject
to Zions' special vote requirements include (1) a merger or consolidation
involving Zions or a subsidiary of Zions with a related person; (2) the sale,
lease, exchange, transfer or other disposition of all or any substantial part of
the assets of either Zions or a subsidiary of Zions to, with or for the benefit
of a related person; (3) the issuance, sale, exchange or other disposition by
Zions or a subsidiary of Zions to a related person of securities of Zions or a
subsidiary of Zions having an aggregate fair market value of $5 million or more;
(4) any liquidation, spinoff, splitoff, splitup, or dissolution of Zions by or
on behalf of a related person; (5) any recapitalization or reclassification of
the securities of Zions or other transaction that would have the effect of
increasing the voting power of a related person or reducing the number of shares
of each class of voting securities outstanding; and (6) any agreement, contract,
or other arrangement providing for any of the transactions set forth above.
-66-
<PAGE>
Zions' special shareholder vote requirements for business transactions
with related persons do not apply to any transaction approved by a majority of
the continuing directors, or if various specified conditions are met. A
continuing director is any member of the Zions Board who is not a related person
or an interested shareholder or an affiliate or associate of a related person
and who (1) was a director on February 21, 1986 or (2) became a director
subsequent to that date and whose election or nomination for election by Zions'
shareholders was approved by a majority of the continuing directors then on the
Board.
The Company's Articles and Bylaws have no similar provision.
Shareholder Rights Plan
The Board of Directors of Zions in September 1996 adopted a Shareholder
Protection Rights Plan and declared a dividend of one Right on each outstanding
share of Zions Common Stock. The Rights Plan was not adopted in response to any
specific effort to acquire control of Zions. Rather, it was adopted to deter
abusive takeover tactics that can be used to deprive shareholders of the full
value of their investment.
Until it is announced that a person or group has acquired 10 percent or
more of Zions Common Stock (an "Acquiring Person") or commences a tender offer
that will result in such person or group owning 10 percent or more of Zions
Common Stock, the Rights will be evidenced by the Common Stock certificates,
will automatically trade with the Common Stock and will not be exercisable.
Thereafter, separate Rights certificates will be distributed and each Right will
entitle its holder to purchase Participating Preferred Stock having economic and
voting terms similar to those of Zions Common Stock for an exercise price of
$90.00.
Upon announcement that any person or group has become an Acquiring
Person, then 10 days thereafter (or such earlier or later date as the Board may
decide) (the "Flip-in Date") each Right (other than Rights beneficially owned by
any Acquiring Person or transferees thereof, which Rights become void) will
entitle its holder to purchase, for the exercise price, a number of shares of
Zions Common Stock or Participating Preferred Stock having a market value of
twice the exercise price.
Also, if after an Acquiring Person controls Zions' Board of Directors
Zions is involved in a merger or sells more than 50 percent of its assets or
earning power (or has entered an agreement to do any of the foregoing) and, in
the case of a merger, the Acquiring Person will receive different treatment than
all other shareholders or the person with whom the merger occurs is the
Acquiring Person or a person affiliated or associated with the Acquiring Person,
each Right will entitle its holder to purchase, for the exercise price, a number
of shares of common stock of the Acquiring Person having a market value of twice
the exercise price. If any person or group acquires between 10 percent and 50
percent of the Zions Common Stock, Zions' Board of Directors may, at its option,
exchange one share of Zions Common Stock for each Right.
The Rights may be redeemed by the Board of Directors for $0.01 per
Right prior to the Flip-in Date.
The Company has no shareholder rights plan.
-67-
<PAGE>
Board of Directors
Director Liability and Indemnification. Zions' Articles contain a
"director liability" provision. The provision generally shields a director from
monetary damages to Zions or its shareholders for a breach of fiduciary duty as
a director other than (i) a breach of a director's duty of loyalty, (ii) acts or
omissions not taken in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) authorizing the unlawful payment of dividends,
and (iv) transactions in which a director receives an improper benefit.
The Company's Articles contain a director liability provision. This
provision protects a director from personal liability to the Company and its
shareholders for damages for breach of fiduciary duty as a director. As with
Zions' Articles, there is no elimination or limitation of liability for any
breach of the director's duty of loyalty to the Company or its shareholders,
acts or omissions not in good faith, or which involve intentional misconduct, or
a knowing violation of law, or the payment of dividends in violation of law, or
any transaction from which a director derived an improper personal benefit.
The Company's Articles and Bylaws provide that the Company may
indemnify a director against the liability incurred in any proceeding if he
meets certain standards of conduct: that he conducted himself in good faith;
reasonably believed that his conduct was in the Company's best interests or at
least not opposed to the Company's best interests; and in the case of any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. However, the Company may not indemnify a director in connection with a
proceeding in which the director was adjudged liable to the Company; or in
connection with any proceeding charging improper personal benefit to the
director in which he was adjudged liable on the basis that he improperly
received personal benefit. The Company is required to indemnify directors and
officers who were wholly successful, on the merits or otherwise, in defense of
any proceeding to which they were parties, against reasonable expenses incurred
in connection with the proceeding. A director or officer of the Company who is
or was a party to a proceeding may also apply for indemnification to the court
conducting the proceeding or another court of competent jurisdiction.
Classified Board. Zions' Articles divide the Board of Directors into
three classes, each consisting of one-third (or as near as may be) of the whole
number of directors. Utah law requires that each class contain as equal a number
of directors as possible. One class of directors is elected at each annual
meeting of shareholders, and each class serves for a term of three years.
The number of directors which constitute Zions' full Board of Directors
may be increased or decreased only by amendment of the Bylaws, which requires
the affirmative vote of two-thirds of the total number of directors constituting
the entire Board, or by the shareholders of Zions at a regular or special
meeting by the affirmative vote of two-thirds of the outstanding and issued
shares entitled by statute to vote. Except as otherwise required by law,
vacancies on Zions' Board of Directors, including vacancies resulting from an
increase in the size of the Board, may be filled by the affirmative vote of a
majority of the remaining directors even though less than a quorum of the Board
of Directors. Zions' directors elected by the Board to fill vacancies serve for
the full remainder of the term of the class to which they have been elected. Any
directorship filled by reason of an increase in the number of directors may be
-68-
<PAGE>
filled for a term of office continuing only until the next election of directors
by the shareholders.
The Company's Articles and Bylaws do not provide for a classified Board
of Directors. Instead, the Company's Articles and Bylaws provide for a Board of
Directors consisting of not less than three individuals, who are to be elected
by the shareholders annually. The current number of directors is five, which may
be changed at the annual meeting of shareholders. Any vacancy occurring in the
Company's Board may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board.
Removal of Directors. Zions' Articles provide that any director (or the
entire Board of Directors) may be removed from office by shareholder vote only
if such removal is approved by the holders of two-thirds of the issued and
outstanding shares then entitled to vote at an election of directors.
The Company's Articles and Bylaws do not expressly provide for the
power to remove directors. However, the Colorado Business Corporation Act
provides that the shareholders may remove one or more directors with or without
cause. A director may be removed by the shareholders only at a meeting called
for the purpose of removing such director, and the meeting notice shall state
that the purpose, or one of the purposes of the meeting, is the removal of the
director.
Special Shareholders' Meetings
Utah law provides that special meetings of a corporation's shareholders
may be called by the board of directors or such other persons authorized by the
bylaws to call a special meeting or by the holders of at least 10 percent of all
the votes entitled to be cast on any issue proposed to be considered at the
special meeting. Under Zions' Bylaws, special meetings may be called by the
president or by the Board of Directors.
The Company's Bylaws permit special meetings to be called by the Board
of Directors, the president, a vice president, or by the holders of shares
entitled to cast not less than 10 percent of the votes at such meeting. The
Company's Bylaws also permit special meetings to be called by the shareholders
for the purpose of filling a vacancy in the Board of Directors.
Amendment of Articles and Bylaws
Zions' Articles require the affirmative votes of the holders of
two-thirds of all outstanding voting stock of Zions to approve any amendment to
Zions' Articles, except that to repeal or amend the provisions in the Articles
regarding business transactions with related persons requires the affirmative
vote of 80% of the issued and outstanding stock entitled to vote. Zions' Bylaws
may be amended by an affirmative vote of two-thirds of the total number of
directors constituting the entire Board or by the affirmative vote of two-thirds
of the issued and outstanding shares entitled to vote.
The Company's Bylaws may be amended by the affirmative vote of a
majority of the Board of Directors at a meeting called for that purpose or by
consent.
-69-
<PAGE>
Dissenters' Rights
Zions is incorporated under the laws of Utah. Utah law provides for
dissenters' rights in a variety of transactions including: (i) any plan of
merger to which a corporation is a party (other than mergers or consolidations
not requiring a shareholder vote); (ii) certain sales, leases, exchanges or
other dispositions of all or substantially all of the assets of a corporation;
and (iii) certain share exchanges. However, shareholders of a Utah business
corporation are not entitled to dissenters' rights in any of the transactions
mentioned above if their stock is either listed on a national securities
exchange or on the National Market System of NASDAQ or held of record by 2,000
or more shareholders. The aforementioned provisions do not apply if the
shareholder will receive for his shares anything except (a) shares of the
corporation surviving the consummation of the plan of merger or share exchange,
(b) shares of a corporation whose shares are listed on a national securities
exchange or the National Market System of NASDAQ or held of record by not less
than 2,000 holders, or (c) cash in lieu of fractional shares. Zions Common Stock
currently is listed for trading in the National Market System of NASDAQ and has
more than 2,000 shareholders of record.
The Company is incorporated under Colorado law. Colorado law provides
for dissenters' rights to any shareholder of a Colorado corporation in the event
of any of the following corporate actions: (i) a merger to which the corporation
is a party if approval by the shareholders is required for the merger and the
shareholder is entitled to vote on the merger; (ii) a plan of exchange where the
corporation is a party as the corporation whose subject owner's interests will
be acquired, if the shareholder is entitled to vote on the plan of exchange; and
(iii) any corporate action taken pursuant to a vote of the shareholders where
the bylaws or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent.
Preemptive Rights
Holders of Zions Common Stock do not have the preemptive right to
purchase unissued or treasury shares of Zions Common Stock or any other
securities of Zions in the event of an issuance of Zions Common Stock or such
other securities.
Holders of Company Common Stock have the preemptive right to acquire
additional shares of Company Common Stock in proportion to the number of shares
owned at the time the increase is authorized by the shareholders, unless another
time is specified by a resolution of the shareholders.
Preferred Stock
Zions' Articles authorize Zions to issue up to 3,000,000 shares of
Zions preferred stock, no par value.
The authorized shares of preferred stock are issuable in one or more
series on the terms set by the resolution or resolutions of the Board of
Directors of Zions providing for the issuance thereof. Each series of preferred
stock would have such dividend rate, which might or might not be cumulative,
such voting rights, which might be general or special, and such liquidation
preferences, redemption and sinking funds provisions, conversion rights or other
rights and preferences, if any, as the Board of Directors may determine. Except
for such
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<PAGE>
rights as may be granted to the holders of any series of preferred stock in the
resolution establishing such series or as required by law, all of the voting and
other rights of the shareholders of Zions belong exclusively to the holders of
common stock.
Zions has reserved 160,000 shares of Participating Preferred Stock for
issuance upon exercise of the Rights under Zions' Shareholder Rights Plan.
The Company's Articles do not authorize the Company to issue any shares
of preferred stock.
Dividend Rights
Utah law generally allows a corporation, subject to restrictions in its
articles of incorporation, to declare and pay dividends in cash or property, but
only if the corporation is solvent and payment would not render the corporation
insolvent. Zions' Articles place no further restrictions on distributions. Thus,
the holders of Zions Common Stock are entitled to dividends when, as and if
declared by the Board of Directors out of funds legally available therefor.
However, if Zions preferred stock is issued, the Board of Directors of Zions may
grant preferential dividend rights to the holders of such stock which would
prohibit payment of dividends on Zions Common Stock unless and until specified
dividends on the preferred stock had been paid.
Colorado law generally allows a corporation to make distributions to
its shareholders in cash, property or its own shares. However, no distribution
may be made if, after giving it effect: (i) the corporation would not be able to
pay its debts as they become due in the usual course of business; or (ii) except
as otherwise specifically allowed by the corporation's articles of
incorporation, the corporation's total assets would be less than the sum of its
total liabilities plus the amount that would be needed, if the corporation were
to be dissolved at the time of distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution. The Company's Articles do not contain any other
specific allowance. Thus, holders of Company Common Stock are entitled to
distributions when, as and if declared by the Board of Directors out of funds
legally available therefor.
Liquidation Rights
Upon liquidation, dissolution or winding up of Zions, whether voluntary
or involuntary, the holders of Zions Common Stock are entitled to share ratably
in the assets of the corporation available for distribution after all
liabilities of the corporation have been satisfied. However, if preferred stock
is issued by Zions, the Board of Directors may grant preferential liquidation
rights to the holders of such stock which would entitle them to be paid out of
the assets of Zions available for distribution before any distribution is made
to the holders of Zions Common Stock.
Upon liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, the holders of Company Common Stock are entitled to
share ratably in the assets of the corporation available for distribution after
all liabilities of the corporation have been satisfied.
-71-
<PAGE>
Miscellaneous
There are no sinking fund provisions, conversion rights, or redemption
provisions applicable to Zions Common Stock. Company Common Stock shall be
redeemed upon payment of 130% of the book value of each share to be redeemed,
plus any accrued and unpaid dividends. Holders of fully paid shares of Zions
Common Stock and Company Common Stock are not subject to any liability for
further calls or assessments.
LEGAL OPINIONS
An opinion with respect to certain legal matters in connection with the
Reorganization will be rendered by Duane, Morris & Heckscher LLP, Washington,
D.C., as counsel for Zions.
EXPERTS
The consolidated financial statements of Zions as of December 31, 1996
and 1995, and for each of the years in the three-year period ended December 31,
1996, incorporated by reference herein have been incorporated by reference
herein in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of such firm as experts in auditing and accounting.
OTHER MATTERS
The management of the Company does not know of any other matters
intended to be presented for shareholder action at the Special Meeting. If any
other matter does properly come before the Special Meeting and is put to a
shareholder vote, the proxies solicited hereby will be voted in accordance with
the judgment of the proxyholders named thereon.
-72-
<PAGE>
SKY VALLEY FINANCIAL STATEMENTS
The following financial statements have not been audited; to audit such
statements would be impractical.
SKY VALLEY BANK CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
September 30, September 30, December 31, December 31,
1997 1996 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 5,731,326 $ 7,274,520 $ 6,440,729 $ 6,644,081
Federal Funds Sold 3,830,000 2,800,000 3,200,000 8,200,000
Investments
Available for Sale 33,389,928 18,171,028 38,422,087 17,343,618
Held Until Maturity 500,305 21,257,891 17,538,488
Loans and Other Receivables 75,228,424 66,237,552 67,366,325 60,839,651
Less: Allowance for Loan Losses (878,153) (823,017) (845,493) (763,791)
-------- -------- -------- --------
Net Loans 74,350,271 65,414,535 66,520,832 60,075,860
Premises and Equipment 1,995,028 2,098,058 2,055,666 2,209,135
Accrued Interest Receivable 2,084,883 1,875,596 1,924,200 1,919,863
Other Real Estate Owned, Net 700 17,100
Deferred Tax Asset 423,916 402,003 409,234 240,316
Other Assets 565,904 887,377 1,463,901 674,169
------- ------- --------- -------
TOTAL ASSETS $ 122,871,561 $ 120,181,008 $ 120,437,349 $ 114,862,630
============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand 11,814,365 13,688,636 $ 12,278,793 $ 13,862,406
NOW and Super NOW 27,890,289 30,869,500 29,794,170 29,465,678
Savings 23,343,386 20,821,625 7,263,235 6,823,634
Time 45,560,898 41,581,227 57,129,495 52,150,677
---------- ---------- ---------- ----------
Total Deposits 108,608,938 106,960,988 106,465,693 102,302,395
Accrued Interest Payable 267,509 308,038 314,425 207,584
Taxes Payable 14,125 19,447 43,433 0
Note Payable 573,224 600,644 593,836 620,143
Advances from Federal Home Loan Bank 4,947,509 5,050,000 5,500,000 4,850,000
Dividends Payable 88,000 92,400 82,500 77,000
Deferred Taxes Payable 105,969 114,434 105,969 192,306
Other Liabilities 184,137 227,206 168,210 318,771
------- ------- ------- -------
TOTAL LIABILITIES 114,789,411 113,373,157 113,274,066 6,265,804
Stockholders' Equity:
Common Stock, $.01 par value. 10,000
shares authorized, 2,200 shares issued
and outstanding 22 22 22 22
Surplus 4,436,716 4,439,716 4,436,716 4,436,716
Unrealized Loss on Securities
Available for Sale (373,280) (340,246) (350,316) (83,641)
Undivided Profits 4,018,692 2,708,359 3,076,861 1,941,334
--------- --------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 8,082,150 6,807,851 7,163,283 6,294,431
--------- --------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 122,871,561 $ 120,181,008 $ 120,437,349 $ 114,862,630
============= ============= ============= =============
</TABLE>
See accountants' report.
-1-
<PAGE>
SKY VALLEY BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30, December 31, December 31,
1997 1996 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income:
Interest and Fees on Loans $5,329,274 $4,703,652 $6,385,968 $5,398,698
Tax-exempt 12,878 7,323 14,354 1,941
Interest on Investment Securities:
Taxable 1,597,694 1,612,723 2,178,137 1,925,077
Tax-exempt 41,686 57,097 64,024 104,073
Interest on Federal Funds Sold 193,581 293,248 346,656 223,181
------- ------- ------- -------
Total Interest Income 7,175,113 6,674,043 8,989,139 7,652,970
--------- --------- --------- ---------
Interest Expense:
Interest on Deposits 3,118,748 2,840,991 3,837,316 3,229,930
Interest on Federal Funds Purchased - - 61 506
Interest on Federal Home Loan Bank Advances 247,527 240,108 320,382 314,301
------- ------- ------- -------
Total Interest Expense 3,366,275 3,081,099 4,157,759 3,544,737
--------- --------- --------- ---------
Net Interest Income Before Provision for
Loan Losses 3,808,838 3,592,944 4,831,380 4,108,233
--------- --------- --------- ---------
Provision for Losses:
Loans (108,000) (101,491) (131,491) (141,695)
--------- --------- --------- ---------
Net Interest Income After Provision for
Loan Losses 3,700,838 3,491,453 4,699,889 3,966,538
--------- --------- --------- ---------
Other Income:
Service Fees 345,591 364,280 494,066 472,533
Net Investment Securities (Losses) Gains 31,489 (350) 14,619 46,159
Other 198,995 188,846 230,141 299,838
------- ------- ------- -------
Total Other Income 576,075 552,776 738,826 818,530
------- ------- ------- -------
Other Expenses:
Salaries 825,850 790,313 1,193,450 1,033,306
Employee Benefits 215,130 194,167 256,349 262,548
Occupancy Expenses 227,724 230,826 301,427 286,590
Depreciation Expense 167,379 184,839 231,662 267,324
Data Processing Fees and Supplies 108,552 107,723 125,143 146,254
FDIC Insurance 27,564 8,572 16,249 88,260
Advertising 75,201 74,538 99,606 86,573
Other 704,603 734,718 1,014,542 986,918
------- ------- --------- -------
Total Other Expenses 2,352,003 2,325,696 3,238,428 3,157,773
--------- --------- --------- ---------
NET INCOME BEFORE INCOME TAXES 1,924,910 1,718,533 2,200,287 1,627,295
Income Taxes 719,079 677,008 734,760 565,522
------- ------- ------- -------
NET INCOME $1,205,831 $1,041,525 $1,465,527 $1,061,773
========== ========== ========== ==========
</TABLE>
See accountants' report.
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<PAGE>
SKY VALLEY BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
--------------- UNDIVIDED UNREALIZED
SHARES AMOUNT SURPLUS PROFITS GAIN/LOSS TOTAL
------ ------ ------- ------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Balances,
December 31, 1994 2,200 $ 22 $4,436,716 $1,187,561 $(352,603) $5,271,696
Net Earnings - - - 1,061,773 - 1,061,773
Dividends - - - (308,000) - (308,000)
Net unrealized loss on
Securities Available
for Sale - - - - 268,962 268,962
----- ------- --------- ---------- -------- ---------
Balances,
December 31, 1995 2,200 22 4,436,716 1,941,334 (83,641) 6,294,431
Net Earnings - - - 1,465,527 - 1,465,527
Dividends - - - (330,000) - (330,000)
Change in net
unrealized loss on
Securities Available
for Sale - - - - (266,675) (266,675)
----- -------- --------- ---------- -------- ---------
Balances,
December 31, 1996 2,200 22 4,436,716 3,076,861 (350,316) 7,163,283
Net Earnings for nine
months ended
September 30, 1997 - - - 1,205,831 - 1,205,831
Dividends - - - (264,000) - (264,000)
Change in net
unrealized loss on
Securities Available
for Sale - - - - ( 22,964) ( 22,964)
----- -------- --------- ---------- -------- ---------
Balances,
September 30, 1997 2,200 $ 22 $4,436,716 $4,018,692 $(373,280) $8.082.150
===== ========= ========== ========== ========= ==========
</TABLE>
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<PAGE>
APPENDIX A
[AN OPINION SUBSTANTIALLY IN THE FORM BELOW WILL BE DELIVERED
AT CLOSING OF THE TRANSACTION DESCRIBED HEREIN, ASSUMING NO
MATERIAL CHANGE IN THE FACTS OR LAW UPON WHICH SUCH OPINION IS
BASED]
DUANE, MORRIS & HECKSCHER LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006-1608
(202) 776-7800
[DATE]
Board of Directors
Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Board of Directors
Sky Valley Bank Corp.
720 Main Street
Alamosa, Colorado 81101
Re: Proposed Merger of Sky Valley Bank Corp. with and into
Val Cor Bancorporation, Inc.
Ladies and Gentlemen:
We have acted as counsel to Zions Bancorporation, a Utah corporation
("Zions Bancorp") in connection with the Agreement and Plan of Reorganization
dated as of July 25, 1997 as amended on September 8, 1997 (the "Agreement"),
among Sky Valley Bank Corp., a Colorado corporation (the "Company"), The First
National Bank in Alamosa, a national banking association organized under the
laws of the United States (the "Bank"), Ralph H. Outcalt, an adult resident of
the State of Colorado ("Outcalt"), Donald J. Wuckert, an adult resident of the
State of Colorado ("Wuckert"), Zions Bancorp, Val Cor Bancorporation, Inc., a
Colorado corporation ("Val Cor"), and Valley National Bank of Cortez, a national
banking association organized under the laws of the United States ("Valley"), a
related Plan of Merger between the Company and Val Cor, and a related Plan of
Merger between the Bank and Valley (collectively, the "Plan of
Reorganizations"), whereby the Company will be merged with and into Val Cor,
with Val Cor being the surviving corporation (the "Holding Company Merger") and
Valley will be merged with and into the Bank, with the Bank being the surviving
entity (the "Bank Merger"; collectively the "Reorganizations"). Zions Bancorp
owns all the issued and outstanding capital stock of Val Cor. Val Cor owns 99.7
percent of the issued and outstanding capital stock of Valley; unrelated parties
own the remaining .3 percent. The Company owns all of the issued and outstanding
capital stock of the Bank.
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<PAGE>
The Board of Directors
___________, 1997
Page 2
In accordance with section 3.5 of the Agreement, this opinion addresses
certain federal income tax consequences of the Reorganizations.
Except as otherwise defined herein, all terms defined in the Agreement
shall have the same meaning when used in this opinion.
The elements of the Reorganizations are as follows:
(1) Pursuant to the Plan of Reorganizations, the Agreement and the
provisions of section 7-111-101 et seq. of the Colorado Business Corporation
Act, the Company will merge with and into Val Cor, with Val Cor being the
surviving corporation and, upon the Effective Date, each holder of shares of
outstanding Company Common Stock will receive, in exchange for each share of
Company Common Stock, shares of Zions Bancorp Stock, that number of shares of
Zions Bancorp Stock calculated by dividing 572,836 by the total number of shares
of Company Common Stock issued and outstanding as of the Effective Date. Zions
Bancorp will not issue fractional shares of its stock. In lieu of fractional
shares of Zions Bancorp Stock, if any, each shareholder of the Company who is
entitled to a fractional share of Zions Bancorp Stock will receive an amount of
cash equal to the product of such fraction multiplied by $33.50. Such fractional
share interest will not include the right to vote or to receive dividends or any
interest thereon.
(2) Pursuant to the Plan of Reorganizations, the Agreement and the
provisions of section 215a of the National Bank Act (12 U.S.C. ss. 215a), Valley
will merge with and into the Bank, with the Bank being the surviving corporation
and, upon the Effective Date, each holder of shares of outstanding Company
Common Stock other than Val Cor will receive, in exchange for each share of
Valley, $47.25 in cash.
*******
In rendering our opinion, we have examined and relied upon but
have not independently verified the accuracy and completeness of the facts,
information, covenants and representations contained in the Agreement, the Plan
of Reorganizations and such other documents as we have deemed necessary or
appropriate as a basis for our opinion. In addition, we have relied upon certain
representation letters furnished to us by Zions Bancorp, Val Cor, Valley and the
Company. A copy of these letters is attached. Where such statements and
representations are made to the best knowledge and belief of the person making
such statement or representation, we have assumed the facts to be as so stated
and represented. We have also assumed that the Reorganizations will be
consummated in accordance with the Agreement and the Registration Statement,
including the Proxy Statement/Prospectus, as filed with the Securities and
Exchange Commission on Form S-4. Our opinion is conditioned on the initial and
continuing accuracy of such facts, information, covenants, representations,
statements and assumptions. In addition, we have assumed the authenticity of all
documents submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons, and the conformity to the originals of all
documents submitted to us as copies.
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<PAGE>
The Board of Directors
___________, 1997
Page 3
In rendering our opinion, we have considered the applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations promulgated thereunder, pertinent judicial authorities, and
interpretive rulings as we have considered relevant. Statutes, regulations,
judicial decisions and administrative interpretations are subject to change at
any time and, in some circumstances, with retroactive effect. A material change
in the authorities upon which our opinion is based could affect our conclusions.
*******
Based solely upon the foregoing, we are of the opinion that
under current law for federal income tax purposes:
(i) The Holding Company Merger will qualify as a "reorganization" under
Section 368(a)(1) of the Code. Zions Bancorp, Val Cor and the Company will each
be a "party to the reorganization" within the meaning of Section 368(b) of the
Code;
(ii) The Bank Merger will qualify as a "reorganization" under Section
368(a)(1) of the Code. Valley and the Bank will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code;
(iii) The Company will recognize no gain or loss upon the transfer of
substantially all of its assets to Val Cor in exchange for Zions Bancorp Stock
and Val Cor's assumption of the liabilities of the Company (sections 361(b) and
357(a));
(iv) No gain or loss will be recognized by either Zions or Val Cor upon
the acquisition by Val Cor of substantially all of the assets of the Company in
exchange for Zions Bancorp Stock, and the assumption of the liabilities of the
Company (Reg. Sec. 1.1032-2(b));
(v) The basis of the Company's assets in the hands of Val Cor will be
the same as the basis of those assets in the hands of the Company immediately
prior to the Holding Company Merger (section 362(b));
(vi) The holding period of the Company's assets received by Val Cor
will include the period during which such assets were held by the Company
immediately prior to the Holding Company Merger (section 1223(2));
(vii) No gain or loss will be recognized by a shareholder of the
Company upon the receipt of Zions Bancorp Stock solely in exchange for his or
her Company Common Stock (section 354(a)(1));
(viii) The basis of the Zions Bancorp Stock received by a shareholder
of the Company pursuant to the Holding Company Merger (including any fractional
share interest to which that shareholder may be entitled) will be the same as
the basis of the Company Common Stock exchanged therefor (section 358(a)(1));
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<PAGE>
The Board of Directors
___________, 1997
Page 4
(ix) The holding period of the Zions Bancorp Stock received by a
shareholder of the Company pursuant to the Holding Company Merger (including any
fractional share interest to which that shareholder may be entitled) will
include the holding period of the Company Common Stock exchanged therefor,
provided the Company Common Stock is held as a capital asset by the shareholder
on the Effective Date (section 1223(1));
(x) A shareholder of the Company who receives cash in lieu of a
fractional share of Zions Bancorp Stock will recognize gain or loss equal to the
difference between the cash received and the shareholder's basis in that
fractional share, and that gain or loss will be capital gain or loss if the
fractional share would have been a capital asset in the hands of the shareholder
(Rev. Rul. 66-365, 1966-2 C.B. 116; Rev. Proc. 77-41, 1977-2 C.B. 574); and
(xi) Cash received by a shareholder of the Company who has perfected
dissenters' rights under the provisions of sections 7-113-101 et seq. of the
Colorado Business Corporation Act as to his or her Company Common Stock will be
treated as a distribution in redemption of such shares, subject to the
provisions and limitations of Section 302 of the Code.
*******
Except as set forth above, we express no opinion as to the
federal, state, local or foreign tax consequences of the Holding Company Merger
or of any transactions related thereto. This opinion is solely for your benefit
and is not to be used, quoted, circulated or otherwise referred to without our
express written permission.
Very truly yours,
-4-
<PAGE>
APPENDIX B
COLORADO BUSINESS CORPORATION ACT
Rights of Dissenting Owners
7-113-201 NOTICE OF DISSENTERS' RIGHTS.--1. If a proposed corporate
action creating dissenters' rights under section 7-113-102 is submitted to a
vote at a shareholders' meeting, the notice of the meeting shall be given to all
shareholders, whether or not entitled to vote. The notice shall state that
shareholders are or may be entitled to assert dissenters' rights under this
article and shall be accompanied by a copy of this article and the materials, if
any, that, under articles 101 to 117 of this title, are required to be given to
shareholders entitled to vote on the proposed action at the meeting. Failure to
give notice as provided by this subsection (1) shall not affect any action taken
at the shareholders' meeting for which the notice was to have been given, but
any shareholder who was entitled to dissent but who was not given such notice
shall not be precluded from demanding payment for the shareholder's shares under
this article by reason of the shareholder's failure to comply with the
provisions of section 7-113-202(1).
2. If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(2).
7-113-202 NOTICE OF INTENT TO DEMAND PAYMENT.--1. If a proposed
corporate action creating dissenters' rights under section 7-113-102 is
submitted to a vote at a shareholders' meeting and if notice of dissenters'
rights has been given to such shareholder in connection with the action pursuant
to section 7-113-201(1), a shareholder who wishes to assert dissenters' rights
shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
2. If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104 and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section 7-113-201(2) a
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<PAGE>
shareholder who wishes to assert dissenters' rights shall not execute a writing
consenting to the proposed corporate action.
3. A shareholder who does not satisfy the requirements of subsection
(1) or (2) of this section is not entitled to demand payment for the
shareholder's shares under this article.
7-113-203 DISSENTERS' NOTICE.--1. If a proposed corporate action
creating dissenters' rights under section 7-113-102 is authorized, the
corporation shall give a written dissenters' notice to all shareholders who are
entitled to demand payment for their shares under this article.
2. The dissenters' notice required by subsection (1) of this section
shall be given no later than ten days after the effective date of the corporate
action creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the
effective date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment
demands and the address of a place where certificates for certificated shares
must be deposited;
(c) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment
demand and certificates for certificated shares, which date shall not be less
than thirty days after the date the notice required by subsection (1) of this
section is given;
(f) State the requirement contemplated in section 7-113-103(3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
7-113-204 PROCEDURE TO DEMAND PAYMENT.--1. A shareholder who is given a
dissenters' notice pursuant to section 7-113-203 and who wishes to assert
dissenters' rights shall, in accordance with the terms of the dissenters'
notice:
(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203(2)(d), duly completed, or
may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
2. A shareholder who demands payment in accordance with subsection (1)
of this section retains all rights of a shareholder, except the right to
transfer the shares, until the effective date of the proposed corporate action
giving rise to the shareholder's exercise of dissenters' rights and has only the
right to receive payment for the shares after the effective date of such
corporate action.
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<PAGE>
3. Except as provided in section 7-113-207 or 7-113-209(1)(b), the
demand for payment and deposit of certificates are irrevocable.
4. A shareholder who does not demand payment and deposit the
shareholder's share certificates as required by the date or dates set in the
dissenters' notice is not entitled to payment for the shares under this article.
7-113-205 UNCERTIFICATED SHARES.--1. Upon receipt of a demand for
payment under section 7-113-204 from a shareholder holding uncertificated
shares, and in lieu of the deposit of certificates representing the shares, the
corporation may restrict the transfer thereof.
2. In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206 PAYMENT.--1. Except as provided in section 7-113-208, upon
the effective date of the corporate action creating dissenters' rights under
section 7-113-102 or upon receipt of a payment demand pursuant to section
7-113-204, whichever is later, the corporation shall pay each dissenter who
complied with section 7-113-204, at the address stated in the payment demand, or
if no such address is stated in the payment demand, at the address shown on the
corporation's current record of shareholders for the record shareholder holding
the dissenter's shares, the amount the corporation estimates to be the fair
value of the dissenter's shares, plus accrued interest.
2. The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent
fiscal year or, if that is not available, the corporation's balance sheet as of
the end of a fiscal year ending not more than sixteen months before the date of
payment, an income statement for that year, and, if the corporation customarily
provides such statements to shareholders, a statement of changes in
shareholders' equity for that year and a statement of cash flow for that year,
which balance sheet and statements shall have been audited if the corporation
customarily provides audited financial statements to shareholders, as well as
the latest available financial statements, if any, for the interim or full-year
period, which financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under
section 7-113-209; and
(e) A copy of this article.
7-113-207 FAILURE TO TAKE ACTION.--1. If the effective date of the
corporate action creating dissenters' rights under section 7-113-102 does not
occur within sixty days after the date set by the corporation by which the
corporation must receive the payment demand as provided in section 7-113-203,
the
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<PAGE>
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
2. If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of sections 7-113-
204 to 7-113-209 shall again be applicable.
7-113-208 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.--1. The corporation may, in or with
the dissenters' notice given pursuant to section 7-113-203, state the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action creating dissenters' rights under section 7-113-102
and state that the dissenter shall certify in writing, in or with the
dissenter's payment demand under section 7-113-204, whether or not the dissenter
(or the person on whose behalf dissenters' rights are asserted) acquired
beneficial ownership of the shares before that date. With respect to any
dissenter who does not so certify in writing, in or with the payment demand,
that the dissenter or the person on whose behalf the dissenter asserts
dissenters' rights acquired beneficial ownership of the shares before such date,
the corporation may, in lieu of making the payment provided in section
7-113-206, offer to make such payment if the dissenter agrees to accept it in
full satisfaction of the demand.
2. An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206(2).
7-113-209 PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR
OFFER.--1. A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206
or offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206
within sixty days after the date set by the corporation by which the corporation
must receive the payment demand; or
(c) The corporation does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as required
by section 7-113-207(1).
2. A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
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<PAGE>
7-113-301 COURT ACTION.--1. If a demand for payment under section
7-113-209 remains unresolved, the corporation may, within sixty days after
receiving the payment demand, commence a proceeding and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it shall pay to
each dissenter whose demand remains unresolved the amount demanded.
2. The corporation shall commence the proceeding described in
subsection (1) of this section in the district court of the county in this state
where the corporation's principal office is located or, if the corporation has
no principal office in this state, in the district court of the county in which
its registered office is located. If the corporation is a foreign corporation
without a registered office, it shall commence the proceeding in the county
where the registered office of the domestic corporation merged into, or whose
shares were acquired by, the foreign corporation was located.
3. The corporation shall make all dissenters, whether or not residents
of this state, whose demands remain unresolved parties to the proceeding
commenced under subsection (2) of this section as in an action against their
shares, and all parties shall be served with a copy of the petition. Service on
each dissenter shall be by registered or certified mail, to the address stated
in such dissenter's payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, or as
provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to such order. The parties to
the proceeding are entitled to the same discovery rights as parties in other
civil proceedings.
5. Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
7-113-302 COURT COSTS AND COUNSEL FEES.--1. The court in an appraisal
proceeding commenced under Section 7-113-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation; except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under section 7-113-209.
2. The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
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<PAGE>
(a) Against the corporation and in favor of any dissenters if the court
finds the corporation did not substantially comply with the requirements of part
2 of this article; or
(b) Against either the corporation or one of more dissenters, in favor
of any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to said counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefitted.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Utah law provides for indemnification of directors and officers as
follows:
16-10a-902 AUTHORITY TO INDEMNIFY DIRECTORS.
(1) Except as provided in Subsection (4), a corporation may indemnify an
individual made a party to a proceeding because he is or was a director, against
liability incurred in the proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or not opposed to,
the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no reasonable cause
to believe his conduct was unlawful.
(2) A director's conduct with respect to any employee benefit plan for a
purpose he reasonably believed to be in or not opposed to the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of Subsection (1)(b).
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation;
or
(b) in connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving action in
his official capacity, in which proceeding he was adjudged liable on the
basis that he derived an improper personal benefit.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
16-10a-903 MANDATORY INDEMNIFICATION OF DIRECTORS.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was successful, on the merits or otherwise, in the
defense of any proceeding, or in the defense of any claim, issue, or matter in
the proceeding, to which he was a party because he is or was a director of the
corporation, against reasonable expenses incurred by him in connection with the
proceeding or claim with respect to which he has been successful.
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<PAGE>
16-10a-907 INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS.
Unless a corporation's articles of incorporation provide otherwise:
(1) an officer of the corporation is entitled to mandatory indemnification
under Section 16-10a-903, and is entitled to apply for court-ordered
indemnification under Section 16-10a-905, in each case to the same extent as a
director;
(2) the corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the corporation to the same extent as to a
director; and
(3) a corporation may also indemnify and advance expenses to an officer,
employee, fiduciary, or agent who is not a director to a greater extent, if not
inconsistent with public policy, and if provided for by its articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract.
16-10a-908 INSURANCE.
A corporation may purchase and maintain liability insurance on behalf of a
person who is or was a director, officer, employee, fiduciary, or agent of the
corporation, or who, while serving as a director, officer, employee, fiduciary,
or agent of the corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, fiduciary, or agent of
another foreign or domestic corporation or other person, or of an employee
benefit plan, against liability asserted against or incurred by him in that
capacity or arising from his status as a director, officer, employee, fiduciary,
or agent, whether or not the corporation would have power to indemnify him
against the same liability under Sections 16-10a-902, 16-10a-903, or 16-10a-907.
Insurance may be procured from any insurance company designated by the board of
directors, whether the insurance company is formed under the laws of this state
or any other jurisdiction of the United States or elsewhere, including any
insurance company in which the corporation has an equity or any other interest
through stock ownership or otherwise.
16-10a-909 LIMITATIONS OF INDEMNIFICATION OF DIRECTORS.
(1) A provision treating a corporation's indemnification of, or advance
for expenses to, directors that is contained in its articles of incorporation or
bylaws, in a resolution of its shareholders or board of directors, or in a
contract (except an insurance policy) or otherwise, is valid only if and to the
extent the provision is not inconsistent with this part. If the articles of
incorporation limit indemnification or advance of expenses, indemnification and
advance of expenses are valid only to the extent not inconsistent with the
articles of incorporation.
(2) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with the director's appearance as
a witness in a proceeding at a time when the director has not been made a named
defendant or respondent to the proceeding.
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<PAGE>
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits. An Exhibit Index, containing a list of all exhibits filed
with this Registration Statement, is included beginning on page II-7.
(b) Financial Statement Schedules. Not applicable.
(c) Report, Opinion or Appraisal. Not applicable.
Item 22. Undertakings.
The undersigned registrant hereby undertakes as follows:
(1) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement 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.
(2) to deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
(3) that prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(4) that every prospectus (i) that is filed pursuant to paragraph (3)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act of 1933, as amended, and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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.
(5) that insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 20
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<PAGE>
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant 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, the registrant 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 whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(6) to respond to requests for information that is incorporated by
reference into the Proxy Statement/Prospectus pursuant to Items 4, 10(b), 11 or
13 of Form S-4, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
Effective Date of the registration statement through the date of responding to
the request.
(7) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Salt Lake City, Utah,
on the 8th day of December, 1997.
Zions Bancorporation
By: /s/ Harris H. Simmons
----------------------------
Harris H. Simmons, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Harris H. Simmons, Roy W. Simmons, and
Dale M. Gibbons, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or either of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
- --------- -------- ----
/s/ Harris H. Simmons President, Chief Executive December 8, 1997
- ----------------------- Officer and Director
Harris H. Simmons
/s/ Dale M. Gibbons Senior Vice President December 8, 1997
- ----------------------- Chief Financial Officer
Dale M. Gibbons
/s/ Walter E. Kelly Controller December 8, 1997
- -----------------------
Walter E. Kelly
- ----------------------- Chairman and Director ____________, 1997
Roy W. Simmons
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<PAGE>
/s/ Jerry C. Atkin Director December 8, 1997
- ------------------------
Jerry C. Atkin
/s/ R. D. Cash Director December 8, 1997
- ------------------------
R. D. Cash
/s/ L. E. Simmons Director December 8, 1997
- ------------------------
L. E. Simmons
/s/ Grant R. Caldwell Director December 8, 1997
- ------------------------
Grant R. Caldwell
/s/ I. J. Wagner Director December 8, 1997
- ------------------------
I. J. Wagner
Director ___________, 1997
- ------------------------
Roger B. Porter
Director ____________, 1997
- ------------------------
Dale W. Westergard
/s/ Richard H. Madsen Director December 8, 1997
- ------------------------
Richard H. Madsen
/s/ Robert G. Sarver Director December 8, 1997
- ------------------------
Robert G. Sarver
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<PAGE>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Page Number
in Sequential
Exhibit Numbering
No. Description and Method of Filing System
--- -------------------------------- ------
2.1 Agreement and Plan of Reorganization dated
as of July 25, 1997 among Zions Bancorporation,
Val Cor Bancorporation, Inc., Valley National
Bank of Cortez, Sky Valley Bank Corp., The First
National Bank in Alamosa, Ralph H. Outcalt, and
Donald J. Wuckert (filed herewith).
2.2 First Amendment to Agreement and Plan of
Reorganization, dated as of September 8, 1997
(filed herewith).
3.1 Restated Articles of Incorporation of Zions *
Bancorporation dated November 8, 1993, and filed
with the Department of Business Regulation, Divi-
sion of Corporations of the State of Utah on
November 9, 1993 (incorporated by reference to
Exhibit 3.1 to the Registrant's Form S-4 Registra-
tion Statement, File No. 33-51145, filed on
November 22, 1993)
3.2 Restated Bylaws of Zions Bancorporation, dated *
November 8, 1993 (incorporated by reference to
Exhibit 3.2 to the Registrant's Form S-4
Registration Statement, File No. 33-51145, filed
November 22, 1993)
3.3 Articles of Amendment to the Restated Articles of *
Incorporation of Zions Bancorporation dated April 30,
1997 and filed with the Department of Business
Regulation, Division of Corporations of the State of
Utah on May 2, 1997 (incorporated by reference to
Exhibit 3.1 of Zions Bancorporation's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997,
File No. 0-2610)
5 Opinion of Duane, Morris & Heckscher LLP regarding the
legality of the shares of Common Stock being registered
(filed herewith)
8 Opinion of Duane, Morris & Heckscher LLP regarding tax
matters (filed herewith as Appendix A to the Proxy
Statement/Prospectus)
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<PAGE>
10.1 Amended and Restated Zions Bancorporation Pension *
Plan (incorporated by reference to Exhibit 10.1 of
Zions Bancorporation's Annual Report on Form 10-K
for the year ended December 31, 1994, File No.0-2610)
10.2 Amendment to Zions Bancorporation Pension Plan effective *
December 1, 1994 (incorporated by reference to
Exhibit 10.2 of Zions Bancorporation's Annual Report on
Form 10-K for the year ended December 31, 1994,
File No. 0-2610)
10.3 Zions Utah Bancorporation Supplemental Retirement Plan *
Form (incorporated by reference to Exhibit 19.4 of Zions
Utah Bancorporation's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1985, File No.0-2610)
10.4 Zions Utah Bancorporation Key Employee Incentive Stock *
Option Plan approved by the shareholders of the Company
on April 28, 1982 (incorporated by reference to
Exhibit 10.1 of Zions Bancorporation's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1995,
File No. 0-2610)
10.5 Amendment No. 1 to Zions Bancorporation Key Employee *
Incentive Stock Option Plan approved by the shareholders
of the Company on April 27, 1990 (incorporated by
reference to Exhibit 10.2 of Zions Bancorporation's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, File No. 0-2610)
10.6 Amendment No. 2 to Zions Bancorporation Key Employee *
Incentive Stock Option Plan approved by the shareholders
of the Company of April 28, 1995 (incorporated by reference
to Exhibit 10.3 of Zions Bancorporation's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1995,
File No. 0-2610)
10.7 Zions Bancorporation Deferred Compensation Plan for *
Directors, as amended May 1, 1991 (incorporated
by reference to Exhibit 19 of Zions Bancorporation's
Annual Report on Form 10-K for the year ended
December 31, 1991, File No. 0-2610)
10.8 Zions Bancorporation Senior Management Value Sharing *
Plan, Award Period 1991-1994 (incorporated by reference
to Exhibit 19 of Zions Bancorporation's Annual Report
on Form 10-K for the year ended December 31, 1992, File
No. 0-2610)
10.9 Zions Bancorporation Senior Management Value Sharing *
Plan, Award Period 1992-1995 (incorporated by reference
to Exhibit 10.6 of Zions Bancorporation's Annual Report
on Form 10-K for the year ended December 31, 1992, File
No. 0-2610)
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<PAGE>
10.10 Zions Bancorporation Senior Management Value Sharing *
Plan, Award Period 1993-1996 (incorporated by reference
to Exhibit 10.8 of Zions Bancorporation's Annual Report
on Form 10-K for the year ended December 31, 1993, File
No. 0-2610)
10.11 Zions Bancorporation Senior Management Value Sharing *
Plan, Award Period 1994-1997 (incorporated by reference
to exhibit 10.9 of Zions Bancorporation's Annual Report
on Form 10-K for the year ended December 31, 1994, File
No. 0-2610)
10.12 Zions Bancorporation Senior Management Value Sharing *
Plan Award Period 1995-1998 (incorporated by reference
to Exhibit 10.14 of Zions Bancorporation's Annual Report
on Form 10-K for the year ended December 31, 1995, File
No. 0-2610)
10.13 Zions Bancorporation Executive Management Pension Plan *
(incorporated by reference to Exhibit 10.10 of Zions
Bancorporation's Annual Report on Form 10-K for the year
ended December 31, 1994, File No. 0- 2610)
10.14 Zions Bancorporation Non-Employee Directors Stock Option *
Plan approved by the shareholders of the Company on
April 26, 1996 (incorporated by reference to Exhibit 10
of Zions Bancorporation's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996, File No. 0-2610)
10.15 Form of Employment Agreement between Pitkin County Bank & *
Trust Company and Charles B. Israel (incorporated by
reference to Exhibit 10.16 to the Registrant's Form S-4
Registration Statement, File No. 333-23839, filed on
March 24, 1997)
10.16 Zions Bancorporation Pension Plan amended and restated *
effective April 1, 1997 (incorporated by reference to
Exhibit 10 of Zions Bancorporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997, File
No. 0-2610)
10.17 Form of Employment Agreement between The First National
Bank in Alamosa and David E. Broyles (filed as Exhibit
VI to the Agreement and Plan of Reorganization,
incorporated by reference as Exhibit 2.1 above)
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<PAGE>
10.18 Form of Advisory Agreement between The First National
Bank in Alamosa and Ralph H. Outcalt (filed as Exhibit
VII to the Agreement and Plan of Reorganization,
incorporated by reference as Exhibit 2.1 above)
10.19 Form of Advisory Agreement between The First National
Bank in Alamosa and Donald J. Wuckert (filed as Exhibit
VII to the Agreement and Plan of Reorganization,
incorporated by reference as Exhibit 2.1 above)
21 List of subsidiaries of Zions Bancorporation
(incorporated by reference to Exhibit 21 of Zions
Bancorporation's Annual Report on Form 10-K for the year
ended December 31, 1995, File No. 0-2610)
23.1 Consent of KPMG Peat Marwick LLP, independent certified
public accountants for Zions Bancorporation (filed
herewith)
23.2 Consent of Duane, Morris & Heckscher LLP (contained in
their opinion filed as Exhibit 5 and in Appendix A)
24.1 Power of Attorney (set forth on Page II-5 of the
Registration Statement)
99.1 Preliminary copy of letter to shareholders of Sky Valley
Bank Corp. (filed herewith)
99.2 Preliminary copy of Notice of Special Meeting of
Shareholders of Sky Valley Bank Corp. (filed herewith)
99.3 Preliminary copy of form of proxy for use by
shareholders of Sky Valley Bank Corp. (filed herewith)
99.4 Voting Agreements between Zions Bancorporation and each
director of Sky Valley Bank Corp. (filed herewith as
part of Agreement and Plan of Reorgani zation, filed as
Exhibit 2.1)
- ---------------
* incorporated by reference
-10-
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made as of the twenty-fifth
day of July, 1997, among ZIONS BANCORPORATION ("Zions Bancorp"), a Utah
corporation having its principal office in Salt Lake City, Utah, VAL COR
BANCORPORATION, INC. ("Val Cor"), a Colorado corporation having its principal
office in Cortez, Colorado, VALLEY NATIONAL BANK OF CORTEZ ("Valley"), a
national banking association organized under the laws of the United States, SKY
VALLEY BANK CORP. (the "Company"), a Colorado corporation having its principal
office in Alamosa, Colorado, THE FIRST NATIONAL BANK IN ALAMOSA (the "Bank"), a
national banking association organized under the laws of the United States,
RALPH H. OUTCALT ("Outcalt"), an adult resident of the State of Colorado, and
DONALD J. WUCKERT ("Wuckert"), an adult resident of the State of Colorado
W I T N E S S E T H T H A T :
WHEREAS, Outcalt and Wuckert are shareholders of the Company who,
between the two of them, own in excess of 63.6 percent of the outstanding voting
stock of the Company;
WHEREAS, the Company is a bank holding company and the sole shareholder
of the Bank;
WHEREAS, Zions Bancorp is a bank holding company and the sole
shareholder of Val Cor;
WHEREAS, Val Cor is a bank holding company which owns approximately
99.1 percent of the outstanding capital stock of Valley as of the date of this
Agreement;
WHEREAS, Zions Bancorp and Val Cor each desire to affiliate with the
Company through the merger of the Company with and into Val Cor, with Val Cor to
be the surviving corporation (the "Holding Company Merger") and, in addition, to
cause the merger of Valley with and into the Bank, with the Bank to be the
surviving national banking association (the "Bank Merger");
WHEREAS, the Board of Directors of the Company has determined that it
would be in the best interests of the Company, its shareholders, its customers
and those of the Bank and the areas served by the Company and the Bank to become
affiliated with Zions Bancorp through the Holding Company Merger and to cause
the Bank Merger;
WHEREAS, the respective boards of directors of Valley and the Bank have
determined that it would be in the best interests of Valley or the Bank, as the
case may be, its shareholders and customers, for Valley and the Bank to merge
with each other;
WHEREAS, the respective Boards of Directors of Zions Bancorp, Val Cor,
and the Company have agreed to cause the Holding Company Merger pursuant to the
provisions of section 7-111-101 et seq. of the Colorado Business Corporation Act
and to cause the Bank Merger pursuant to the provisions of section 215a of the
National Bank Act (12 U.S.C. ss. 215a);
WHEREAS, the respective Boards of Directors of Valley and the Bank have
agreed to cause the Bank Merger pursuant to the provisions of section 215a of
the National Bank Act;
WHEREAS, the parties intend that the Holding Company Merger and the
Bank Merger qualify as one or more tax-free reorganizations under section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Outcalt and Wuckert desire to facilitate the Holding Company
Merger and the Bank Merger;
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<PAGE>
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Combinations.
1.1. Form of Combinations.
(a) Val Cor and the Company will execute a merger agreement (the
"Holding Company Merger Agreement") substantially in the form of Exhibit I
annexed hereto. Subject to the provisions of the Holding Company Merger
Agreement, the Company will be merged with and into Val Cor in the Holding
Company Merger and Val Cor shall be the surviving corporation. The shares of
common stock of the Company (the "Company Common Stock") shall be canceled and
immediately converted into the right to receive, subject to the terms,
conditions, and limitations set forth herein, such consideration as is provided
in section 1.2(a)(i) hereof.
(b) Valley and the Bank will execute a merger agreement (the
"Bank Merger Agreement") substantially in the form of Exhibit II annexed hereto.
Immediately following the effectiveness of the Holding Company Merger, and
subject to the provisions of the Bank Merger Agreement, Valley will be merged
with and into the Bank in the Bank Merger and the Bank shall be the surviving
national banking association. The shares of common stock of Valley (the "Valley
Common Stock") shall be canceled and immediately converted into the right to
receive, subject to the terms, conditions, and limitations set forth herein,
such consideration as is provided in section 1.2(a)(ii) hereof.
1.2. Consideration for Mergers.
(a) Exchange Ratios. Subject to the terms, conditions, and
limitations set forth herein, upon surrender of his or her certificate or
certificates in accordance with Section 1.1 hereof:
(i) each holder of shares of Company Common Stock shall be
entitled to receive, in exchange for each share of Company Common Stock held of
record by such stockholder as of the Effective Date, that number of shares of
the common stock of Zions Bancorp, no par value (the "Zions Bancorp Stock")
calculated by dividing 573,135 by the total number of shares of Company Common
Stock that shall be issued and outstanding at the Effective Date; and
(ii) each holder of shares of Valley Common Stock other than
Val Cor shall be entitled to receive from Val Cor, in exchange for each share of
the common stock of Valley, $5.00 par value (the "Valley Common Stock") held of
record by such stockholder as of the Effective Date, $47.25.
1.3. No Fractional Shares. Zions Bancorp will not issue fractional
shares of its stock. In lieu of fractional shares of Zions Bancorp Stock, if
any, each shareholder of the Company who is entitled to a fractional share of
Zions Bancorp Stock shall receive an amount of cash equal to the product of such
fraction times $33.50. Such fractional share interest shall not include the
right to vote or to receive dividends or any interest thereon.
1.4. Dividends; Interest. No shareholder of the Company will be
entitled to receive dividends on his or her Zions Bancorp Stock until he or she
exchanges his or her certificates representing Company Common Stock for Zions
Bancorp Stock. Any dividends declared on Zions Bancorp Stock (which stock is to
be delivered pursuant to this Agreement) to holders of record on or after the
Effective Date shall be paid to the Exchange Agent (as designated in Section 1.5
of this Agreement) and, upon receipt of the certificates representing shares of
Company Common Stock, the Exchange Agent shall forward to the former
shareholders entitled to receive Zions Bancorp
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<PAGE>
Stock (i) certificates representing their shares of Zions Bancorp Stock, (ii)
dividends declared thereon subsequent to the Effective Date (without interest)
and (iii) the cash value of any fractional shares determined in accordance with
Section 1.3 hereof.
1.5. Designation of Exchange Agent.
(a) The parties of this Agreement hereby designate Zions First
National Bank, a national banking association with its head office located in
Salt Lake City, Utah ("Zions Bank") as Exchange Agent to effect the exchanges
contemplated hereby.
(b) Zions Bancorp will, promptly after the Effective Date, issue
and deliver to Zions Bank the share certificates representing shares of Zions
Bancorp Stock and the cash to be paid to holders of Company Common Stock in
accordance with this Agreement.
(c) Val Cor will, promptly after the Effective Date, issue and
deliver to Zions Bank the cash to be paid to holders of Valley Common Stock
other than Val Cor in accordance with this Agreement.
1.6. Notice of Exchange. Promptly after the Effective Date, Zions Bank
shall mail to each holder of one or more certificates formerly representing
Company Common Stock or Valley Common Stock, as the case may be, except to such
holders as shall have waived the notice required by this Section 1.6, a notice
specifying the Effective Date and notifying such holder to surrender his or her
certificate or certificates to Zions Bank for exchange. Such notice shall be
mailed to holders by regular mail at their addresses on the records of the
Company or Valley, as the case may be.
1.7. Treatment of Stock Options. Each stock option to purchase Company
Common Stock or Valley Common Stock not exercised prior to the Effective Date
shall automatically be canceled on and as of the Effective Date.
1.8. Voting Agreements. Simultaneously herewith, Outcalt and Wuckert
and each other shareholder of the Company who is listed on Schedule 1.8 annexed
hereto shall each enter into an agreement with Zions Bancorp, substantially in
form and substance as that set forth as Exhibit III attached hereto, in which he
or she agrees to vote all shares of Company Common Stock which may be voted, or
whose vote may be directed, by him or her, in favor of the transactions
contemplated by this Agreement at the meeting of shareholders at which such
transaction shall be considered.
1.9. Employee Benefits. If any employee of the Company or of the Bank
becomes a participant in any employment benefit plan, practice, or policy of
Zions Bancorp, such employee shall be given credit under such plan, practice, or
policy for all service prior to the Effective Date with the Company or the Bank
for purposes of eligibility and vesting, but not for benefit accrual purposes,
for which such service is taken into account or recognized, provided that there
be no duplication of such benefits as are provided under any employee benefit
plans, practices, or policies of the Company or the Bank that continue in effect
following the Effective Date.
2. Effective Date.
The Effective Date shall be the date which is the latest of:
2.1. Shareholder Approval. The day upon which the shareholders of the
Company approve, ratify, and confirm the Holding Company Merger; or
2.2. Bank Shareholder Approval. The day upon which the shareholders of
Valley approve, ratify, and confirm the Bank Merger; or
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2.3. Federal Reserve Approval. The first to occur of (a) the date
thirty days following the date of the order of the Board of Governors of the
Federal Reserve System or the Federal Reserve Bank of San Francisco acting
pursuant to authority delegated to it by the Board of Governors of the Federal
Reserve System (collectively, the "Board of Governors") approving the Holding
Company Merger, or (b) if, pursuant to section 321(a) of the Riegle Community
Development and Regulatory Improvement Act of 1994 (the "Riegle Act"), the Board
of Governors shall have prescribed a shorter period of time with the concurrence
of the Attorney General of the United States, the date on which such shorter
period of time shall elapse, or (c) the date ten days following the date on
which the Board of Governors indicates its waiver of jurisdiction over the
Holding Company Merger; or
2.4. OCC Approval. The first to occur of (a) the date thirty days
following the date of the order of the Office of the Comptroller of the Currency
(the "OCC") approving the Bank Merger, or (b) if, pursuant to section 321(b) of
the Riegle Act, the OCC shall have prescribed a shorter period of time with the
concurrence of the Attorney General of the United States, the date on which such
shorter period of time shall elapse; or
2.5. Utah Commissioner Approval. If such an order shall be required by
law, the date ten days following the date of the order of the Commissioner of
Financial Institutions of the State of Utah (the "Commissioner") approving the
transactions contemplated by this Agreement; or
2.6. Colorado Division Approval. If such an order shall be required by
law, the date ten days following the date of the order of the Colorado Division
of Banking (the "Division") approving the transactions contemplated by this
Agreement; or
2.7. Other Regulatory Approvals. The date upon which any other material
order, approval, or consent of a federal or state regulator of financial
institutions or financial institution holding companies authorizing consummation
of the transactions contemplated by this Agreement is obtained or any waiting
period mandated by such order, approval, or consent has run; or
2.8. Expiration of Stays. Ten days after any stay of the approvals of
any of the Board of Governors, the OCC, the Commissioner, or the Division of the
transactions contemplated by this Agreement or any injunction against closing of
said transactions is lifted, discharged, or dismissed; or
2.9. Mutual Agreement. Such other date as shall be mutually agreed to
by Zions Bancorp and the Company.
3. Conditions Precedent to Performance of Obligations of the Parties.
The obligations of Zions Bancorp, Val Cor, and the Company to
consummate the Holding Company Merger and the obligations of Valley Bank and the
Bank to consummate the Bank Merger shall be subject to the conditions that on or
before the Effective Date:
3.1. Regulatory Approvals. Orders, consents, and approvals, in form and
substance reasonably satisfactory to Zions Bancorp and the Company, shall have
been entered by the requisite governmental authorities, granting the authority
necessary for consummation of the transactions contemplated by this Agreement
and the operation by Zions Bancorp and Val Cor of the business of the Company,
the business of the Bank, and each of the branches of the Bank, pursuant to the
provisions of applicable law; and all other requirements prescribed by law or by
the rules and regulations of any other regulatory authority having jurisdiction
over such transactions shall have been satisfied.
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3.2. Absence of Litigation. No action, suit, or proceeding shall have
been instituted or shall have been threatened before any court or other
governmental body or by any public authority to restrain, enjoin, or prohibit
the Holding Company Merger or the Bank Merger, or which would reasonably be
expected to restrict materially the operation of the business of the Company or
that of the Bank or the exercise of any rights with respect thereto or to
subject either of the parties hereto or any of their subsidiaries, directors, or
officers to any liability, fine, forfeiture, divestiture, or penalty on the
ground that the transactions contemplated hereby, the parties hereto, or their
subsidiaries, directors, or officers have breached or will breach any applicable
law or regulation or have otherwise acted improperly in connection with the
transactions contemplated hereby and with respect to which the parties hereto
have been advised by counsel that, in the opinion of such counsel, such action,
suit, or proceeding raises substantial questions of law or fact which could
reasonably be decided materially adversely to either party hereto or its
subsidiaries, directors, or officers.
3.3. Accounting Treatment. It shall have been determined to the
satisfaction of Zions Bancorp that the reorganization contemplated by this
Agreement will be treated for accounting purposes as a "pooling of interests" in
accordance with APB Opinion No. 16, and Zions Bancorp shall have received a
letter to the above effect from KPMG Peat Marwick, certified public accountants.
3.4. Registration Statement.
(a) Effectiveness. The registration statement to be filed by
Zions Bancorp with the Securities and Exchange Commission (the "SEC") pursuant
to the Securities Act of 1933 (the "Securities Act") in connection with the
registration of the shares of Zions Bancorp Stock to be used as consideration in
connection with the Holding Company Merger (the "Registration Statement") shall
have become effective under that Act, and Zions Bancorp shall have received all
required state securities laws or "blue sky" permits and other required
authorizations or confirmations of the avail ability of exemptions from
registration requirements necessary to issue Zions Bancorp Stock in the Holding
Company Merger.
(b) Absence of Stop-Order. Neither the Registration Statement nor
any such required permit, authorization, or confirmation shall be subject to a
stop-order or threatened stop- order by the SEC or any state securities
authority.
3.5. Federal Income Taxation. Zions Bancorp and the Company shall have
received a written opinion of Duane, Morris & Heckscher LLP, or of another firm
mutually agreeable to Zions Bancorp and the Company, applying existing law, that
the reorganization contemplated by this Agreement shall qualify as one or more
reorganizations under section 368(a)(1) of the Code and the regulations and
rulings promulgated thereunder.
3.6. Adverse Legislation. Subsequent to the date of this Agreement no
legislation shall have been enacted and no regulation or other governmental
requirement shall have been adopted or imposed that renders or will render
consummation of any of the material transactions contemplated by this Agreement
impossible.
4. Conditions Precedent to Performance of the Obligations of Zions
Bancorp, Val Cor, and Valley.
The obligations of Zions Bancorp, Val Cor, and Valley hereunder are
subject to the satisfaction, on or prior to the Effective Date, of all the
following conditions, compliance with which or the occurrence of which may be
waived in whole or in part by Zions Bancorp in writing unless not so permitted
by law:
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4.1. Approval by Shareholders of the Company and the Bank.
(a) The shareholders of the Company, acting pursuant to a proxy
statement in form and substance satisfactory to Zions Bancorp and its counsel,
shall have authorized, ratified, and confirmed the Holding Company Merger by not
less than the requisite percentage of the outstanding voting stock of each class
of the Company, in accordance with the applicable laws of the State of Colorado.
(b) The shareholder of the Bank shall have authorized, ratified,
and confirmed the Bank Merger by not less than the requisite percentage of the
outstanding voting stock of each class of the Bank, in accordance with the
applicable laws of the United States.
4.2. Representations and Warranties; Performance of Obligations. All
representations and warranties of the Company, the Bank, Outcalt, and Wuckert
contained in this Agreement shall be true and correct in all material respects
as of the Effective Date with the same effect as if such representations and
warranties had been made or given at and as of such date, except that
representations and warranties of the Company, the Bank, Outcalt, or Wuckert
contained in this Agreement which specifically relate to an earlier date shall
be true and correct in all material respects as of such earlier date. All
covenants and obligations to be performed or met by the Company, the Bank,
Outcalt, or Wuckert on or prior to the Effective Date shall have been so
performed or met. On the Effective Date, Outcalt, Wuckert, and the president and
chief executive officer and the chief financial officer of each of the Company
and the Bank shall deliver to Zions Bancorp a certificate to that effect. The
delivery of such certificates shall in no way diminish the warranties,
representations, covenants, and obligations of the Company, the Bank, Outcalt,
and Wuckert made in this Agreement.
4.3. Opinion of Company Counsel. Zions Bancorp, Val Cor, and Valley
shall have received a favorable opinion from Kettelkamp, Young & Kettelkamp,
P.C., or from other legal counsel agreeable to Zions Bancorp, dated the
Effective Date, substantially in form and substance as that set forth as Exhibit
IV attached hereto.
4.4. Opinion of Company Litigation Counsel. Zions Bancorp, Val Cor, and
Valley shall have received a favorable opinion from legal counsel handling
litigation matters for the Company and the Bank, dated the Effective Date,
substantially in form and substance as that set forth as Exhibit V attached
hereto.
4.5. Delivery of Branch Authorizations. The Company shall have
delivered to Zions Bancorp originals or certified copies of all of the
regulatory authorizations entitling the Bank to operate each of its branch
offices, together with a certification by the president and chief executive
officer and the chief financial officer of the Bank dated the Effective Date,
certifying that such branch certificates have not been revoked or threatened to
be revoked and that such certificates are in full force and effect.
4.6. No Adverse Developments.
(a) During the period from March 31, 1997 to the Effective Date,
(i) there shall not have been any material adverse change in the financial
position or results of operations of the Company or the Bank taken as a whole,
nor shall the Company or the Bank have sustained any material loss or damage to
its properties, whether or not insured, which materially affects its ability to
conduct its business; and (ii) none of the events described in clauses (a)
through (f) of Section 6.16 of this Agreement shall have occurred, and each of
the practices and conditions described in clauses (x) through (z) of that
section shall have been maintained.
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(b) As of the Effective Date, the capital structure of the
Company and the capital structure of the Bank shall be as stated in section 6.9.
(c) As of the Effective Date, other than liabilities incurred in
the ordinary course of business subsequent to December 31, 1996, there shall be
no liabilities of the Company or the Bank which are material to the Company on a
consolidated basis which were not reflected on the consolidated statement of
condition of the Company as of December 31, 1996 or in the related notes to the
consolidated statement of condition of the Company as of December 31, 1996.
(d) No adverse action shall have been instituted or threatened by
any governmental authority, or referred by a governmental authority to another
governmental authority, for the enforcement or assessment of penalties for the
violation of any laws of regulations relating to equal credit opportunity, fair
housing, or fair lending.
(e) Zions Bancorp shall have received a certificate dated the
Effective Date, signed by the president and the chief financial officer of the
Company and the president and the chief financial officer of the Bank,
certifying to the matters set forth in paragraphs (a), (b), (c), and (d) of this
section 4.6. The delivery of such officers' certificate shall in no way diminish
the warranties and representations of the Company or those of the Bank made in
this Agreement.
4.7. Consolidated Net Worth. On and as of the Effective Date, the
consolidated net worth of the Company as determined in accordance with generally
accepted accounting principles shall not be less than the sum of (a) $7,478,526
and (b) the aggregate contributions to capital caused by the payments
accompanying the exercise of any stock options on or after March 31, 1997.
4.8. Loan Loss Reserve. On and as of the Effective Date, the aggregate
reserve for loan losses of the Bank as determined in accordance with generally
accepted accounting principles shall not be less than $849,545.
4.9. CRA Rating. The CRA rating of the Bank shall be no lower than
"satisfactory."
4.10. Employment Agreement. David E. Broyles shall have entered into an
employment agreement with the Bank substantially in form and substance as that
set forth as Exhibit VI attached hereto.
4.11. Advisory Agreements. Each of Outcalt and Wuckert shall have
entered into advisory agreements with the Bank substantially in form and
substance as that set forth as Exhibit VII attached hereto.
5. Conditions Precedent to Performance of Obligations of the Company
and the Bank.
The obligations of the Company and the Bank hereunder are subject to
the satisfaction, on or prior to the Effective Date, of all the following
conditions, compliance with which or the occurrence of which may be waived in
whole or in part by the Company in writing unless not so permitted by law:
5.1. Approval by Shareholders of Valley. The shareholders of Valley
shall have authorized, ratified, and confirmed the Bank Merger by not less than
the requisite percentage of the outstanding voting stock of each class of
Valley, in accordance with the applicable laws of the United States.
5.2. Representations and Warranties; Performance of Obligations. All
representations and warranties of Zions Bancorp, Val Cor, and Valley contained
in this Agreement shall be true and correct in all material respects as of the
Effective Date with the same effect as if such representations
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<PAGE>
and warranties had been made or given at and as of such date, except that
representations and warranties of Zions Bancorp, Val Cor, and Valley contained
in this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by Zions Bancorp, Val Cor, or Valley on or
prior to the Effective Date shall have been so performed or met. On the
Effective Date, either the President or an Executive Vice President of Zions
Bancorp and either the Chairman of the Board or the President of each of Val Cor
and Valley shall deliver to the Company a certificate to that effect. The
delivery of such officer's certificate shall in no way diminish the warranties,
representa tions, covenants, and obligations of Zions Bancorp, Val Cor, and
Valley made in this Agreement.
5.3. Opinion of Zions Bancorp Counsel. The Company and the Bank shall
have received a favorable opinion of Duane, Morris & Heckscher LLP, dated the
Effective Date, substantially in form and substance as that set forth as Exhibit
VIII attached hereto.
5.4. No Adverse Developments. During the period from March 31, 1997 to
the Effective Date, there shall not have been any material adverse change in the
financial position or results of operations of Zions Bancorp nor shall Zions
Bancorp have sustained any material loss or damage to its properties, whether or
not insured, which materially affects its ability to conduct its business; and
the Company shall have received a certificate dated the Effective Date signed by
either the President of Zions Bancorp or an Executive Vice President of Zions
Bancorp to the foregoing effect. The delivery of such officer's certificate
shall in no way diminish the warranties and representations of Zions Bancorp
made in this Agreement.
5.5. Status of Zions Bancorp Stock. Zions Bancorp Stock shall be listed
on the National Association of Securities Dealers' Automated Quotation System
(or else shall become listed on a national securities exchange).
6. Representations and Warranties of the Company and the Bank.
Outcalt, Wuckert, and the Company (with respect to the Company and the
Bank) and the Bank (solely with respect to itself) each represent and warrant to
Zions Bancorp, Val Cor, and Valley as follows:
6.1. Organization, Powers, and Qualification. Each of the Company and
the Bank is a corporation which is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own and operate its properties and
assets, to lease properties used in its business, and to carry on its business
as now conducted. Each of the Company and the Bank owns or possesses in the
operation of its business all franchises, licenses, permits, branch
certificates, consents, approvals, waivers, and other authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now conducted, except for those where the failure of such ownership or
possession would not adversely affect the operation and properties of the
Company or the Bank in any material respect. Each of the Company and the Bank is
duly qualified and licensed to do business and is in good standing in every
jurisdiction with respect to which the failure to be so qualified or licensed
could result in material liability or adversely affect the operation and
properties of the Company or the Bank in any material respect.
6.2. Execution and Performance of Agreement. Each of the Company and
the Bank has all requisite corporate power and authority to execute and deliver
this Agreement and to perform its respective terms.
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6.3. Absence of Violations. Except as set forth on Schedule 6.3
hereof:
(a) neither the Company nor the Bank is in violation of its
respective charter documents or bylaws, nor of any applicable federal, state, or
local law or ordinance nor any order, rule, or regulation of any federal, state,
local, or other governmental agency or body, in any material respect, or in
default with respect to any order, writ, injunction, or decree of any court, or
in default under any order, license, regulation, or demand of any governmental
agency, any of which violations or defaults could reasonably be expected to have
a materially adverse effect on its business, properties, liabilities, financial
position, results of operations, or prospects; and neither the Company nor the
Bank has received any claim or notice of violation with respect thereto;
(b) neither the Company nor the Bank nor any member of the
management of either of them is a party to any assistance agreement, supervisory
agreement, memorandum of understanding, consent order, cease and desist order or
condition of any regulatory order or decree with or by the Board of Governors,
the OCC, the Federal Deposit Insurance Corporation (the "FDIC"), any other
banking or securities authority of the United States or the State of Colorado,
or any other regulatory agency that relates to the conduct of the business of
the Company or the Bank or their assets; and except as previously disclosed to
Zions Bancorp in writing, no such agreement, memorandum, order, condition, or
decree is pending or threatened;
(c) each of the Company and the Bank has established policies and
procedures to provide reasonable assurance of compliance in a safe and sound
manner with the federal banking, credit, housing, consumer protection, and civil
rights laws and with all other laws applicable to the operations of the Company
and the Bank and the regulations adopted under each of those laws, so that
transactions be executed and assets be maintained in accordance with such laws
and regulations; and the policies and practices of each of the Company and the
Bank with respect to all such laws and regulations reasonably limit
noncompliance and detect and report noncompliance to its management; and
(d) the Bank has established a CRA policy which provides for (i)
goals and objec tives consistent with CRA; (ii) a methodology for
self-assessment by the board of directors of the Bank; (iii) ongoing CRA
training of all personnel of the Bank, including the members of its board of
directors; and (iv) procedures whereby all significant CRA-related activity is
documented; and the Bank has officially designated a CRA officer who reports
directly to the board of directors and is responsible for the CRA program of the
Bank.
6.4. Compliance with Agreements. Neither the Company nor the Bank is in
violation of any material term of any material security agreement, mortgage,
indenture, or any other contract, agreement, instrument, lease, or certificate.
The capital ratios of each of the Company and the Bank comply fully with all
terms of all currently outstanding supervisory and regulatory requirements and
with the conditions of all regulatory orders and decrees.
6.5. Binding Obligations; Due Authorization. Subject to the approval of
its shareholders, this Agreement constitutes valid, legal, and binding
obligations of each of the Company and the Bank, enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar law, or by general principles of
equity. The execution, delivery, and performance of this Agreement and the
transactions contemplated thereby have been duly and validly authorized by the
board of directors of each of the Company and the Bank. Subject to approval by
its shareholders of this Agreement, no other corporate proceedings on the part
of either the Company or the Bank are necessary to authorize this Agreement or
the carrying out of the transactions contemplated hereby.
6.6. Absence of Default. None of the execution or the delivery of this
Agreement, the consummation of the transactions contemplated thereby, or the
compliance with or fulfillment of
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the terms thereof will conflict with, or result in a breach of any of the terms,
conditions, or provisions of, or constitute a default under the organizational
documents or bylaws of the Company or the Bank. Such execution, consummation, or
fulfillment will not (a) conflict with, or result in a material breach of the
terms, conditions, or provisions of, or constitute a material violation,
conflict, or default under, or, except as set forth on Schedule 6.6 hereof, give
rise to any right of termination, cancellation, or acceleration with respect to,
or result in the creation of any lien, charge, or encumbrance upon, any property
or assets of the Company or the Bank pursuant to any material agreement or
instrument under which the Company or the Bank is obligated or by which any of
its properties or assets may be bound, including without limitation any material
lease, contract, mortgage, promissory note, deed of trust, loan, credit
arrangement, or other commitment or arrangement of the Company or the Bank in
respect of which it is an obligor; (b) if the Holding Company Merger is approved
by the Board of Governors under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"), or if the Board of Governors waives its jurisdiction over the
Holding Company Merger, and if the transactions contemplated by this Agreement
are approved by the OCC, the Commissioner, and the Division, violate any law,
statute, rule, or regulation of any government or agency to which the Company or
the Bank is subject and which is material to its operations; or (c) violate any
judgment, order, writ, injunction, decree, or ruling to which the Company or the
Bank or any of its properties or assets is subject or bound. None of the
execution or delivery of this Agreement, the consummation of the transactions
contemplated thereby, or the compliance with or fulfillment of the terms thereof
will require any authorization, consent, approval, or exemption by any person
which has not been obtained, or any notice or filing which has not been given or
done, other than approval of or waiver of jurisdiction over the transactions
contemplated by this Agreement by the Board of Governors, the OCC, the
Commissioner, and the Division.
6.7. Compliance with BHC Act.
(a) The Company is registered as a bank holding company under the BHC
Act. All of the activities and investments of the Company conform to the
requirements applicable generally to bank holding companies under the BHC Act
and the regulations of the Board of Governors adopted thereunder.
(b) No corporation or other entity, other than the Company, is
registered or is required to be registered as a bank holding company under the
BHC Act by virtue of its control over the Bank or over any company that directly
or indirectly has control over the Bank.
6.8. Subsidiaries.
(a) Other than the Bank, which is a direct, wholly-owned
subsidiary of the Company, the Company does not have any direct or indirect
subsidiaries and does not directly or indirectly own, control, or hold with the
power to vote any shares of the capital stock of any company (except shares held
by the Bank for the account of others in a fiduciary or custodial capacity in
the ordinary course of its business). There are no outstanding subscriptions,
options, warrants, convertible securities, calls, commitments, or agreements
calling for or requiring the issuance, transfer, sale, or other disposition of
any shares of the capital stock of the Bank, or calling for or requiring the
issuance of any securities or rights convertible into or exchangeable for shares
of capital stock of the Bank. There are no other direct or indirect subsidiaries
of the Company which are required to be consolidated or accounted for on the
equity method in the consolidated financial statements of the Company or the
financial statements of the Bank prepared in accordance with generally accepted
accounting principles.
(b) Except as specified in the previous subsection, neither the
Company nor the Bank has a direct or indirect equity or ownership interest which
represents 5 percent or more of the aggregate equity or ownership interest of
any entity (including, without limitation, corporations, partnerships, and joint
ventures).
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6.9. Capital Structure.
(a) The authorized capital stock of the Company consists of
10,000 shares of Company Common Stock, $0.01 par value, of which, as of the date
of this Agreement, 2,200 shares have been duly issued and are validly
outstanding, fully paid, and held by approximately forty-two shareholders of
record; no shares are issued and held in the treasury of the Company. The
aforemen tioned shares of Company Common Stock are the only voting securities of
the Company authorized, issued, or outstanding as of such date; and except as
set forth on Schedule 6.9 hereof, no subscrip tions, warrants, options, rights,
convertible securities, or similar arrangements or commitments in respect of
securities of the Company are authorized, issued, or outstanding which would
enable the holder thereof to purchase or otherwise acquire shares of any class
of capital stock of the Company. None of the Company Common Stock is subject to
any restrictions upon the transfer thereof under the terms of the corporate
charter or bylaws of the Company.
(b) Schedule 6.9 hereof lists all options to purchase Company
securities currently outstanding and, for each such option, the date of
issuance, date of exercisability, exercise price, type of security for which
exercisable, and date of expiration. Schedule 6.9 hereof further lists all
shares of Company Common Stock reserved for issuance pursuant to stock option
plans, agreements, or arrangements but not yet issued and all options upon
shares of Company Common Stock designated or made available for grant but not
yet granted.
(c) The authorized capital stock of the Bank consists of 2,200
shares of common stock, $100.00 par value (the "Bank Common Stock"), of which,
as of the date of this Agreement, 2,200 shares have been duly issued and are
validly outstanding, fully paid, and all of which are held of record and
beneficially by the Company. The aforementioned shares of Bank Common Stock are
the only voting securities of the Bank authorized, issued, or outstanding as of
such date; and no subscriptions, warrants, options, rights, convertible
securities, or similar arrangements or commitments in respect of securities of
the Bank are authorized, issued, or outstanding which would enable the holder
thereof to purchase or otherwise acquire shares of any class of capital stock of
the Bank. None of the Bank Common Stock is subject to any restrictions upon the
transfer thereof under the terms of the corporate charter or bylaws of the Bank.
(d) None of the shares of Company Common Stock or Bank Common
Stock has been issued in violation of the preemptive rights of any shareholder.
(e) As of the date hereof, to the best of the knowledge of the
Company and the Bank, and except for this Agreement, there are no shareholder
agreements, or other agreements, understandings, or commitments relating to the
right of any holder or beneficial owner of more than 1 percent of the issued and
outstanding shares of any class of the capital stock of either the Company or
the Bank to vote or to dispose of his or its shares of capital stock of that
entity.
(f) The Company has not granted any shareholders' rights to
dissent from any merger.
6.10. Articles of Incorporation, Bylaws, and Minute Books. The copies
of the articles of incorporation and all amendments thereto and of the bylaws,
as amended, of the Company and the Bank that have been provided to Zions Bancorp
and certified by the Company as complete and true copies are true, correct, and
complete copies thereof. The minute books of the Company and the Bank which have
been made available to Zions Bancorp for its continuing inspection until the
Effective Date contain accurate minutes of all meetings and accurate consents in
lieu of meetings of the board of directors (and any committee thereof) and of
the shareholders of the Company and the Bank since their respective inceptions.
These minute books accurately reflect all transactions referred to in such
minutes and consents in lieu of meetings and disclose all material corporate
actions of the shareholders and boards of directors of the Company and the Bank
and all committees
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<PAGE>
thereof. Except as reflected in such minute books, there are no minutes of
meetings or consents in lieu of meetings of the board of directors (or any
committee thereof) or of shareholders of the Company or the Bank.
6.11. Books and Records. The books and records of each of the Company
and the Bank fairly reflect the transactions to which it is a party or by which
its properties are subject or bound. Such books and records have been properly
kept and maintained and are in compliance in all material respects with all
applicable legal and accounting requirements. Each of the Company and the Bank
follows generally accepted accounting principles applied on a consistent basis
in the preparation and maintenance of its books of account and financial
statements, including but not limited to the application of the accrual method
of accounting for interest income on loans, leases, discounts, and investments,
interest expense on deposits and all other liabilities, and all other items of
income and expense. The Company and the Bank have made all accruals in amounts
which fairly report income and expense in the proper periods in accordance with
generally accepted accounting principles. Each of the Company and the Bank has
filed all material reports and returns required by any law or regulation to be
filed by it.
6.12. Regulatory Approvals and Filings, Contracts, Commitments, etc.
The Company has made or will, no later than ten business days after the date
hereof, make available to Zions Bancorp or grant to Zions Bancorp continuing
access until the Effective Date to originals or copies of the following
documents relating to the Company and the Bank:
(a) All regulatory approvals received since January 1, 1992, of
the Company and the Bank relating to all bank and nonbank acquisitions or the
establishment of de novo operations;
(b) All employment contracts, election contracts, retention
contracts, deferred compensation, non-competition, bonus, stock option,
profit-sharing, pension, retirement, consultation after retirement, incentive,
insurance arrangements or plans (including medical, disability, group life or
other insurance plans), and any other remuneration or fringe benefit
arrangements applicable to employees, officers, or directors of the Company or
the Bank, accompanied by any agreements, including trust agreements, embodying
such contracts, plans, or arrangements, and all employee manuals and memoranda
relating to employment and benefit policies and practices of any nature
whatsoever (whether or not distributed to employees or any of them), and any
actuarial reports and audits relating to such plans;
(c) All material contracts, agreements, leases, mortgages, and
commitments, except those entered into in the ordinary course of business, to
which the Company or the Bank is a party or may be bound; or, if any of the same
be oral, true, accurate, and complete written summaries of all such oral
contracts, agreements, leases, mortgages, and commitments;
(d) All material contracts, agreements, leases, mortgages, and
commitments, whether or not entered into in the ordinary course of business, to
which the Company or the Bank is a party or may be bound and which require the
consent or approval of third parties to the execution and delivery of this
Agreement or to the consummation or performance of any of the transactions
contemplated thereby, or, if any of the same be oral, true, accurate, and
complete written summaries of all such oral contracts, agreements, leases,
mortgages, and commitments;
(e) All deeds, leases, contracts, agreements, mortgages, and
commitments, whether or not entered into in the ordinary course of business, to
which the Company or the Bank is a party or may be bound and which relate to
land, buildings, fixtures, or other real property upon or within which the
Company or the Bank operates its businesses or is authorized to operate its
businesses, or with respect to which the Company or the Bank has any application
pending for authorization to operate its businesses;
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(f) Any pending application, including any documents or materials
related thereto, which has been filed by the Company or the Bank with any
federal or state regulatory agency with respect to the establishment of a new
office or the acquisition or establishment of any additional banking or
nonbanking subsidiary; and
(g) All federal, state, and local tax returns, including any
amended returns, filed by the Company or the Bank for the years 1991 through
1996, a copy of the most recent audit examination of each of the Company and the
Bank by the Internal Revenue Service ("IRS"), and a copy of all correspondence
or other documents with respect to any examination that has not yet been
resolved, a copy of the most recent state or local tax agency examination, if
any, of each of the Company and the Bank, and a copy of all correspondence or
other documents with respect to any examination that has not yet been resolved,
and all tax rulings, closing agreements, settlement agreements, or similar
documents with respect to the Company or the Bank received from or entered into
with the IRS or any other taxing authority since January 1, 1988 or that would
have continuing effect after the Effective Date.
6.13. Financial Statements. The Company has furnished to Zions Bancorp
its consolidated statement of condition as of each of December 31, 1994,
December 31, 1995, December 31, 1996, and March 31, 1997, and its related
consolidated statement of income, consolidated statement of changes in financial
position, and consolidated statement of changes in stockholders' equity for each
of the periods then ended, and the notes thereto (collectively, the "Company
Financial Statements"). All of the Company Financial Statements, including the
related notes, (a) were prepared in accordance with generally accepted
accounting principles applied in all material respects, and (b) are in
accordance with the books and records of the Company and the Bank which have
been main tained in accordance with generally accepted accounting principles or
the requirements of financial institution regulatory authorities, as the case
may be, and (c) fairly reflect the consolidated financial position of the
Company as of such dates, and the consolidated results of operations of the
Company for the periods ended on such dates, and do not fail to disclose any
material extraordinary or out-of-period items, and (d) reflect, in accordance
with generally accepted accounting principles applied in all material respects,
adequate provision for, or reserves against, the possible loan losses of the
Company as of such dates.
6.14. Call Reports; Bank Holding Company Reports.
(a) The Bank has made available to Zions Bancorp its Consolidated
Reports of Condition and Consolidated Reports of Income for the calendar
quarters dated March 31, 1995 and thereafter. All of such Consolidated Reports
of Condition and Consolidated Reports of Income, including the related schedules
and memorandum items, were prepared in accordance with generally accepted
accounting principles applied in all material respects or, to the extent
different from generally accepted accounting principles, accounting principles
mandated by the applicable instructions to such Consolidated Reports of
Condition or Consolidated Reports of Income.
(b) No adjustments are required to be made to the equity capital
account of the Bank as reported on any of the Consolidated Reports of Condition
referred to in Subsection 6.14(a) hereof, in any material amount, in order to
conform such equity capital account to equity capital as would be determined in
accordance with generally accepted accounting principles as of such date.
(c) The Company has furnished to Zions Bancorp (i) its annual
report on Form FR Y-6 as filed with the Board of Governors as of December 31,
1996, and (ii) its quarterly reports on Forms FR Y-9C and FR Y-9LP as filed with
the Board of Governors as of March 31, 1997.
6.15. Absence of Undisclosed Liabilities. At March 31, 1997, neither
the Company nor the Bank had any obligation or liability of any nature (whether
absolute, accrued, contingent, or otherwise, and whether due or to become due)
which was material, or which when combined with
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all similar obligations or liabilities would have been material, to the Company,
except (a) as disclosed in the Company Financial Statements, or (b) as set forth
on Schedule 6.15 hereof, or (c) for unfunded loan commitments made by the
Company or the Bank in the ordinary course of their business consistent with
past practice. The amounts set up as current liabilities for taxes in the
Company Financial Statements are sufficient for the payment of all taxes
(including, without limitation, federal, state, local, and foreign excise,
franchise, property, payroll, income, capital stock, and sales and use taxes and
any interest, penalties, or additions to tax with respect thereto ("Tax" or
"Taxes")) accrued in accordance with generally accepted accounting principles
and unpaid at March 31, 1997. Since March 31, 1997, neither the Company nor the
Bank has incurred or paid any obligation or liability that would be material (on
a consolidated basis) to the Company, except (x) for obligations incurred or
paid in connection with transactions by it in the ordinary course of its
business consistent with past practices, or (y) as set forth on Schedule 6.15
hereof, or (z) as expressly contemplated herein.
6.16. Absence of Certain Developments. Since March 31, 1997, except as
set forth on Schedule 6.16 hereof, there has been (a) no material adverse change
in the condition, financial or otherwise, or to the assets, properties,
liabilities, or businesses of the Company and the Bank, (b) no material
deterioration in the quality of the consolidated loan portfolio of the Company,
and no material increase in the consolidated level of nonperforming assets or
non-accrual loans at the Company or in the level of its consolidated provision
for credit losses or its consolidated reserve for possible credit losses; (c) no
declaration, setting aside, or payment by the Company or the Bank of any regular
dividend, special dividend, or other distribution with respect to any class of
capital stock of the Company or the Bank, other than customary cash dividends
paid by the Company or the Bank whose amounts have not exceeded past practice
and the intervals between which dividends have not been more frequent than past
practice; (d) no repurchase by the Company of any of its capital stock; (e) no
material loss, destruction, or damage to any material property of the Company or
the Bank, which loss, destruction, or damage is not covered by insurance; and
(f) no material acquisition or disposition of any asset, nor any material
contract outside the ordinary course of business entered into by the Company or
the Bank nor any substantial amendment or termination of any material contract
outside the ordinary course of business to which the Company or the Bank is a
party, nor any other transaction by the Company or the Bank involving an amount
in excess of $25,000 other than for fair value in the ordinary course of its
business. Since March 31, 1997, except as set forth on Schedule 6.16 hereof, (x)
each of the Company and the Bank has conducted its business only in the ordinary
course of such business and consistent with past practice; (y) the Company, on a
consolidated basis, has maintained the quality of its loan portfolio and that of
each of its major components at approximately the same level as existed at March
31, 1997; and (z) the Company, on a consolidated basis, has administered its
investment portfolio pursuant to essentially the same policies and procedures as
existed during 1995 and 1996 and the first three months of 1997, and has taken
no action to lengthen the average maturity of the investment portfolio, or of
any significant category thereof, to any material extent.
6.17. Reserve for Possible Credit Losses. The Company's consolidated
reserve for possible credit losses is adequate to absorb reasonably anticipated
losses in the consolidated loan and lease portfolios of the Company, in view of
the size and character of such portfolios, current economic conditions, and
other pertinent factors. Management periodically reevaluates the adequacy of
such reserve based on portfolio performance, current economic conditions, and
other factors.
6.18. Tax Matters.
(a) Except as set forth on Schedule 6.18 hereof, all Tax returns
and reports required to be filed by or on behalf of the Company or the Bank have
been timely filed with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be filed, or
requests for extensions have been timely filed, granted, and have not expired
for periods ending on or before December 31, 1996, and all returns filed are
complete and accurate and
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properly reflect its Taxes for the periods covered thereby. All Taxes shown or
required to be shown on filed returns have been paid. As of the date hereof,
there is no audit examination, deficiency, or refund litigation or tax claim or
any notice of assessment or proposed assessment by the IRS or any other taxing
authority, or any other matter in controversy with respect to any Taxes that
might result in a determination adverse to the Company or the Bank, except as
reserved against in the Company Financial Statements. All Taxes due with respect
to completed and settled examinations or concluded litigation have been properly
accrued or paid.
(b) Neither the Company nor the Bank has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect.
(c) To the extent any Taxes are due from, but have not yet been
paid by, the Company or the Bank for the period or periods beginning January 1,
1997 or thereafter through and including the Effective Date, adequate provision
on an estimated basis has been or will be made for the payment of such taxes by
establishment of appropriate tax liability accounts on the last monthly
financial statements of the Company prepared before the Effective Date.
(d) Except as set forth on Schedule 6.18 hereof, deferred Taxes
of the Company and the Bank have been provided for in accordance with generally
accepted accounting principles as in effect on the date of this Agreement.
(e) The deductions of the Bank for bad debts taken and the
reserve of the Bank for loan losses for federal income tax purposes at December
31, 1996, were not greater than the maximum amount permitted under the
provisions of section 585 of the Code.
(f) Other than liens arising under the laws of the State of
Colorado with respect to taxes assessed and not yet due and payable, there are
no tax liens on any of the properties or assets of the Company or the Bank.
(g) The Company and the Bank (A) have timely filed all
information returns or reports required to be filed with respect to Taxes,
including but not limited to those required by sections 6041, 6041A, 6042, 6045,
6049, 6050H, and 6050J of the Code, (B) have properly and timely provided to all
persons, other than taxing authorities, all information reports or other
documents (for example, Form 1099s, Form W-2s, and so forth) required to be
provided to such persons under applicable law, and (C) have exercised due
diligence in obtaining certified taxpayer identification numbers as required
under applicable law.
(h) The taxable year end of the Company for federal income tax
purposes is, and since the inception of the Company has continuously been,
December 31.
(i) The Company and the Bank have in all material respects
satisfied all federal, state, local, and foreign withholding tax requirements
including but not limited to income, social security, and employment tax
withholding.
(j) Neither the Company nor the Bank (A) is, or has been, a
member of a group filing a consolidated, combined, or unitary tax return, other
than a group the common parent of which is or was the Company, or (B) has any
liability for the Taxes of any person (other than the Company and the Bank)
under Treas. Reg. Sec. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
6.19. Consolidated Net Worth. The consolidated net worth of the Company
on the date of this Agreement, as determined in accordance with generally
accepted accounting principles, is not less than $7,478,526.
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6.20. Examinations. To the extent consistent with law, the Company has
heretofore disclosed to Zions Bancorp relevant information contained in the most
recent safety-and-soundness, compliance, Community Reinvestment Act, and other
Reports of Examination with respect to the Company issued by the Board of
Governors and the most recent safety-and-soundness, compliance, Community
Reinvestment Act, and other Reports of Examination with respect to the Bank
issued by the OCC. Such information so disclosed consists of all material
information with respect to the financial, operational, and legal condition of
the entity under examination which is included in such reports, and does not
omit or will not omit any information necessary to make the information
disclosed not misleading.
6.21. Reports. Since January 1, 1994, each of the Company and the Bank
has effected all registrations and filed all reports and statements, together
with any amendments required to be made with respect thereto, which it was
required to effect or file with (a) the Board of Governors, (b) the OCC, (c) the
FDIC, (d) the United States Department of the Treasury, (e) the Division, and
(f) any other governmental or regulatory authority or agency having jurisdiction
over its operations. Each of such registrations, reports, and documents,
including the financial statements, exhibits, and schedules thereto, does not
contain any statement which, at the time and in the light of the circumstances
under which it was made, is false or misleading with respect to any material
fact or which omits to state any material fact necessary in order to make the
statements contained therein not false or misleading.
6.22. FIRA Compliance and Other Transactions with Affiliates. Except as
set forth on Schedule 6.22 hereof, (a) none of the officers, directors, or
beneficial holders of 5 percent or more of the common stock of the Company or
the Bank and no person "controlled" (as that term is defined in the Financial
Institutions Regulatory and Interest Rate Control Act of 1978) by the Company or
the Bank (collectively, "Insiders") has any ongoing material transaction with
the Company or the Bank on the date of this Agreement; (b) no Insider has any
ownership interest in any business, corporate or otherwise, which is a party to,
or in any property which is the subject of, business arrangements or
relationships of any kind with the Company or the Bank not in the ordinary
course of business; and (c) all other extensions of credit by the Company or the
Bank to any Insider have heretofore been disclosed in writing by the Company to
Zions Bancorp.
6.23. SEC Registered Securities. No equity or debt securities of the
Company or the Bank are registered or required to be registered under the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
6.24. Legal Proceedings. Except as disclosed in the Company Financial
Statements or as set forth on Schedule 6.24 hereof, there is no claim, action,
suit, arbitration, investigation, or other proceeding pending before any court,
governmental agency, authority or commission, arbitrator, or "impartial
mediator" (of which the Company or the Bank has been served with process or
otherwise been given notice) or, to the best of the knowledge of the Company and
the Bank , threatened or contemplated against or affecting it or its property,
assets, interests, or rights, or any basis therefor of which notice has been
given, which, if adversely determined, would have a material adverse effect
(financial or otherwise) on the business, operating results, or financial
condition of the Company or which otherwise could prevent, hinder, or delay
consummation of the transactions contemplated by this Agreement.
6.25. Absence of Governmental Proceedings. Except as set forth on
Schedule 6.25 hereof, neither the Company nor the Bank is a party defendant or
respondent to any pending legal, equitable, or other proceeding commenced by any
governmental agency and, to the best of the knowledge of the Company and the
Bank, no such proceeding is threatened.
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<PAGE>
6.26. Federal Deposit Insurance.
(a) The deposits held by the Bank are insured within statutory
limits by the Bank Insurance Fund of the FDIC pursuant to the provisions of the
Federal Deposit Insurance Act, as amended (12 U.S.C. ss. 1811 et seq.), and the
Bank has paid all assessments and filed all related reports and statements
required under the Federal Deposit Insurance Act.
(b) The Bank is a member of and pay insurance assessments to the
Bank Insurance Fund of the FDIC ("BIF"), and its deposits are insured by the
BIF. None of the deposits of the Bank are insured by the Savings Association
Insurance Fund of the FDIC ("SAIF"), and the Bank pays no insurance assessments
to the SAIF.
6.27. Other Insurance. Each of the Company and the Bank carries
insurance with reputable insurers, including blanket bond coverage, in such
amounts as are reasonable to cover such risks as are customary in relation to
the character and location of its properties and the nature of its businesses.
All such policies of insurance are in full force and effect, and no notice of
cancellation has been received. All premiums to date have been paid in full.
Neither the Company nor the Bank is in default with respect to any such policy
which is material to it.
6.28. Labor Matters. Neither the Company nor the Bank is a party to or
bound by any collective bargaining contracts with respect to any employees of
the Company or the Bank. Since their respective inceptions there has not been,
nor to the best of the knowledge of the Company and the Bank was there or is
there threatened, any strike, slowdown, picketing, or work stoppage by any union
or other group of employees against the Company or the Bank or any of its
premises, or any other labor trouble or other occurrence, event, or condition of
a similar character. As of the date hereof, neither the Company nor the Bank is
aware of any attempts to organize a collective bargaining unit to represent any
of its employee groups.
6.29. Employee Benefit Plans.
(a) Schedule 6.29 hereto contains a list or brief descriptions of
all pension, retire ment, stock purchase, stock bonus, stock ownership, stock
option, performance share, stock appreciation right, phantom stock, savings, or
profit-sharing plans, any employment, deferred compensation, consultant, bonus,
or collective bargaining agreement, or group insurance contract or any other
incentive, welfare, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
or vacation plans, contracts, and arrangements or employee benefit plans or
agreements sponsored, maintained, or contributed to by the Company or the Bank
for the employees or former employees of the Company or the Bank. The Company
has previously made available and will continue to make available to Zions
Bancorp for its continuing review until the Effective Date true, complete, and
accurate copies of all plans and arrangements listed on Schedule 6.29, together
with (i) the most recent actuarial and financial report prepared with respect to
any such plans which constitute "qualified plans" under section 401(a) of the
Code, and (ii) the most recent annual reports, if any, filed with any government
agency and all IRS rulings and determination letters and any open requests for
such rulings and letters that pertain to any such plan.
(b) Except for liabilities to the Pension Benefit Guaranty
Corporation ("PBGC") pursuant to section 4007 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), all of which have been fully paid,
and except for liabilities to the IRS under section 4971 of the Code, all of
which have been fully paid, neither the Company nor the Bank has any liability
with respect to any pension plan qualified under section 401 of the Code.
Neither the Company nor the Bank sponsors or maintains any defined benefit plan
and has never sponsored or maintained any defined benefit plan.
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(c) All "employee benefit plans," as defined in section 3(3) of
ERISA, that cover one or more employees employed by the Company or the Bank
(each individually a "Plan" and collectively the "Plans"), comply in all
material respects with ERISA and, where applicable for tax-qualified or
tax-favored treatment, with the Code. As of March 31, 1997, neither the Company
nor the Bank had any material liability under any Plan which is not reflected on
the Company Financial Statements as of such date (other than such normally
unrecorded liabilities under the Plans for sick leave, holiday, education,
bonus, vacation, incentive compensation, and anniversary awards, provided that
such liabilities are not in any event material). None of the Plans, the Company,
the Bank, nor any trustee or administrator of the Plans has ever engaged in a
"prohibited transaction" with respect to the Plans within the meaning of section
406 of ERISA or, where applicable, section 4975 of the Code for which no
exemption is applicable, nor have there been any "reportable events" within
section 4043 of ERISA for which the thirty-day notice therefor has not been
waived. Neither the Company nor the Bank has incurred any liability under
section 4201 of ERISA for a complete or partial withdrawal from a multi-employer
plan.
(d) No action, claim, or demand of any kind has been brought or
threatened by any potential claimant or representative of such a claimant under
any plan, contract, or arrangement referred to in Subsection (a) of this
section, where the Company or the Bank may be either (i) liable directly on such
action, claim, or demand; or (ii) obligated to indemnify any person, group of
persons, or entity with respect to such action, claim, or demand which is not
fully covered by insurance maintained with reputable, responsible financial
insurers or by a self-insured plan.
6.30. Employee Relations. As of the date hereof, each of the Company
and the Bank is, to the best of its knowledge, in compliance in all material
respects with all federal and state laws, regulations, and orders respecting
employment and employment practices (including Title VII of the Civil Rights Act
of 1964), terms and conditions of employment, and wages and hours; and neither
the Company nor the Bank is engaged in any unfair labor practice. As of the date
hereof, except as set forth on Schedule 6.30 hereof, no dispute exists between
the Company or the Bank and any of its employee groups regarding any employee
organization, wages, hours, or conditions of employment which would materially
interfere with the business or operations of the Company or the Bank.
6.31. Fiduciary Activities. The Bank is duly qualified and registered
and in good standing in accordance with the laws of each jurisdiction in which
it is required to so qualify or register as a result of or in connection with
its fiduciary or custodial activities as conducted as of the date hereof. The
Bank is duly registered under and in compliance with all requirements of the
federal Investment Advisers Act of 1940 as amended, or is exempt from
registration thereunder and from compliance with the requirements thereof. Since
January 1, 1994, the Bank has conducted, and currently is conducting, all
fiduciary and custodial activities in all material respects in accordance with
all applicable law.
6.32. Environmental Liability.
(a) Except as set forth on Schedule 6.32 hereof, neither the
Company nor the Bank is in material violation of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental matters, including
those arising under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, the
Federal Water Pollution Control Act, the Federal Clean Air Act, the Toxic
Substances Control Act or any state or local statute, regulation, ordinance,
order or decree relating to health, safety or the environment ("Environmental
Laws").
(b) Except as set forth on Schedule 6.32 hereof, neither the
Company, the Bank, nor, to the best of the knowledge of either of them, any
borrower of the Company or of the Bank has
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received notice that it has been identified by the United States Environmental
Protection Agency as a potentially responsible party under CERCLA with respect
to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B,
nor has the Company or the Bank or, to the best of the knowledge of either of
them, any borrower of the Company or of the Bank received any notification that
any hazardous waste, as defined by 42 U.S.C. ss. 6903(5), any hazardous
substances, as defined by 42 U.S.C. ss. 9601(14), any "pollutant or
contaminant," as defined by 42 U.S.C. ss. 9601(33), or any toxic substance,
hazardous materials, oil, or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") that it has disposed of has been
found at any site at which a federal or state agency is conducting a remedial
investigation or other action pursuant to any Environmental Law.
(c) To the best knowledge of the Company, the Bank, Outcalt, and
Wuckert collectively, no portion of any real property at any time owned or
leased by the Company or the Bank (collectively, the "Company Real Estate") has
been used by the Company or the Bank for the handling, processing, storage or
disposal of Hazardous Substances in a manner which violates any Environmental
Laws and, to the best of the knowledge of such person giving the warranty, no
under ground tank or other underground storage receptacle for Hazardous
Substances is located on any of the Company Real Estate. To the best knowledge
of the Company, the Bank, Outcalt, and Wuckert collectively, in the course of
its activities, neither the Company nor the Bank has generated or is generating
any hazardous waste on any of the Company Real Estate in a manner which violates
any Environmental Laws. To the best knowledge of the Company, the Bank, Outcalt,
and Wuckert collectively, there has been no past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping (collectively, a "Release") of Hazardous
Substances by the Company or the Bank on, upon, or into any of the Company Real
Estate. In addition, to the best of the knowledge of the Company, the Bank,
Outcalt, and Wuckert collectively, except as set forth on Schedule 6.32 hereof,
there have been no such Releases on, upon, or into any real property in the
vicinity of any of the Company Real Estate that, through soil or groundwater
contamination, may be located on any of such Company Real Estate.
(d) With respect to any real property at any time held as
collateral for any outstanding loan by the Company or the Bank (collectively,
the "Collateral Real Estate"), except as set forth on Schedule 6.32 hereof, to
the best knowledge of the Company, the Bank, Outcalt, and Wuckert collectively,
neither the Company nor the Bank has since January 1, 1988 received notice from
any borrower thereof or third party, or has knowledge, that such borrower has
generated or is generating any hazardous waste on any of the Collateral Real
Estate in a manner which violates any Environmental Laws or that there has been
any Release of Hazardous Substances by such borrower on, upon, or into any of
the Collateral Real Estate, or that there has been any Release on, upon, or into
any real property in the vicinity of any of the Collateral Real Estate that,
through soil or groundwater contamination, may be located on any of such
Collateral Real Estate.
(e) As used in this Section 6.32, each of the terms "Company" and
"Bank" includes the applicable entity and any partnership or joint venture in
which it has an interest.
6.33. Intangible Property. To the best of the knowledge of the Company
and the Bank, each of the Company and the Bank owns or possesses the right, free
of the claims of any third party, to use all material trademarks, service marks,
trade names, copyrights, patents, and licenses currently used by it in the
conduct of its business. To the best of the knowledge of the Company and the
Bank, no material product or service offered and no material trademark, service
mark, or similar right used by the Company or the Bank infringes any rights of
any other person, and, as of the date hereof, neither the Company nor the Bank
has received any written or oral notice of any claim of such infringement.
6.34. Real and Personal Property. Except for property and assets
disposed of in the ordinary course of business, each of the Company and the Bank
possesses good and marketable title to and
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owns, free and clear of any mortgage, pledge, lien, charge, or other encumbrance
or other third party interest of any nature whatsoever which would materially
interfere with the business or operations of either the Company or the Bank, its
real and personal property and other assets, including without limitation those
properties and assets reflected in the Company Financial Statements as of March
31, 1997, or acquired by the Company or the Bank subsequent to the date thereof.
The leases pursuant to which the Company and the Bank lease real or personal
property are valid and effective in accordance with their respective terms; and
there is not, under any such lease, any material existing default or any event
which, with the giving of notice or lapse of time or otherwise, would constitute
a material default. The real and personal property leased by either the Company
or the Bank is free from any adverse claim which would materially interfere with
its business or operation taken as a whole. The material properties and
equipment owned or leased by the Company and the Bank are in normal operating
condition, free from any known defects, except such minor defects as do not
materially interfere with the continued use thereof in the conduct of its normal
operations.
6.35. Loans, Leases, and Discounts.
(a) To the best of the knowledge of the Company and the Bank,
each loan, lease, and discount reflected as an asset of the Company in the
Company Financial Statements as of March 31, 1997, or acquired since that date,
is the legal, valid, and binding obligation of the obligor named therein,
enforceable in accordance with its terms; and no loan, lease, or discount having
an unpaid balance (principal and accrued interest) in excess of $25,000 is
subject to any asserted defense, offset, or counterclaim known to the Company or
the Bank.
(b) Except as set forth on Schedule 6.35 hereof, neither the
Company nor the Bank holds any loans or loan-participation interests purchased
from, or participates in any loans originated by, any person other than the
Company or the Bank.
6.36. Material Contracts. Neither the Company nor the Bank nor any of
the assets, businesses, or operations of either of them is as of the date hereof
a party to, or is bound or affected by, or receives benefits under any material
agreement, arrangement, or commitment not cancelable by it without penalty,
other than (a) the agreements set forth on Schedule 6.36 hereof, and (b)
agreements, arrangements, or commitments entered into in the ordinary course of
its business consistent with past practice, or, if there has been no past
practice, consistent with prudent banking practices.
6.37. Employment and Severance Arrangements. Schedule 6.37 hereof
sets forth
(a) all employment contracts granted by the Company or the Bank
to any of its officers, directors, shareholders, consultants, or other
management officials and any officer, director, shareholder, consultant, or
management official of any affiliate providing for increased or acceler ated
compensation in the event of a change of control with respect to the Company or
the Bank or any other event affecting the ownership, control, or management of
the Company or the Bank; and
(b) all employment and severance contracts, agreements, and
arrangements between the Company or the Bank and any officer, director,
consultant, or other management official of any of them.
6.38. Material Contract Defaults. All contracts, agreements, leases,
mortgages, or commitments referred to in Section 6.12(c) hereof are valid and in
full force and effect on the date hereof. As of the date of this Agreement and
as of the Effective Date, neither the Company nor the Bank is or will be in
default in any material respect under any material contract, agreement, commit
ment, arrangement, lease, insurance policy, or other instrument to which it is a
party or by which its assets, business, or operations may be bound or affected
or under which it or its assets, business,
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or operations receive benefits; and there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute such a
default.
6.39. Capital Expenditures. Except as set forth on Schedule 6.39
hereof, neither the Company nor the Bank has any outstanding commitments in the
nature of capital expenditures which in the aggregate exceed $12,500.
6.40. Repurchase Agreements. With respect to all agreements pursuant to
which the Company or the Bank has purchased securities subject to an agreement
to resell, it has a valid, perfected first lien or security interest in the
securities securing the agreement, and the value of the collateral securing each
such agreement equals or exceeds the amount of the debt secured by such
collateral under such agreement.
6.41. Internal Controls. Each of the Company and the Bank maintains
internal controls to provide reasonable assurance to its board of directors and
officers that its assets are safeguarded, its records and reports are prepared
in compliance with all applicable legal and accounting requirements and with its
internal policies and practices, and applicable federal, state, and local laws
and regulations are complied with. These controls extend to the preparation of
its financial state ments to provide reasonable assurance that the statements
are presented fairly in conformity with generally accepted accounting principles
or, in the case of the Bank and to the extent different from generally accepted
accounting principles, accounting principles mandated by the OCC. The controls
contain self-monitoring mechanisms, and appropriate actions are taken on
significant deficiencies as they are identified.
6.42. Dividends. Neither the Company nor the Bank has paid any dividend
to its shareholders which caused its regulatory capital to be less than the
amount then required by applicable law, or which exceeded any other limitation
on the payment of dividends imposed by law, agreement, or regulatory policy.
6.43. Brokers and Advisers. Except as set forth on Schedule 6.43
hereof, (a) there are no claims for brokerage commissions, finder's fees, or
similar compensation arising out of or due to any act of the Company or the Bank
in connection with the transactions contemplated by this Agreement or based upon
any agreement or arrangement made by or on behalf of the Company or the Bank,
and (b) neither the Company nor the Bank has entered into any agreement or
understanding with any party relating to financial advisory services provided or
to be provided with respect to the trans actions contemplated by this Agreement.
6.44. Interest Rate Risk Management Instruments.
(a) Schedule 6.44 contains a true, correct, and complete list of
all interest-rate swaps, caps, floors, and options agreements and other
interest-rate risk management arrangements to which the Company or the Bank is a
party or by which any of its properties or assets may be bound.
(b) All interest rate swaps, caps, floors, and option agreements
and other interest rate risk management arrangements to which the Company or the
Bank is a party or by which any of its properties or assets may be bound were
entered into in the ordinary course of its business and, to the best of its
knowledge, in accordance with prudent banking practice and applicable rules,
regulations, and regulatory policies and with counterparties believed to be
financially responsible at the time and are legal, valid, and binding
obligations enforceable in accordance with their terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization, or similar laws affecting
the rights of creditors generally and the availability of equitable remedies),
and are in full force and effect. The Company and the Bank have duly performed
in all material respects of all of their respective obligations thereunder to
the extent that such obligations to perform have accrued;
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and to the best of the knowledge of the Company and the Bank, there are no
breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
6.45. Disclosure. No representation or warranty hereunder and no
certificate, statement, or other document delivered by the Company or the Bank
hereunder or in connection with this Agreement or any of the transactions
contemplated thereunder contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Company which reasonably might
materially adversely affect the business, assets, liabilities, financial
condition, results of operations, or prospects of the Company or the Bank which
has not been disclosed in the Company Financial Statements or a certificate
delivered to Zions Bancorp by the Company. Copies of all documents referred to
in this Agreement, unless prepared solely by Zions Bancorp, Val Cor, or Valley
or solely by Zions Bancorp, Val Cor, or Valley and third parties hereto, are
true, correct, and complete copies thereof and include all amendments,
supplements, and modifications thereto and all waivers thereunder.
6.46. Regulatory and Other Approvals. As of the date hereof, except as
set forth on Schedule 6.46 hereof, the Company, the Bank, Outcalt, and Wuckert
collectively are not aware of any reason why all material consents and approvals
shall not be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement, as shall be necessary for (a)
consummation of the transactions contemplated by this Agreement, and (b) the
continuation after the Effective Date of the business of the Company and the
Bank as such business is carried on immediately prior to the Effective Date,
free of any conditions or requirements which, in the reasonable opinion of the
Company, could have a material adverse effect upon the business, operations,
activities, earnings, or prospects of the Company. As of the date hereof, the
Company, the Bank, Outcalt, and Wuckert collectively are not aware of any reason
why all material consents and approvals shall not be procured from all other
persons and entities whose consent or approval shall be necessary for (y)
consummation of the transactions contemplated by this Agreement, or (z) the
continuation after the Effective Date of the business of the Company and the
Bank as such business is carried on immediately prior to the Effective Date.
7. Covenants of the Company and the Bank.
The Company (on behalf of itself and the Bank) and the Bank (on behalf
of itself) each hereby covenant and agree as follows:
7.1. Rights of Access. In addition and not in limitation of any other
rights of access provided to Zions Bancorp, Val Cor, and Valley herein, until
the Effective Date the Company and the Bank will give to Zions Bancorp, Val Cor,
and Valley and to their representatives, including their certified public
accountants, KPMG Peat Marwick, full access during normal business hours to all
of the property, documents, contracts, books, and records of the Company and the
Bank, and such information with respect to their business affairs and properties
as Zions Bancorp, Val Cor, or Valley from time to time may reasonably request.
7.2. Corporate Records, Contracts, etc.
(a) The Company and the Bank will make available to Zions
Bancorp, Val Cor, and Valley copies of their respective articles of
incorporation and bylaws, and will make available their respective minute books,
all of which shall be certified to be complete and true copies.
(b) The Company and the Bank will make available copies of all
contracts or agreements involving amounts in excess of $12,500 to which the
Company or the Bank is a party, including but not limited to data processing
contracts, service contracts, contracts to purchase or
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lease real property or equipment, guaranties, employment contracts, and
insurance contracts pertain ing to fire, accident, indemnity, fidelity, health,
life, hospitalization, or other employee benefits.
(c) The Company and the Bank will furnish to Zions Bancorp, Val
Cor, and Valley the following information with respect to properties owned by
the Company and the Bank: (i) a brief description and location of each parcel of
real property owned by the Company or the Bank, (ii) a brief description of real
property covered by lease or other rental arrangements to which the Company or
the Bank is a party, including a copy of the relevant leases; and (iii) a brief
description of personal property with a value in excess of $12,500 covered by
lease or other rental arrangements to which the Company or the Bank is a party,
including a copy of the relevant leases.
7.3. Monthly and Quarterly Financial Statements; Minutes of Meetings
and Other Materials.
(a) The Company and the Bank will continue to prepare all of the
monthly and quarterly financial statements and financial reports to regulatory
authorities for the months and quarterly periods ending between April 1, 1997
and the Effective Date which it customarily prepared during the period between
January 1, 1995 and March 31, 1997 and shall promptly provide Zions Bancorp with
copies of all such financial statements and reports. Such financial statements
and reports shall be verified by the chief financial officer of the reporting
entity. All of such financial statements and reports, including the related
notes, schedules, and memorandum items, will have been prepared in accordance
with generally accepted accounting principles applied in all material respects
(except that Consolidated Reports of Condition and Consolidated Reports of
Income required to be filed by the Bank under federal law may be prepared in
accordance with the official instructions applicable thereto at the time of
filing).
(c) The Company and the Bank shall promptly provide Zions Bancorp
with (i) copies of all of its periodic reports to directors and to shareholders,
whether or not such reports were prepared or distributed in connection with a
meeting of the board of directors or a meeting of the shareholders, prepared or
distributed between the date of this Agreement and the Effective Date, and (ii)
complete copies of all minutes of meetings of its board of directors and
shareholders which meetings take place between the date of this Agreement and
the Effective Date, certified by the secretary or cashier or an assistant
secretary or assistant cashier of the Company or the Bank, as the case may be.
7.4. Extraordinary Transactions. Without the prior written consent of
Zions Bancorp, neither the Company nor the Bank will, on or after the date of
this Agreement: (a) declare or pay any cash dividends or property dividends with
respect to any class of its capital stock, with the exception of customary
periodic cash dividends paid by the Company or the Bank to holders of its common
stock at such intervals and in such amounts as are in every case consistent with
the amounts and intervals characteristic of that payer; (b) declare or
distribute any stock dividend, authorize a stock split, or authorize, issue, or
make any distribution of its capital stock or any other securities (except for
issuances of Company Common Stock upon exercise of stock options outstanding on
the date of this Agreement), or grant any options to acquire such additional
securities; (c) merge into, consolidate with, or sell its assets to any other
corporation or person, or enter into any other transac tion or agree to effect
any other transaction not in the ordinary course of its business except as
explicitly contemplated herein, or engage in any discussions concerning such a
possible transaction except as explicitly contemplated herein; (d) convert the
charter or form of entity of the Bank from that in existence on the date of this
Agreement to any other charter or form of entity; (e) make any direct or
indirect redemption, purchase, or other acquisition of any of its capital stock;
(f) except in the ordinary course of its business or to accomplish the
transactions contemplated by this Agreement, incur any liability or obligation,
make any commitment or disbursement, acquire or dispose of any property or
asset, make any contract or agreement, or engage in any transaction; (g) other
than in the ordinary course of business, subject any of its properties or assets
to any lien, claim, charge, option, or encumbrance; (h) except for increases in
the ordinary course of business in
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<PAGE>
accordance with past practices, which together with all other compensation rate
increases do not exceed 4.5 percent per annum of the aggregate payroll as of
April 1, 1997, increase the rate of compensation of any employee or enter into
any agreement to increase the rate of compensation of any employee; (i) create
or modify any pension or profit sharing plan, bonus, deferred compensation,
death benefit, or retirement plan, or the level of benefits under any such plan,
nor increase or decrease any severance or termination pay benefit or any other
fringe benefit; (j) enter into any employment or personal services contract with
any person or firm, including without limitation any contract, agreement, or
arrangement described in Section 6.37(a) hereof, except directly to facilitate
the transactions contemplated by this Agreement; nor (k) purchase any loans or
loan-participation interests from, or participate in any loans originated by,
any person other than the Company or the Bank.
7.5. Preservation of Business. Each of the Company and the Bank will
(a) carry on its business and manage its assets and properties diligently and
substantially in the same manner as heretofore; (b) maintain the ratio of its
loans to its deposits at approximately the same level as existed at December 31,
1996, as adjusted to allow for seasonal fluctuations of loans and deposits of a
kind and amount experienced traditionally by it; (c) manage its investment
portfolio in substantially the same manner and pursuant to substantially the
same investment policies as in 1995 and 1996, and will take no action to change
the percentage which its investment portfolio bears to its total assets, or to
lengthen the average maturity of its investment portfolio, or of any significant
category thereof, to any material extent; (d) continue in effect its present
insurance coverage on all properties, assets, business, and personnel; (e) use
its best efforts to preserve its business organization intact; except as
otherwise consented to by Zions Bancorp, to keep available its present
employees; and to preserve its present relationships with customers and others
having business dealings with it; (f) not do anything and not fail to do
anything which will cause a breach of or default in any contract, agreement,
commitment, or obligation to which it is a party or by which it may be bound;
(g) not amend its articles of incorporation or bylaws; and (h) not grant or
expand any shareholders' rights to dissent from any merger.
7.6 Comfort Letter. At the time of the effectiveness of the
Registration Statement, but prior to the mailing of the proxy materials, and at
the Effective Date, the Company shall furnish Zions Bancorp with a letter from
Wall, Smith, Bateman & Associates, Inc., in form and substance acceptable to
Zions Bancorp, stating that (a) they are independent accountants with respect to
the Company within the meaning of the 1933 Act and the published rules and
regulations thereunder, (b) in their opinion the consolidated financial
statements of the Company included in the Registration Statement and examined by
them comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the published rules and regulations thereunder,
and (c) a reading of the Company's audited consolidated financial statements and
the latest available unaudited consolidated financial statements of the Company
and unaudited financial statements of the Bank and inquiries of certain
officials of the Company and the Bank responsible for financial and accounting
matters as to transactions and events since the date of the most recent
consolidated statement of condition included in their most recent audit report
with respect to the Company did not cause them to believe that (i) the Company's
audited consolidated financial statements and such latest available unaudited
consolidated financial statements are not stated on a basis consistent with that
followed in the Company's audited consolidated financial statements; or (ii)
except as disclosed in the letter, at a specified date not more than five
business days prior to the date of such letter, there was any change in the
Company's capital stock or any change in consolidated long-term debt or any
decrease in the consolidated net assets of the Company as compared with the
respective amounts shown in the most recent Company audited consolidated
financial statements. The letter shall also cover such other matters pertaining
to the Company's and the Bank's financial data and statistical information
included in the Registration Statement as may reasonably be requested by Zions
Bancorp.
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7.7 Affiliates' Agreements. The Company will furnish to Zions Bancorp a
list of all persons known to the Company who at the date of the Company's
special meeting of shareholders to vote upon the transactions contemplated by
this Agreement may be deemed to be "affiliates" of the Company within the
meaning of Rule 145 under the 1933 Act and for purposes of qualifying the
Holding Company Merger for "pooling of interests" accounting treatment. The
Company will use its best efforts to cause each such "affiliate" of the Company
to deliver to Zions Bancorp not later than thirty days prior to the Effective
Date a written agreement providing that such person will not sell, pledge,
transfer or otherwise dispose of (a) the shares of Company Common Stock
beneficially owned by such person, or the shares of Zions Bancorp Stock to be
received by such person in the Holding Company Merger (the "Company Merger
Shares") or any other shares of Zions Bancorp Stock held by such person during
the period commencing thirty days prior to the Effective Date and ending at such
time as financial results covering at least thirty days of post-Holding Company
Merger combined operations have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies or (b) the
Company Merger Shares except in compliance with the applicable provisions of the
1933 Act and the rules and regulations thereunder.
7.8 Inconsistent Activities. Unless and until the Holding Company
Merger has been consummated or this Agreement has been terminated in accordance
with its terms, neither the Company nor the Bank will (a) solicit or encourage,
directly or indirectly, any inquiries or proposals to acquire more than 1
percent of the Company Common Stock or any capital stock of the Bank or any
significant portion the assets of either of them (whether by tender offer,
merger, purchase of assets, or other transactions of any type); (b) afford any
third party which may be considering any such transaction access to its
properties, books or records except as required by mandatory provisions of law;
(c) enter into any discussions or negotiations for, or enter into any agreement
or understanding which provides for, any such transaction, or (d) authorize or
permit any of its directors, officers, employees or agents to do or permit any
of the foregoing. If the Company or the Bank becomes aware of any offer or
proposed offer to acquire any shares of its capital stock or any significant
portion of its assets (regardless of the form of the proposed transaction) or of
any other matter which could adversely affect this Agreement, the Holding
Company Merger, or the Bank Merger, the Company and the Bank shall immediately
give notice thereof to Zions Bancorp.
8. Representations and Warranties of Zions Bancorp, Val Cor, and Valley.
Zions Bancorp (with respect to itself, Val Cor, and Valley), Val Cor
(with respect to itself and Valley), and Valley (solely with respect to itself)
each represent and warrant to the Company and the Bank as follows:
8.1. Organization, Powers, and Qualification. Each of Zions Bancorp,
Val Cor, and Valley is a corporation which is duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to own and operate its properties
and assets, to lease properties used in its business, and to carry on its
business as now conducted. Each of Zions Bancorp, Val Cor, and Valley owns or
possesses in the operation of its business all franchises, licenses, permits,
branch certificates, consents, approvals, waivers, and other authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now conducted, except for those where the failure of such ownership or
possession would not adversely affect its operation and properties in any
material respect. Each of Zions Bancorp, Val Cor, and Valley is duly qualified
and licensed to do business and is in good standing in every jurisdiction in
which such qualification or license is required or with respect to which the
failure to be so qualified or licensed could result in material liability or
adversely affect its operation and properties in any material respect.
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<PAGE>
8.2. Execution and Performance of Agreement. Each of Zions Bancorp,
Val Cor, and Valley has all requisite corporate power and authority to
execute and deliver this Agreement and to perform its respective terms.
8.3. Binding Obligations; Due Authorization. This Agreement constitutes
the valid, legal, and binding obligations of each of Zions Bancorp, Val Cor, and
Valley enforceable against it in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, moratorium or
similar law, or by general principles of equity. The execution, delivery, and
performance of this Agreement and the transactions contemplated thereby have
been duly and validly authorized by the board of directors of each of Zions
Bancorp, Val Cor, and Valley. No other corporate proceedings on the part of any
of them are necessary to authorize this Agreement or the carrying out of the
transactions contemplated hereby.
8.4. Absence of Default. None of the execution or the delivery of this
Agreement, the consummation of the transactions contemplated hereby, or the
compliance with or fulfillment of the terms hereof will conflict with, or result
in a breach of any of the terms, conditions, or provisions of, or constitute a
default under the organizational documents or bylaws of Zions Bancorp, Val Cor,
or Valley. None of such execution, consummation, or fulfillment will (a)
conflict with, or result in a material breach of the terms, conditions, or
provisions of, or constitute a material violation, conflict, or default under,
or give rise to any right of termination, cancellation, or acceleration with
respect to, or result in the creation of any lien, charge, or encumbrance upon,
any of the property or assets of Zions Bancorp, Val Cor, or Valley pursuant to
any material agreement or instrument under which it is obligated or by which any
of its properties or assets may be bound, including without limitation any
material lease, contract, mortgage, promissory note, deed of trust, loan, credit
arrangement or other commitment or arrangement of it in respect of which it is
an obligor, or (b) if the Holding Company Merger is approved by the Board of
Governors under the BHC Act, or if the Board of Governors waives its
jurisdiction over the Holding Company Merger, and if the transac tions
contemplated by this Agreement are approved by the OCC, the Commissioner, and
the Division, violate any law, statute, rule, or regulation of any government or
agency to which Zions Bancorp, Val Cor, or Valley is subject and which is
material to its operations, or (c) violate any judgment, order, writ,
injunction, decree, or ruling to which it or any of its properties or assets is
subject or bound. None of the execution or delivery of this Agreement, the
consummation of the transactions contemplated thereby, or the compliance with or
fulfillment of the terms thereof will require any authorization, consent,
approval, or exemption by any person which has not been obtained, or any notice
or filing which has not been given or done, other than approval of or waiver of
jurisdiction over the transactions contemplated by this Agreement by the Board
of Governors, the OCC, the Commissioner, and the Division.
8.5. Brokers and Advisers.
(a) There are no claims for brokerage commissions, finder's fees,
or similar compensation arising out of or due to any act of Zions Bancorp, Val
Cor, or Valley in connection with the transactions contemplated by this
Agreement or based upon any agreement or arrangement made by or on behalf of any
of them.
(b) None of Zions Bancorp, Val Cor, nor Valley has entered into
any agreement or understanding with any party relating to financial advisory
services provided or to be provided with respect to the transactions
contemplated by this Agreement.
8.6. Books and Records. The books and records of each of Zions Bancorp,
Val Cor, and Valley fairly reflect the transactions to which it is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance in all material respects with
all applicable legal and accounting requirements. Each of Zions Bancorp, Val
Cor, and Valley follows generally accepted accounting principles applied on a
consistent basis
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in the preparation and maintenance of its books of account and financial
statements, including but not limited to the application of the accrual method
of accounting for interest income on loans, leases, discounts, and investments,
interest expense on deposits and all other liabilities, and all other items of
income and expense. Each of Zions Bancorp, Val Cor, and Valley has made all
accruals in amounts which accurately report income and expense in the proper
periods in accordance with generally accepted accounting principles. Each of
Zions Bancorp, Val Cor, and Valley has filed all material reports and returns
required by any law or regulation to be filed by it.
8.7. Financial Statements. Zions Bancorp has furnished to the Company
its consolidated statement of condition as of each of December 31, 1994,
December 31, 1995, December 31, 1996, and March 31, 1997, and its related
consolidated statement of income, consolidated statement of changes in financial
position, and consolidated statement of changes in stockholders' equity for each
of the periods then ended, and the notes thereto (collectively, the "Zions
Bancorp Financial Statements"). All of the Zions Bancorp Financial Statements,
including the related notes, (a) were prepared in accordance with generally
accepted accounting principles applied in all material respects, and (b) are in
accordance with the books and records of Zions Bancorp which have been
maintained in accordance with generally accepted accounting principles, and (c)
fairly reflect the consolidated financial position of Zions Bancorp as of such
dates, and the consolidated results of operations of Zions Bancorp for the
periods ended on such dates, and do not fail to disclose any material
extraordinary or out-of-period items, and (d) reflect, in accordance with
generally accepted accounting principles applied in all material respects,
adequate provision for, or reserves against, the possible loan losses of Zions
Bancorp as of such dates.
8.8. Absence of Certain Developments. Since March 31, 1997, there has
been (a) no material adverse change in the condition, financial or otherwise,
assets, properties, liabilities, or businesses of Zions Bancorp, and (b) no
material deterioration in the quality of the loan portfolio of Zions Bancorp or
of any major component thereof, and no material increase in the level of
nonperforming assets or nonaccrual loans at Zions Bancorp or in the level of its
provision for credit losses or its reserve for possible credit losses.
8.9. Disclosure. No representation or warranty hereunder and no
certificate, statement, or other document delivered by it hereunder or in
connection with this Agreement or any of the trans actions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circum stances under which they were made, not misleading. There is
no fact known to it which might materially adversely affect its business,
assets, liabilities, financial condition, results of operations, or prospects
which has not been disclosed in the Zions Bancorp Financial Statements or a
certificate delivered by it to the Company. Copies of all documents referred to
in this Agreement, unless prepared solely by the Company and the Bank or solely
by the Company and the Bank and third parties hereto, are true, correct, and
complete copies thereof and include all amendments, supplements, and
modifications thereto and all waivers thereunder.
9. Closing.
9.1. Place and Time of Closing. Closing shall take place at the offices
of Zions Bancorp, One South Main Street, Suite 1380, Salt Lake City, Utah, or
such other place as the parties choose, commencing at 10:00 a.m., local time, on
the Effective Date, provided that all conditions precedent to the obligations of
the parties hereto to close have then been met or waived.
9.2. Events To Take Place at Closing. At the Closing, the following
actions will be taken:
(a) Such certificates and other documents as are required by this
Agreement to be executed and delivered on or prior to the Effective Date and
have not been so executed and
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delivered, and such other certificates and documents as are mutually deemed by
the parties to be otherwise desirable for the effectuation of the Closing, will
be so executed and delivered; and then
(b) the Holding Company Merger and the issuance of shares
incident thereto shall be effected; provided, however, that the administrative
and ministerial aspects of the issuance of shares incident to the Holding
Company Merger will be settled as soon thereafter as shall be reasonable under
the circumstances; and then
(c) the Bank Merger shall be effected.
10. Termination, Damages for Breach, Waiver, and Amendment.
10.1. Termination by Reason of Lapse of Time. This Agreement may be
terminated by any party on or after March 13, 1998, by instrument duly
authorized and executed and delivered to the other parties, unless the Effective
Date shall have occurred on or before such date.
10.2. Grounds for Termination. This Agreement may be terminated by
written notice of termination at any time before the Effective Date (whether
before or after action by shareholders of the Company):
(a) by mutual consent of the parties hereto;
(b) by Zions Bancorp, upon written notice to the Company given at
any time (i) if any of the representations and warranties of the Company, the
Bank, Outcalt, or Wuckert contained in Section 6 hereof was materially incorrect
when made, (ii) if any of the representations or warranties of the Company, the
Bank, Outcalt, or Wuckert contained in Section 6.32(c) or 6.32(d) would have
been materially incorrect when made had the underlying facts been known to the
Company, the Bank, Outcalt, or Wuckert on the date of this Agreement, or (iii)
in the event of a material breach or material failure by the Company or the Bank
of any covenant or agreement of the Company or the Bank contained in this
Agreement which has not been, or cannot be, cured within thirty days after
written notice of such breach or failure is given to the Company or the Bank, as
the case may be;
(c) by the Company, upon written notice to Zions Bancorp given at
any time (i) if any of the representations and warranties of Zions Bancorp, Val
Cor, or Valley contained in Section 8 hereof was materially incorrect when made,
or (ii) in the event of a material breach or material failure by Zions Bancorp,
Val Cor, or Valley of any covenant or agreement of Zions Bancorp, Val Cor, or
Valley contained in this Agreement which has not been, or cannot be, cured
within thirty days after written notice of such breach or failure is given to
Zions Bancorp, Val Cor, or Valley, as the case may be; or
(d) by either Zions Bancorp or the Company upon written notice
given to the other if the board of directors of either Zions Bancorp or the
Company shall have determined in its sole judgment made in good faith, after due
consideration and consultation with counsel, that the Holding Company Merger has
become inadvisable or impracticable by reason of the institution of litigation
by the federal government or the government of the State of Colorado or the
State of Utah to restrain or invalidate the transactions contemplated by this
Agreement.
10.3. Effect of Termination. In the event of the termination and
abandonment hereof pursuant to the provisions of Section 10.1 or Section 10.2,
this Agreement shall become void and have no force or effect, without any
liability on the part of Zions Bancorp, Val Cor, Valley, the Company, the Bank,
their respective directors or officers or shareholders, or Outcalt or Wuckert in
respect of this Agreement. Notwithstanding the foregoing, (a) as provided in
Section 11.4 of this
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Agreement, the confidentiality agreement contained in that section shall survive
such termination, and (b) if such termination is a result of any of the
representations and warranties of a party being materially incorrect when made
or a result of the material breach or material failure by a party of a covenant
or agreement hereunder, such party whose representations and warranties were
materially incorrect or who materially breached or failed to perform its
covenant or agreement shall be liable in the amount of $250,000 to the other
party or parties hereto that are not affiliated with it (it being understood and
agreed for the purposes of the preceding clause that Zions Bancorp, Val Cor, and
Valley are parties that are affiliated with one another and that the Company,
the Bank, Outcalt, and Wuckert are parties that are affiliated with one
another).
10.4. Waiver of Terms or Conditions. Any of the terms or conditions of
this Agreement may be waived at any time prior to the Effective Date by the
party which is, or whose shareholders are, entitled to the benefit thereof, by
action taken by that party (if an individual) or by the board of directors of
such party (if a corporation), or by its chairman, or by its president; provided
that such waiver shall be in writing and shall be taken only if, in the judgment
of the party, board of directors, or officer taking such action, such waiver
will not have a materially adverse effect on the benefits intended hereunder to
it or to the shareholders of its or his corporation; and the other parties
hereto may rely on the delivery of such a waiver as conclusive evidence of such
judgment and the validity of the waiver.
10.5. Amendment.
(a) Anything herein or elsewhere to the contrary notwithstanding,
to the extent permitted by law, this Agreement and the exhibits hereto may be
amended, supplemented, or interpreted at any time prior to the Effective Date by
written instrument duly authorized and executed by each of the parties hereto;
provided, however, that this Agreement may not be amended after the action by
shareholders of the Company or shareholders of Valley in any respect that would
prejudice the economic interests of such Company shareholders or Valley
shareholders, as the case may be, or any of them, except as specifically
provided herein or by like action of such shareholders.
(b) If Zions Bancorp and the Company should mutually determine
(following receipt of advice of legal or other counsel) that it has become
inadvisable or inexpedient to effectu ate the transactions contemplated by this
Agreement through means of a sequence of mergers such as is contemplated herein,
then the parties hereto agree to effect such change in the form of transac tion
as described especially in Sections 1.1 and 9.2 of this Agreement by written
instrument in amendment of this Agreement.
11. General Provisions.
11.1. Allocation of Costs and Expenses. Except as provided in this
Section, each party hereto shall pay its own fees and expenses, including
without limitation the fees and expenses of its own counsel and its own
accountants and tax advisers, incurred in connection with this Agreement and the
transactions contemplated thereby. For purposes of this Section, (i) the cost of
printing and delivering the proxy statement and other material to be transmitted
to shareholders of the Company shall be deemed to be incurred on behalf of the
Company, (ii) the cost of printing and delivering the proxy statement or
information statement and other materials to be transmitted to shareholders of
Valley shall be deemed to be incurred on behalf of Valley, and (iii) the cost of
registering under federal and state securities laws the stock of Zions Bancorp
to be received by the shareholders of the Company shall be deemed to be incurred
on behalf of Zions Bancorp.
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11.2. Mutual Cooperation.
(a) General. Subject to the terms and conditions herein provided,
each party shall use its best efforts, and shall cooperate fully with the other
party, in carrying out the provisions of this Agreement and in making all
filings and obtaining all necessary governmental approvals, and shall execute
and deliver, or cause to be executed and delivered, such governmental
notifications and additional documents and instruments and do or cause to be
done all additional things necessary, proper, or advisable under applicable law
to consummate and make effective the transactions contemplated hereby.
(b) Prior to the Effective Date, the parties shall cooperate, and
shall make all reasonable efforts to cause their respective data processing
service providers to cooperate, to complete all reasonable steps for an orderly
transfer of all applicable data tapes and processing information, and to
facilitate an electronic and systematic conversion of all applicable data
regarding the Bank to Zions Bancorp's own system of electronic data processing
by the next business day following the Effective Date. Each party shall bear its
own costs associated with the transfer of tapes and information and the
conversion of data. Prior to the Effective Date, the Bank will provide all test
tapes and reports necessary to complete the transfer and will provide a test
tape and deconversion reports within fifteen days of the date of this Agreement,
a preliminary tape and set of deconversion reports six weeks prior to the
Effective Date, and an updated preliminary tape and set of deconversion reports
no more than two weeks prior to the Effective Date. The Bank shall also arrange
the delivery to Zions Bancorp at the main office of Zions Bancorp (or at such
other location as has been designated in writing by Zions Bancorp no later than
five business days before the Effective Date) no later than 6:00 a.m. Mountain
time on the day immediately following the Effective Date, two duplicate final
data processing conversion file packages and deconversion reports in an industry
standard format.
11.3. Form of Public Disclosures. Zions Bancorp and the Company shall
mutually agree in advance upon the form and substance of all public disclosures
concerning this Agreement and the transactions contemplated hereby.
11.4. Confidentiality. Zions Bancorp, Val Cor, Valley, the Company, the
Bank, and their respective subsidiaries and Outcalt and Wuckert shall use all
information that each obtains from the other pursuant to this Agreement solely
for the effectuation of the transactions contemplated by this Agreement or for
other purposes consistent with the intent of this Agreement. Neither Zions
Bancorp, Val Cor, Valley, the Company, the Bank, nor their respective
subsidiaries nor Outcalt nor Wuckert shall use any of such information for any
other purpose, including, without limitation, the competitive detriment of any
other party. Zions Bancorp, Val Cor, and Valley, on the one hand, and the
Company, the Bank, Outcalt, and Wuckert, on the other hand, shall maintain as
strictly confiden tial all information each of them learns from the other and
shall, at any time, upon the request of the other, return promptly to it all
documentation provided by it or made available to third parties. Each of the
parties may disclose such information to its respective affiliates, counsel,
accountants, tax advisers, and consultants. The confidentiality agreement
contained in this Section 11.4 shall remain operative and in full force and
effect, and shall survive the termination of this Agreement.
11.5. Claims of Brokers.
(a) Each of the Company, the Bank, Outcalt, and Wuckert shall
indemnify, defend, and hold Zions Bancorp, Val Cor, and Valley harmless for,
from, and against any claim, suit, liability, fees, or expenses (including,
without limitation, attorneys' fees and costs of court) arising out of any claim
for brokerage commissions, finder's fees, or similar compensation arising out of
or due to any of its or his acts in connection with the transactions
contemplated by this Agreement or based upon any agreement or arrangement made
by it or him or on its or his behalf with respect to Zions Bancorp, Val Cor, or
Valley.
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(b) Each of Zions Bancorp, Val Cor, and Valley shall indemnify,
defend, and hold the Company, the Bank, Outcalt, and Wuckert harmless for, from,
and against any claim, suit, liability, fees, or expenses (including, without
limitation, attorneys' fees and costs of court) arising out of any claim for
brokerage commissions, finder's fees, or similar compensation arising out of or
due to any of its acts in connection with any of the transactions contemplated
by this Agreement or based upon any agreement or arrangement made by it or on
its behalf with respect to the Company or the Bank.
11.6. Information for Applications and Registration Statement.
(a) Each party represents and warrants that all information
concerning it which is included in any statement and application (including the
Registration Statement) made to any governmental agency in connection with the
transactions contemplated by this Agreement shall not, with respect to such
party, omit any material fact required to be stated therein or necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading. The party so representing and warranting will indemnify, defend,
and hold harmless the other, each of its directors and officers, each
underwriter and each person, if any, who controls the other within the meaning
of the Securities Act, for, from and against any and all losses, claims, suits,
damages, expenses, or liabilities to which any of them may become subject under
applicable laws (including, but not limited to, the Securities Act and the
Exchange Act) and rules and regulations thereunder and will reimburse them for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any actions whether or not resulting in liability,
insofar as such losses, claims, damages, expenses, liabilities, or actions arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any such application or statement or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
the representing and warranting party expressly for use therein. Each party
agrees at any time upon the request of the other to furnish to the other a
written letter or statement confirming the accuracy of the information contained
in any proxy statement, registration statement, report, or other application or
statement, and confirming that the information contained in such document was
furnished expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or draft or indicating the information
not furnished expressly for use therein. The indemnity agreement contained in
this Section 11.6(a) shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any of the other
parties, and shall survive the termination of this Agreement or the consummation
of the transactions contemplated thereby.
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement contained in Section 11.6(a) of
this Agreement is for any reason held by a court of competent jurisdiction to be
unenforceable as to any or every party, then the parties in such circumstances
shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claims asserted) to which any party may be subject in such proportion as the
court of law determines based on the relative fault of the parties.
11.7. Standard of Materiality.
(a) For purposes of Sections 4, 6, and 7 of this Agreement, the
terms "material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of $372,000.
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(b) For purposes of Sections 5 and 8 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of $25,178,000.
(c) For other purposes and, notwithstanding subsections (a) and
(b) of this section 11.7, when used anywhere in this Agreement with explicit
reference to any of the federal securities laws or to the Registration
Statement, the terms "material" and "materially" shall be construed and
understood in accordance with standards of materiality as judicially determined
under the federal securities laws.
11.8. Covenants of Zions Bancorp.
(a) From the date hereof to the Effective Date, Zions Bancorp
shall, contemporaneously with the filing with the SEC of any periodic or current
report pursuant to section 13 of the Exchange Act, deliver a copy of such report
to the Company.
(b) Following the Effective Date neither Val Cor nor Valley will
take any action to abrogate or diminish any right accorded under the articles of
incorporation or by-laws of the Company or the Bank as they existed immediately
prior to the Effective Date to any person who, on or prior to the Effective
Date, was a director or officer of the Company or the Bank to indemnification
from or against losses, expenses, claims, demands, damages, liabilities,
judgments, fines, penalties, costs, expenses (including without limitation
reasonable attorneys fees) and amounts paid in settlement pertaining to or
incurred in connection with any threatened or actual action, suit, claim, or
proceeding (whether civil, criminal, administrative, arbitration, or
investigative) arising out of events, matters, actions, or omissions occurring
on or prior to the Effective Date. To the extent not provided by the foregoing,
following the Effective Date and to the extent permitted by law, all rights to
such indemnification accorded under the articles of incorporation and by-laws of
the Company or the Bank to any person who, on or prior to the Effective Date,
was a director or officer of the Company or the Bank shall survive the Effective
Date and, following the Holding Company Merger and the Bank Merger, to the
extent permitted by law, Val Cor and Valley will honor such obligations in
accordance with their terms with respect to events, acts, or omissions occurring
prior to the Effective Date.
11.9. Adjustments for Certain Events. Anything in this agreement to the
contrary notwithstanding, all prices per share and exchange ratios referred to
in this Agreement shall be appropriately adjusted to account for stock
dividends, split-ups, mergers, recapitalizations, combina tions, conversions,
exchanges of shares or the like, but not for normal and recurring cash dividends
declared or paid in a manner consistent with the established practice of the
payer.
11.10. Stock Repurchases. The Company, the Bank, Outcalt, and Wuckert
acknowledge that from time to time Zions Bancorp repurchases shares of its
common stock in the open market in accordance with market conditions. Nothing in
this Agreement shall be construed to abridge the right of Zions Bancorp to
continue to do so in compliance with Exchange Act rules and regulations and
pursuant to advice of independent securities counsel for Zions Bancorp.
11.11. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
11.12. Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to their commitments to one
another and their undertakings vis-a-vis one another on the subject matter
hereof. Any previous agreements or understandings among the parties
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regarding the subject matter hereof are merged into and superseded by this
Agreement. Nothing in this Agreement express or implied is intended or shall be
construed to confer upon or to give any person, other than Zions Bancorp, Val
Cor, Valley, the Company, the Bank, Outcalt, Wuckert, and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
11.13. Survival of Representations, Warranties, and Covenants. The
respective representations, warranties, and covenants of each party to this
Agreement are hereby declared by the other parties to have been relied on by
such other parties and shall survive the Effective Date for a period of two
years from such date, provided that if any party should breach a representation,
warranty, or covenant contained in this Agreement through fraud, deliberate
misrepresentation, or other intentional tortious conduct, or through gross
negligence, then the representation, warranty, or covenant so breached shall be
deemed to have survived the Effective Date for the longer of a period of two
years or the period within which a civil action must be commenced according to
the applicable statute of limitations. Each party shall be deemed to have relied
upon each and every representation and warranty of the other parties regardless
of any investigation heretofore or hereafter made by or on behalf of such party.
11.14. Section Headings. The section and subsection headings herein
have been inserted for convenience of reference only and shall in no way modify
or restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
11.15. Notices. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to Zions Bancorp, Val Cor, or Valley:
Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Attention: Mr. Harris H. Simmons
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to the Company or the Bank:
Sky Valley Bank Corp.
720 Main Street
Alamosa, Colorado 81101
Attention: Mr. Ralph H. Outcalt
Chairman of the Board
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With a required copy to:
Tuck Young, Esq.
Kettelkamp, Young & Kettelkamp, P.C.
201 West 8th Street, Suite 540
Pueblo, Colorado 81003
If to Outcalt or Wuckert:
Messrs. Ralph H. Outcalt and Donald J. Wuckert
c/o Sorum Tractor Company
7727 Highway 160
Alamosa, Colorado 81101
All such notices shall be deemed to have been given on the date
delivered, transmitted, or mailed in the manner provided above.
11.16. Choice of Law and Venue. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Utah,
without giving effect to the principles of conflict of law thereof. The parties
hereby designate Salt Lake County, Utah to be the proper jurisdiction and venue
for any suit or action arising out of this Agreement. Each of the parties
consents to personal jurisdiction in such venue for such a proceeding and agrees
that it may be served with process in any action with respect to this Agreement
or the transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of Utah. Each of the parties irrevocably and unconditionally waives and
agrees, to the fullest extent permitted by law, not to plead any objection that
it may now or hereafter have to the laying of venue or the convenience of the
forum of any action or claim with respect to this Agreement or the transactions
contemplated thereby brought in the courts aforesaid.
11.17. Knowledge of a Party. References in this Agreement to the
knowledge of a party shall mean the knowledge possessed by any of such parties
or the present executive officers of such party including, without limitation,
information which is or has been in the books and records of such party.
11.18. Binding Agreement. This Agreement shall be binding upon
the parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ZIONS BANCORPORATION
Attest: By:
--------------------------- ------------------------------
Dale M. Gibbons Harris H. Simmons
Senior Vice President President and
and Secretary Chief Executive Officer
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VAL COR BANCORPORATION, INC.
Attest: By:
--------------------------- ------------------------------
Wayne D. Glazner
President and
Chief Executive Officer
VALLEY NATIONAL BANK OF CORTEZ
Attest: By:
--------------------------- ------------------------------
Wayne D. Glazner
President and
Chief Executive Officer
SKY VALLEY BANK CORP.
Attest: By:
--------------------------- ------------------------------
Ralph H. Outcalt
Chairman of the Board
THE FIRST NATIONAL BANK IN
ALAMOSA
Attest: By:
--------------------------- ------------------------------
David E. Broyles
President and
Chief Executive Officer
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- -------------------------------------)
)
State of Utah )
) ss.
County of Salt Lake )
)
- -------------------------------------)
On this twenty-fifth day of July, 1997, before me personally appeared
Harris H. Simmons, to me known to be the President and Chief Executive Officer
of Zions Bancorporation, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
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- --------------------------------------)
)
State of Colorado )
) ss.
County of Montezuma )
)
- --------------------------------------)
On this twenty-fifth day of July, 1997, before me personally appeared
Wayne D. Glazner, to me known to be the President and Chief Executive Officer of
each of Val Cor Bancorporation, Inc. and Valley National Bank of Cortez, and
acknowledged said instrument to be the free and voluntary act and deed of each
of said corporations, for the uses and purposes therein mentioned, and on oath
stated that he was authorized to execute said instrument and that the respective
seals affixed are the respective corporate seals of said corporations.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
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- --------------------------------------
)
State of Colorado )
) ss.
County of Alamosa )
)
- --------------------------------------)
On this twenty-fifth day of July, 1997, before me personally appeared
Ralph H. Outcalt, to me known to be the Chairman of the Board of Sky Valley Bank
Corp., and acknowledged said instrument to be the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned, and on
oath stated that he was authorized to execute said instrument and that the seal
affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
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- --------------------------------------)
)
State of Colorado )
)
County of Alamosa ) ss.
)
- --------------------------------------)
On this twenty-fifth day of July, 1997, before me personally appeared
David E. Broyles, to me known to be the President and Chief Executive Officer of
The First National Bank in Alamosa, and acknowledged said instrument to be the
free and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned, and on oath stated that he was authorized to execute said
instrument and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
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- --------------------------------------)
)
State of Colorado )
)
County of Alamosa ) ss.
)
- --------------------------------------)
On this twenty-fifth day of July, 1997, before me personally appeared
Ralph H. Outcalt and Donald J. Wuckert, each to me known, and each of whom
acknowledged said instrument to be his free and voluntary act and deed, for the
uses and purposes therein mentioned.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
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The undersigned members of the Board of Directors of Sky Valley Bank
Corp. (the "Company"), acknowledging that Zions Bancorporation ("Zions Bancorp")
has relied upon the action heretofore taken by the board of directors in
entering into the Agreement, and has required the same as a prerequisite to
Zions Bancorp's execution of the Agreement, do individually and as a group
agree, subject to their fiduciary duties to shareholders, to support the
Agreement and to recommend its adoption by the other shareholders of the
Company.
The undersigned do hereby, individually and as a group, until the
Effective Date or termination of the Agreement, further agree to refrain from
soliciting or, subject to their fiduciary duties to shareholders, negotiating or
accepting any offer of merger, consolidation, or acquisition of any of the
shares or all or substantially all of the assets of the Company or The First
National Bank in Alamosa.
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
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SCHEDULE 1.8
David E. Broyles
Clyde R. Jones
Ralph H. Outcalt
George W. Woodard
Donald J. Wuckert
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EXHIBIT I
HOLDING COMPANY MERGER AGREEMENT
<PAGE>
AGREEMENT OF MERGER
This Agreement of Merger is made and entered into as of
[_______________], 1997, between VAL COR BANCORPORATION, INC. ("Val Cor"), a
corporation organized under the laws of the State of Colorado, and SKY VALLEY
BANK CORP. (the "Company"), a corpora tion organized under the laws of the State
of Colorado. Val Cor and the Company are hereinafter sometimes individually
called a "Constituent Corporation" and collectively called the "Constituent
Corporations."
RECITALS
Val Cor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado. As of [_______________], 1997,
the authorized capital stock of Val Cor consisted of 500,000 shares of Common
Stock, $5.00 par value, of which 306,259 shares were issued and outstanding; no
shares of capital stock were held in its treasury on such date. All of the
capital stock of Val Cor is owned of record and beneficially by Zions
Bancorporation, a corporation organized under the laws of the State of Utah
("Zions Bancorp").
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. As of [_______________],
1997, the authorized capital stock of the Company consisted of 10,000 shares of
Company Common Stock, $0.01 par value (the "Company Common Stock"), of which
2,200 shares were issued and outstanding; no shares of capital stock were held
in its treasury on such date.
Val Cor and the Company have entered into an Agreement and Plan of
Reorganization, dated July 25, 1997 (the "Plan of Reorganization"), setting
forth certain representations, warran ties, and agreements in connection with
the transactions therein and herein contemplated, which contemplates the merger
of the Company with and into Val Cor (the "Merger") in accordance with this
Agreement of Merger (the "Agreement").
The Boards of Directors of each of Val Cor and the Company deem the
Merger advisable and in the best interests of each corporation and its
stockholders. The Boards of Directors of each of Val Cor and the Company, by
resolutions duly adopted, have approved the Plan of Reorganization. The Boards
of Directors of each of Val Cor and the Company, by resolutions duly adopted,
have approved this Agreement. The Boards of Directors of each of Val Cor and the
Company have directed that this Agreement, and authorization for the
transactions contem plated hereby, be submitted to stockholders of Val Cor and
the Company respectively for approval.
At the Effective Date (as defined in Section 1.1 below) shares of
Company Common Stock shall be converted into the right to receive shares of the
common stock of Zions Bancorp, no par value (the "Zions Bancorp Stock"), as
provided herein.
In consideration of the premises and the mutual covenants and
agreements herein contained and subject to the terms and conditions of the
Agreement, the parties hereto hereby covenant and agree as follows:
ARTICLE I
1.1. Merger of the Company into Val Cor. The Company shall be merged
with and into Val Cor on the date and at the time to be specified in the
Articles of Merger to be filed with
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the Secretary of State of the State of Colorado pursuant to section 7-111-105 of
the Colorado Business Corporation Act (such date and time being referred to
herein as the "Effective Date").
1.2. Effect of the Merger. At the Effective Date:
(a) The Company and Val Cor shall be a single corporation,
which shall be Val Cor. Val Cor is hereby designated as the surviving
corporation in the Merger and is hereinafter sometimes called the "Surviving
Corporation."
(b) The separate existence of the Company shall cease.
(c) The Surviving Corporation shall have all the rights,
privileges, immunities, and powers and shall assume and be subject to all the
duties and liabilities of a corporation organized under the Colorado Business
Corporation Act.
(d) The Surviving Corporation shall thereupon and thereafter
possess all of the rights, privileges, immunities, and franchises, of a public
as well as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account,
including subscriptions to shares and all other choses in action, and all and
every other interest of and belonging to or due to each of the Constituent
Corporations shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; and the title to any real
estate, or any interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.
(e) The Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities and obligations of each of the Constituent
Corporations; and any claim existing or action or proceeding pending by or
against either of the Constituent Corporations may be prosecuted as if the
Merger had not taken place, or the Surviving Corporation may be substituted in
its place. The Surviving Corporation expressly assumes and agrees to perform all
of the Company's liabilities and obligations. Neither the rights of creditors
nor any liens upon the property of either Constituent Corporation shall be
impaired by the Merger.
(f) The Articles of Incorporation of Val Cor as they exist
immediately prior to the Effective Date shall be the Articles of Incorporation
of the Surviving Corporation until later amended pursuant to Colorado law.
(g) At the Effective Date and until surrendered for exchange
and payment, each outstanding stock certificate which, prior to the Effective
Date, represents shares of Company Common Stock shall, without further action,
cease to be an issued and existing share and shall be converted into a right to
receive from Zions Bancorp, and shall for all purposes represent the right to
receive, upon surrender of the certificate representing such shares, the number
of shares of Zions Bancorp Stock specified in Article III; provided that, with
respect to any matters relating to stock certificates representing Company
Common Stock, Zions Bancorp may rely conclusively upon the record of
stockholders maintained by the Company containing the names and addresses of the
holders of record of the Company's Common Stock at the Effective Date.
1.3. Acts to Carry Out This Merger Plan.
(a) The Company and its proper officers and directors shall
and will do all such acts and things as may be necessary or proper to vest,
perfect, or confirm title to such property or rights in Val Cor and otherwise to
carry out the purposes of this Agreement.
-2-
<PAGE>
(b) If, at any time after the Effective Date, Val Cor shall
consider or be advised that any further assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect, or confirm, of
record or otherwise, in Val Cor its right, title, or interest in or under any of
the rights, properties, or assets of the Company acquired or to be acquired by
Val Cor as a result of, or in connection with, the Merger, or (ii) otherwise
carry out the purposes of this Agreement, the Company and its proper officers
and directors shall be deemed to have granted to Val Cor an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments, and
assurances in law and to do all acts necessary or proper to vest, perfect, or
confirm title to and possession of such rights, properties, or assets in Val Cor
and otherwise to carry out the purposes of this Agreement; and the proper
officers and directors of Val Cor are fully authorized in the name of the
Company or otherwise to take any and all such action.
ARTICLE II
2.1. Capitalization. The authorized shares of capital stock of Val Cor
as of the Effective Date shall be 500,000 shares of Common Stock, $5.00 par
value.
2.2. By-Laws. The By-Laws of Val Cor as they exist immediately prior to
the Effective Date shall be the By-Laws of Val Cor until later amended pursuant
to Colorado law.
ARTICLE III
3.1. Manner of Converting Shares. Subject to the terms, conditions, and
limitations set forth herein, upon surrender of his or her certificate or
certificates, each holder of shares of Company Common Stock shall be entitled to
receive, in exchange for each share of Company Common Stock held of record by
such stockholder as of the Effective Date, that number of shares of the common
stock of Zions Bancorp, no par value (the "Zions Bancorp Stock") calculated by
dividing 573,135 by the total number of shares of Company Common Stock that
shall be issued and outstanding at the Effective Date.
3.2. No Fractional Shares. Zions Bancorp will not issue fractional
shares of its stock. In lieu of fractional shares of Zions Bancorp Stock, if
any, each shareholder of the Company who is entitled to a fractional share of
Zions Bancorp Stock shall receive an amount of cash equal to the product of such
fraction times $33.50. Such fractional share interest shall not include the
right to vote or to receive dividends or any interest thereon.
3.3. Dividends; Interest. No shareholder of the Company will be
entitled to receive dividends on his or her Zions Bancorp Stock until he or she
exchanges his or her certificates representing Company Common Stock for Zions
Bancorp Stock. Any dividends declared on Zions Bancorp Stock (which stock is to
be delivered pursuant to this Agreement) to holders of record on or after the
Effective Date shall be paid to the Exchange Agent (as designated in Section 3.4
of this Agreement) and, upon receipt of the certificates representing shares of
Company Common Stock, the Exchange Agent shall forward to the former
shareholders entitled to receive Zions Bancorp Stock (i) certificates
representing their shares of Zions Bancorp Stock, (ii) dividends declared
thereon subsequent to the Effective Date (without interest) and (iii) the cash
value of any fractional shares determined in accordance with Section 3.2 hereof.
-3-
<PAGE>
3.4. Designation of Exchange Agent.
(a) The parties of this Agreement hereby designate Zions First
National Bank, a national banking association with its head office located in
Salt Lake City, Utah ("Zions Bank") as Exchange Agent to effect the exchanges
contemplated hereby.
(b) Zions Bancorp will, promptly after the Effective Date,
issue and deliver to Zions Bank the share certificates representing shares of
Zions Bancorp Stock and the cash to be paid to holders of Company Common Stock
in accordance with this Agreement.
3.5. Notice of Exchange. Promptly after the Effective Date, Zions Bank
shall mail to each holder of one or more certificates formerly representing
Company Common Stock, except to such holders as shall have waived the notice
required by this Section 3.5, a notice specifying the Effective Date and
notifying such holder to surrender his or her certificate or certificates to
Zions Bank for exchange. Such notice shall be mailed to holders by regular mail
at their addresses on the records of the Company.
3.6. Treatment of Stock Options. Each stock option to purchase Company
Common Stock not exercised prior to the Effective Date shall automatically be
canceled on and as of the Effective Date.
ARTICLE IV
4.1. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counter parts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
4.2. Section Headings. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
4.3. Choice of Law and Venue. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Utah,
without giving effect to the principles of conflict of law thereof. The parties
hereby designate Salt Lake County, Utah to be the proper jurisdiction and venue
for any suit or action arising out of this Agreement. Each of the parties
consents to personal jurisdiction in such venue for such a proceeding and agrees
that it may be served with process in any action with respect to this Agreement
or the transactions contem plated thereby by certified or registered mail,
return receipt requested, or to its registered agent for service of process in
the State of Utah. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
4.4. Binding Agreement. This Agreement shall be binding upon the
parties and their respective successors and assigns.
4.5. Amendment. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law, this Agreement may be amended,
supplemented, or interpreted at
-4-
<PAGE>
any time prior to the Effective Date by written instrument duly authorized and
executed by each of the parties hereto, provided that this Agreement may not be
amended after the action by shareholders of the Company in any respect that
would prejudice the economic interests of such Company shareholders, or any of
them, except as specifically provided herein or by like action of such
shareholders.
4.6. Termination. This Agreement shall terminate and be abandoned upon
(i) termination of the Plan of Reorganization or (ii) the mutual consent of Val
Cor and the Company at any time prior to the Effective Date, and there shall be
no liability on the part of either of the parties hereto (or any of their
respective officers or directors) except to the extent provided in the Plan of
Reorganization.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VAL COR BANCORPORATION, INC.
Attest:
By:
------------------------------
Wayne D. Glazner
President and
Chief Executive Officer
SKY VALLEY BANK CORP.
Attest: By:
------------------------------
Ralph H. Outcalt
Chairman of the Board
-5-
<PAGE>
- --------------------------------------)
)
State of Colorado )
)
County of Montezuma ) ss.
)
- --------------------------------------)
On this [________] day of [____________], 1997, before me personally
appeared Wayne D. Glazner, to me known to be the President and Chief Executive
Officer of Val Cor Bancorpo ration, Inc., and acknowledged said instrument to be
the free and voluntary act and deed of said corporation, for the uses and
purposes therein mentioned, and on oath stated that he was authorized to execute
said instrument and that the seal affixed is the corporate seal of said
corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
-6-
<PAGE>
- --------------------------------------)
)
State of Colorado )
)
County of Alamosa ) ss.
)
- --------------------------------------)
On this [________] day of [____________], 1997, before me personally
appeared Ralph H. Outcalt, to me known to be the Chairman of the Board of Sky
Valley Bank Corp., and acknowledged said instrument to be the free and voluntary
act and deed of said corporation, for the uses and purposes therein mentioned,
and on oath stated that he was authorized to execute said instrument and that
the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
------------------------------
Notary Public
-7-
<PAGE>
EXHIBIT II
BANK MERGER AGREEMENT
<PAGE>
AGREEMENT OF MERGER
This Agreement of Merger is made and entered into as of
[_______________], 1997, between VALLEY NATIONAL BANK OF CORTEZ ("Valley"), a
national banking association organized under the laws of the United States and
located at Cortez, County of Montezuma, State of Colorado, and THE FIRST
NATIONAL BANK IN ALAMOSA (the "Bank"), a national banking association organized
under the laws of the United States and located at Alamosa, County of Alamosa,
State of Colorado, each acting pursuant to a resolution of its Board of
Directors, adopted by the vote of a majority of its directors, pursuant to the
authority given by and in accordance with the provisions of the Act of November
7, 1918, as amended (12 U.S.C. ss. 215a). Valley and the Bank are hereinafter
sometimes individually called a "Constituent Association" and collectively
called the "Constituent Associations."
RECITALS
Valley is a national banking association duly organized, validly
existing and in good standing under the laws of the United States. As of
[_______________], 1997, the authorized capital stock of Valley consisted of
600,000 shares of Common Stock, $5.00 par value, of which 354,000 shares were
issued and outstanding; no shares of capital stock were held in its treasury on
such date.
The Bank is a corporation duly organized, validly existing and in good
standing under the laws of the United States. As of [_______________], 1997, the
authorized capital stock of the Bank consisted of 2,200 shares of Bank Common
Stock, $100.00 par value (the "Bank Common Stock"), of which 2,200 shares were
issued and outstanding; no shares of capital stock were held in its treasury on
such date.
Valley and the Bank have entered into an Agreement and Plan of
Reorganization, dated July 25, 1997 (the "Plan of Reorganization"), setting
forth certain representations, warranties, and agreements in connection with the
transactions therein and herein contemplated, which contemplates the merger of
Valley with and into the Bank (the "Merger") in accordance with this Agreement
of Merger (the "Agreement").
The Boards of Directors of each of Valley and the Bank deem the Merger
advisable and in the best interests of each association and its stockholders.
The Boards of Directors of each of Valley and the Bank, by resolutions duly
adopted, have approved the Plan of Reorganization. The Boards of Directors of
each of Valley and the Bank, by resolutions duly adopted, have approved this
Agreement. The Boards of Directors of each of Valley and the Bank have directed
that this Agreement, and authorization for the transactions contemplated hereby,
be submitted to stockholders of Valley and the Bank respectively for approval.
At the Effective Date (as defined in Section 1.1 below) shares of
Valley Common Stock shall be converted into the right to receive cash as
provided herein.
In consideration of the premises and the mutual covenants and
agreements herein contained and subject to the terms and conditions of the
Agreement, the parties hereto hereby covenant and agree as follows:
ARTICLE I
1.1. Merger of Valley into the Bank. Valley shall be merged with and
into the Bank under the charter of the latter.
-1-
<PAGE>
1.2. Effect of the Merger. At the Effective Date:
(a) The Bank and Valley shall be a single association, which
shall be the Bank. The Bank is hereby designated as the surviving association in
the Merger and is hereinafter sometimes called the "Surviving Association."
(b) The separate existence of Valley shall cease. The
corporate existence of the Bank and Valley shall be merged into and continued in
the Surviving Association as provided in 12 U.S.C. ss. 215a; and the Surviving
Association shall be deemed to be the same corporation as the Bank and Valley.
All assets, rights, franchises and interests of the Bank and Valley
respectively, in and to every type of property (real, personal and mixed) and
choses in action, as they exist at the Effective Date, shall be transferred to
and vested in the Surviving Association by virtue of the Merger without any deed
or other transfer. At the Effective Date and without any order or other action
on the part of any court or otherwise, the Surviving Association shall hold and
enjoy all rights of property, franchises and interests, including appointments,
powers, designations and nominations, and all other rights and interests as
trustee, executor, administrator, agent, transfer agent, and registrar of stocks
and bonds, guardian of estates, assignee, receiver and conservator, and in every
other fiduciary capacity, and every agency capacity, in the same manner and to
the same extent as such rights, franchises and interests were held or enjoyed by
the Bank and Valley, respectively, immediately prior to the Effective Date.
(c) The Surviving Association shall be liable for all
liabilities of the Bank and Valley, including liabilities arising out of the
operation of a Trust Department, and (except as so provided) all deposits,
debts, liabilities, obligations and contracts of the Bank and Valley,
respectively, matured or unmatured, whether accrued, absolute, contingent or
otherwise, and whether or not reflected or reserved against on balance sheets,
books of account or records of the Bank or Valley, as the case may be, shall be
those of and are hereby expressly assumed by the Surviving Association and shall
not be released or impaired by the Merger; and all rights of creditors and other
obligees and all liens on property of either the Bank or Valley shall be
preserved unimpaired. At the Effective Date, the Surviving Association shall be
liable for all then existing indemnification obligations of the Bank and Valley
under their respective Articles of Association or By-Laws or under any other
agreement. At the Effective Date, the Association shall have all rights, and
shall be liable for all obligations of the Bank and Valley under all employee
compensation and benefit plans and arrangements of the Bank and Valley, and such
plans and related trusts, if any, shall continue in effect without any
interruption or termination.
(d) The name of the Surviving Association shall be "Valley
National Bank of Cortez."
(e) The business of the Surviving Association shall be that of
a national banking association. This business shall be conducted by the
Surviving Association at its main office which shall be located at 350 West
Montezuma Avenue, Cortez, Colorado and at its legally established branches.
(f) The Articles of Association of Valley as they exist
immediately prior to the Effective Date shall be the Articles of Association of
the Surviving Association until later amended pursuant to the laws of the United
States.
(g) At the Effective Date, the outstanding shares of the Bank
shall, in the aggregate, be converted into 398,000 shares of the capital stock
of the Bank, $5.00 par value.
(h) At the Effective Date and until surrendered for exchange
and payment, each outstanding stock certificate which, prior to the Effective
Date, represents shares of Valley
-2-
<PAGE>
Common Stock shall, without further action, cease to be an issued and existing
share and shall be converted into a right to receive from the Surviving
Association, and shall for all purposes represent the right to receive, upon
surrender of the certificate representing such shares, the amount of cash
specified in Article III; provided that, with respect to any matters relating to
stock certificates representing Valley Common Stock, the Surviving Association
may rely conclusively upon the record of stockholders maintained by Valley
containing the names and addresses of the holders of record of the Valley's
Common Stock at the Effective Date.
1.3. Acts to Carry Out This Merger Plan.
(a) Valley and its proper officers and directors shall and
will do all such acts and things as may be necessary or proper to vest, perfect,
or confirm title to such property or rights in the Bank and otherwise to carry
out the purposes of this Agreement.
(b) If, at any time after the Effective Date, the Bank shall
consider or be advised that any further assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect, or confirm, of
record or otherwise, in the Bank its right, title, or interest in or under any
of the rights, properties, or assets of Valley acquired or to be acquired by the
Bank as a result of, or in connection with, the Merger, or (ii) otherwise carry
out the purposes of this Agreement, Valley and its proper officers and directors
shall be deemed to have granted to the Bank an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments, and assurances in law
and to do all acts necessary or proper to vest, perfect, or confirm title to and
possession of such rights, properties, or assets in the Bank and otherwise to
carry out the purposes of this Agreement; and the proper officers and directors
of the Bank are fully authorized in the name of Valley or otherwise to take any
and all such action.
ARTICLE II
2.1. Capitalization. The authorized shares of capital stock of the Bank
as of the Effective Date shall be 600,000 shares of Common Stock, $5.00 par
value.
2.2. By-Laws. The By-Laws of Valley as they exist immediately prior to
the Effective Date shall be the By-Laws of the Bank until later amended pursuant
to the laws of the United States.
2.3. Directors. At and after the Effective Date, the Board of Directors
of the Surviving Association will be composed of the following persons:
The Board of Directors of the Surviving Association as so constituted
shall serve until the next annual meeting or until such time as their successors
have been elected and have qualified.
ARTICLE III
3.1. Manner of Converting Shares. Subject to the terms, conditions, and
limitations set forth herein, upon surrender of his or her certificate or
certificates in accordance with Section
-3-
<PAGE>
1.1 hereof, each holder of shares of Valley Common Stock other than Val Cor
shall be entitled to receive from Val Cor, in exchange for each share of the
common stock of Valley, $5.00 par value (the "Valley Common Stock") held of
record by such stockholder as of the Effective Date, $47.25.
3.2. Designation of Exchange Agent.
(a) The parties of this Agreement hereby designate Zions First
National Bank, a national banking association with its head office located in
Salt Lake City, Utah ("Zions Bank") as Exchange Agent to effect the exchanges
contemplated hereby.
(c) Val Cor will, promptly after the Effective Date, issue and
deliver to Zions Bank the cash to be paid to holders of Valley Common Stock
other than Val Cor in accordance with this Agreement.
3.3. Notice of Exchange. Promptly after the Effective Date, Zions Bank
shall mail to each holder of one or more certificates formerly representing
Valley Common Stock, except to such holders as shall have waived the notice
required by this Section 3.3, a notice specifying the Effective Date and
notifying such holder to surrender his or her certificate or certificates to
Zions Bank for exchange. Such notice shall be mailed to holders by regular mail
at their addresses on the records of Valley.
3.4. Treatment of Stock Options. Each stock option to purchase Valley
Common Stock not exercised prior to the Effective Date shall automatically be
canceled on and as of the Effective Date.
ARTICLE IV
4.1. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counter parts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
4.2. Section Headings. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
4.3. Choice of Law and Venue. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Utah,
without giving effect to the principles of conflict of law thereof. The parties
hereby designate Salt Lake County, Utah to be the proper jurisdiction and venue
for any suit or action arising out of this Agreement. Each of the parties
consents to personal jurisdiction in such venue for such a proceeding and agrees
that it may be served with process in any action with respect to this Agreement
or the transactions contem plated thereby by certified or registered mail,
return receipt requested, or to its registered agent for service of process in
the State of Utah. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
-4-
<PAGE>
4.4. Binding Agreement. This Agreement shall be binding upon the
parties and their respective successors and assigns.
4.5. Amendment. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law, this Agreement may be amended,
supplemented, or interpreted at any time prior to the Effective Date by written
instrument duly authorized and executed by each of the parties hereto, provided
that this Agreement may not be amended after the action by shareholders of
Valley in any respect that would prejudice the economic interests of such Valley
shareholders, or any of them, except as specifically provided herein or by like
action of such shareholders.
4.6. Termination. This Agreement shall terminate and be abandoned upon
(i) termination of the Plan of Reorganization or (ii) the mutual consent of
Valley and the Bank at any time prior to the Effective Date, and there shall be
no liability on the part of either of the parties hereto (or any of their
respective officers or directors) except to the extent provided in the Plan of
Reorganization.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VALLEY NATIONAL BANK OF CORTEZ
Attest: By:
-------------------------- -------------------------------------
Wayne D. Glazner
President and
Chief Executive Officer
THE FIRST NATIONAL BANK IN
ALAMOSA
Attest: By:
--------------------------- -------------------------------------
David E. Broyles
President and Chief Executive Officer
-5-
<PAGE>
_____________________________
State of Colorado )
)
) ss.
)
County of Montezuma )
_____________________________
On this [________] day of [____________], 1997, before me personally
appeared Wayne D. Glazner, to me known to be the President and Chief Executive
Officer of Valley National Bank of Cortez, and acknowledged said instrument to
be the free and voluntary act and deed of said association, for the uses and
purposes therein mentioned, and on oath stated that he was authorized to execute
said instrument and that the seal affixed is the corporate seal of said
association.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
---------------------------
Notary Public
-6-
<PAGE>
_____________________________
State of Colorado )
)
) ss.
)
County of Alamosa )
_____________________________
On this [________] day of [____________], 1997, before me personally
appeared David E. Broyles, to me known to be the President and Chief Executive
Officer of The First National Bank in Alamosa, and acknowledged said instrument
to be the free and voluntary act and deed of said association, for the uses and
purposes therein mentioned, and on oath stated that he was authorized to execute
said instrument and that the seal affixed is the corporate seal of said
association.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
---------------------------
Notary Public
-7-
<PAGE>
EXHIBIT III
VOTING AGREEMENT
<PAGE>
July 25, 1997
Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Mesdames and Gentlemen:
The undersigned understands that Zions Bancorporation ("Zions Bancorp")
is about to enter into an Agreement and Plan of Reorganization with Sky Valley
Bank Corp. (the "Company") (the "Agreement"). The Agreement provides for the
merger of the Company with and into Val Cor Bancorporation, Inc., a wholly-owned
subsidiary of Zions Bancorp (the "Merger") and the conversion of outstanding
shares of Company Stock into Zions Bancorp Common Stock and cash in lieu of
fractional shares in accordance with the formula therein set forth.
In order to induce Zions Bancorp to enter into the Agreement, and
intending to be legally bound hereby, the undersigned, subject to the conditions
hereinafter stated, represents, warrants, and agrees that at the Company
Shareholders' Meeting contemplated by Section 4.1 of the Agreement and Plan of
Reorganization (the "Meeting"), and any adjournment thereof, the under signed
will, in person or by proxy, vote or cause to be voted in favor of the Agreement
and the Merger the shares of Company Common Stock beneficially owned by the
undersigned individually or, to the extent of the undersigned's proportionate
voting interest, jointly with other persons, as well as, to the extent of the
undersigned's proportionate voting interest, any other shares of Company Common
Stock over which the undersigned may hereafter acquire beneficial ownership in
such capacities (collectively, the "Shares"). Subject to the final paragraph of
this agreement, the undersigned further agrees that he will use his best efforts
to cause any other shares of Company Common Stock over which he has or shares
voting power to be voted in favor of the Agreement and the Merger.
The undersigned further represents, warrants, and agrees that beginning
upon the authorization and execution of the Agreement by the Company until the
earlier of (i) the consummation of the Merger or (ii) the termination of the
Agreement in accordance with its terms, the undersigned will not, directly or
indirectly:
(a) vote any of the Shares, or cause or permit any of the Shares to be
voted, in favor of any other sale of control, merger, consolidation, plan of
liquidation, sale of assets, reclassification, or other transaction involving
the Company or any of its subsidiaries which would have the effect of assisting
or facilitating the acquisition of control by any person other than Zions
Bancorp or an affiliate thereof over the Company or any substantial portion of
its assets or assisting or facilitating the acquisition of control by any person
other than Zions Bancorp or an affiliate, or the Company or a wholly-owned
subsidiary of the Company, of any subsidiary of the Company or any substantial
portion of its assets. As used herein, the term "control" means (1) the ability
to direct the voting of 10 percent or more of the outstanding voting securities
of a person having ordinary voting power in the election of directors or in the
election of any other body having similar functions or (2) the ability to direct
the management
<PAGE>
Zions Bancorporation
July 25, 1997
Page 2
and policies of a person, whether through ownership of securities, through any
contract, arrangement, or understanding or otherwise.
(b) voluntarily sell or otherwise transfer any of the Shares, or cause
or permit any of the Shares to be sold or otherwise transferred (i) pursuant to
any tender offer, exchange offer, or similar proposal made by any person other
than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain
control (as the term "control" is defined in paragraph (a), above) of the
Company, any of its subsidiaries or any substantial portion of the assets of the
Company or any subsidiary thereof or to any other person (other than Zions
Bancorp or an affiliate thereof) under circumstances where such sale or transfer
may reasonably be expected to assist a person seeking to obtain such control,
(iii) for the purpose of avoiding the obligations of the undersigned under this
agreement, or (iv) to any transferee unless such transferee expressly agrees in
writing to be bound by the terms of this agreement in all events.
It is understood and agreed that this agreement relates solely to the
capacity of the undersigned as a shareholder or other beneficial owner of the
Shares and does not prohibit the undersigned, if a member of the Board of
Directors of the Company or a member of the Board of Directors of The First
National Bank in Alamosa, from acting, in his or her capacity as a director, as
the undersigned may determine to be appropriate in light of the obligations of
the undersigned as a director. It is further understood and agreed that the term
"Shares" shall not include any securities beneficially owned by the undersigned
as a trustee or fiduciary for another (unless such other person is affiliated
with the undersigned or is bound by an agreement with Zions Bancorp
substantially similar to this agreement), and that this agreement is not in any
way intended to affect the exercise by the undersigned of the undersigned's
fiduciary responsibility in respect of any such securities.
Very truly yours,
---------------------------
Accepted and Agreed to:
ZIONS BANCORPORATION
By:
--------------------------
Title:
-----------------------
<PAGE>
Zions Bancorporation
July 25, 1997
Page 3
Name of Shareholder:
Shares of Common Stock of Sky Valley Bank Corp.
Beneficially Owned
As of July 25, 1997
Name(s) of Number of
Record Owner(s) Beneficial Ownership1/ Shares
- --------------- ----------------------- ------
- ---------------
1/ For purposes of this Agreement, shares are beneficially owned by the
shareholder named above if held in any capacity other than a fiduciary capacity
(other than a revocable living trust and other than a fiduciary capacity on
behalf of a person who is affiliated with the shareholder or is bound by an
agreement with Zions Bancorp substantially similar to this agreement) and if the
shareholder named above has the power (alone or, in the case of shares held
jointly with his or her spouse, together with his or her spouse) to direct the
voting of such shares.
<PAGE>
EXHIBIT IV
OPINION OF KETTELKAMP, YOUNG & KETTELKAMP, P.C.
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[____________________], 1997
Page 1
[____________________], 1997
Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Val Cor Bancorporation, Inc.
350 West Montezuma Avenue
Cortez, Colorado 81321-2750
Valley National Bank of Cortez
350 West Montezuma Avenue
Cortez, Colorado 81321-2750
Re: Merger of Sky Valley Bank Corp. With Val Cor Bancorporation, Inc.,
In Exchange for Stock of Zions Bancorporation; Merger of Valley
National Bank of Cortez With The First National Bank in Alamosa
Mesdames and Gentlemen:
We are special counsel to Sky Valley Bank Corp., a Colorado corporation
(the "Company"), and its subsidiary, The First National Bank in Alamosa, a
national banking association organized under the laws of the United States with
its head office located at Alamosa, County of Alamosa, State of Colorado (the
"Bank"), in connection with the merger (the "Holding Company Merger") of the
Company with Val Cor Bancorporation, Inc. ("Val Cor"), in exchange for which
shareholders of the Company will receive shares of the common stock of Zions
Bancorporation ("Zions Bancorp") and cash, and the merger (the "Bank Merger") of
the Bank with Valley National Bank of Cortez ("Valley"), pursuant to an
Agreement and Plan of Reorganization dated July 25, 1997 (the "Agreement") and
certain additional agreements whose execution is contemplated in the Agreement,
including the Agreement of Merger by and between Val Cor and the Company (the
"Holding Company Merger Agreement") and the Agreement of Merger by and between
the Bank and Valley (the "Bank Merger Agreement") (the Agreement, the Holding
Company Merger Agreement, and the Bank Merger Agreement to be referred to
collectively as the "Agreements").
This opinion is provided to you pursuant to Section 4.3 of the
Agreement.
In our capacity as special counsel, we have participated in the
preparation of a Regis tration Statement filed with the Securities and Exchange
Commission on Form S-4 covering the
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[____________________], 1997
Page 2
shares of Zions Bancorp stock to be issued in connection with the Holding
Company Merger (the "Registration Statement") including the Prospectus/Proxy
Statement for the shareholders of the Company (the "Prospectus/Proxy
Statement"). In addition, in rendering the opinions that follow, we have
examined the Agreements and the exhibits and schedules appended thereto; the
articles of incorporation and by-laws of the Company and the articles of
incorporation or association and by-laws of the Bank; the minutes of certain
meetings of the respective boards of directors of the Company and the Bank; and
such other corporate documents and corporate records of the Company and the Bank
as we have deemed necessary or appropriate for the purpose of rendering the
following opinions. In addition, we have interviewed officers of the Company and
the Bank and undertaken and performed such other procedures as we have deemed
necessary or appropriate for the purpose of rendering the following opinions. In
these regards, we have examined and relied upon representations of Zions
Bancorp, Val Cor, and Valley contained in the Agreements, and, where we have
deemed appropriate, representations or certifications of officers or public
officials.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. In making our examination of any documents, we have assumed that all
parties other than the Company, the Bank, Ralph H. Outcalt ("Outcalt"), and
Donald J. Wuckert ("Wuckert") had the corporate power and authority to enter
into and perform all obligations thereunder and, as to such parties other than
the Company, the Bank, Outcalt, and Wuckert, we have also assumed the execution
and delivery of such documents and the validity and binding effect and
enforceability thereof. We have also assumed that the Agreements have not been
otherwise amended by oral or written agreement or by conduct of the parties
thereto. We have assumed that the certifications and representations dated
earlier than the date hereof on which we have expressed reliance herein continue
to remain accurate, insofar as material to our opinions, from such earlier date
through the date hereof.
Based on the foregoing, and solely in reliance thereon, we are of the
opinion that:
(a) Organization, Powers and Qualifications.
(i) The Company is a corporation which is duly organized,
validly existing and in good standing under the laws of the State of Colorado
and has all requisite corporate power and authority to own and operate its
properties and assets, to lease properties used in its business, and to carry on
its business as now conducted. The Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended. All outstanding
shares of capital stock of the Company have been duly and validly authorized and
issued, and are fully paid and non-assessable.
(ii) The Bank is duly organized, validly existing and in good
standing under the laws of the United States and has all requisite corporate
power and authority to own and operate its properties and assets, to lease
properties used in its business, and to carry on its business as now conducted.
The deposit accounts of the Bank are insured by the Bank Insurance Fund of the
Federal Deposit Insurance Corporation (the "FDIC") and, to the best of our
knowledge, no proceedings for the termination of such insurance are pending or
threatened. All
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[____________________], 1997
Page 3
outstanding shares of capital stock of the Bank have been duly and validly
authorized and issued and are fully paid and non-assessable. All issued and
outstanding shares of the Bank are held of record by the Company directly, free
and clear of any adverse claims.
(b) Execution and Performance of Agreements. Each of the Company and
the Bank has the corporate power and authority to execute, deliver, and perform
each of the Agreements to which it is a party and to carry out the terms thereof
and the transactions contemplated thereby.
(c) Absence of Violations. To the best of our knowledge, neither the
Company nor the Bank is in violation of its articles of incorporation or its
bylaws, or any law, regulation, ordinance, order, or restriction imposed by the
United States, any state, municipality, or other political subdivision or agency
thereof, or any order of any court or other competent tribunal having
jurisdiction over it in respect of the conduct of its business or the ownership
of its properties, which, either individually or in the aggregate with all such
other violations, would materially and adversely affect the business,
operations, or condition (financial or otherwise) of the Company or the Bank or
the observance or performance by the Company or the Bank of the terms of any of
the Agreements to which it is a party.
(d) Compliance with Corporate Documents and Agreements. Neither the
execution, delivery, or performance by either the Company or the Bank of any of
the Agreements to which it is a party nor the consummation of the transactions
contemplated therein will violate, conflict with, constitute a breach of or
default under the respective articles of incorporation or by-laws of the Company
or the Bank, or any agreement or instrument to which the Company or the Bank is
a party (or which is binding on either of them or its assets) or by which the
Company or the Bank is bound, and will not result in the creation of any lien
on, or security interest in, any of the assets of either of them.
(e) Binding Obligations; Due Authorization. Each of the Agreements to
which it is a party has been duly authorized by all necessary corporate action
on the part of each of the Company and the Bank, has been duly executed and
delivered by each of the Company and the Bank, and constitutes a valid, legal,
and binding obligation of the Company and the Bank, enforceable against it in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, receivership, conservatorship, or
similar laws or judicial decisions relating to or affecting creditors' rights
generally or the rights of creditors, or of the FDIC as insurer, regulator,
conservator, or receiver, of banks the accounts of which are insured by the FDIC
in particular, or by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law) as to whose
availability we express no opinion. No other corporate proceedings on the part
of either the Company or the Bank are necessary to authorize any of the
Agreements to which it is a party or the carrying out of the transactions
contemplated thereby.
(f) Absence of Default. Except for those consents (including, but not
limited to, approvals, licenses, registrations, or declarations) that have been
obtained, the execution and delivery by the Company and the Bank of each of the
Agreements to which it is a party and consummation of the transactions
contemplated thereby do not require the approval or consent of any governmental
authority or third party. The execution and delivery by the Company and the
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[____________________], 1997
Page 4
Bank of each of the Agreements to which it is a party, the consummation of the
transactions contemplated thereby, and the compliance with and fulfillment of
the terms thereof by the Company and the Bank will not require any
authorization, consent, approval, or exemption by any person which has not been
obtained or any notice or filing which has not been given or done.
(g) Compliance with Securities Laws. The Prospectus/Proxy Statement
complies on its face as to form in all material respects with the requirements
of the federal securities laws and published rules and regulations of the
Securities and Exchange Commission as of the date thereof.
In connection with our participation in the preparation of the
Prospectus/Proxy Statement, we have not independently verified the accuracy,
completeness, or fairness of the statements contained therein or of documents
incorporated by reference therein, and we make no representation to you as to
the accuracy or completeness of statements of fact contained or incorporated by
reference in the Prospectus/Proxy Statement or the Registration Statement.
Nothing, however, has come to our attention that would lead us to believe that
the Prospectus/Proxy Statement as of its issue date or the date hereof, or the
Registration Statement as of the effective date or the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (other than the
financial statements and schedules and other financial and statistical data
included or incorporated by reference therein, as to which we make no statement)
or that any event has occurred which should have been set forth in an amendment
or supplement to the Prospectus/Proxy Statement or Registration Statement which
has not been set forth in such amendment or supplement.
This opinion is given solely for your benefit in connection with the
transactions contemplated by the Agreements, and no other person or entity is
entitled to rely thereon, nor may copies be delivered or furnished to any other
party, nor may all or portions of this opinion be quoted, circulated, or
referred to in any other document without our prior consent.
Respectfully submitted,
<PAGE>
EXHIBIT V
OPINION OF COMPANY AND BANK LITIGATION COUNSEL
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[____________________], 1997
Page 1
[____________________], 1997
Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Val Cor Bancorporation, Inc.
350 West Montezuma Avenue
Cortez, Colorado 81321-2750
Valley National Bank of Cortez
350 West Montezuma Avenue
Cortez, Colorado 81321-2750
Re: Merger of Sky Valley Bank Corp. With Val Cor Bancorporation, Inc.,
In Exchange for Stock of Zions Bancorporation
Mesdames and Gentlemen:
We are special counsel to Sky Valley Bank Corp., a Colorado corporation
(the "Company"), and its subsidiary, The First National Bank in Alamosa, a
national banking association organized under the laws of the United States with
its head office located at Alamosa, County of Alamosa, State of Colorado (the
"Bank"), in connection with the merger (the "Holding Company Merger") of the
Company with Val Cor Bancorporation, Inc. ("Val Cor"), in exchange for which
shareholders of the Company will receive shares of the common stock of Zions
Bancorporation ("Zions Bancorp") and cash, and the merger (the "Bank Merger") of
the Bank with Valley National Bank of Cortez ("Valley"), pursuant to an
Agreement and Plan of Reorganization dated July 25, 1997 (the "Agreement") and
certain additional agreements whose execution is contemplated in the Agreement,
including the Agreement of Merger by and between Val Cor and the Company (the
"Holding Company Merger Agreement") and the Agreement of Merger by and between
the Bank and Valley (the "Bank Merger Agreement") (the Agreement, the Holding
Company Merger Agreement, and the Bank Merger Agreement to be referred to
collectively as the "Agreements"). We have been requested by the Company and SS
Bank to furnish to you our opinion pursuant to Section 4.4 of the Agreement.
In rendering the opinion that follows, we have examined the Agreements
and such other documents and records as we have deemed necessary or appropriate
for the purpose of rendering the following opinion. In addition, we have
interviewed officers of the Company and the Bank
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[____________________], 1997
Page 2
and undertaken and performed such other procedures as we have deemed necessary
or appropriate for the purpose of rendering the following opinion. In these
regards, we have examined and relied upon representations of Zions Bancorp, Val
Cor, and Valley contained in the Agreements, and, where we have deemed
appropriate, representations or certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. We have also assumed that the Agreements have not been otherwise amended
by oral or written agreement or by conduct of the parties thereto. We have
assumed that the certifications and representations dated earlier than the date
hereof on which we have expressed reliance herein continue to remain accurate,
insofar as material to our opinions, from such earlier date through the date
hereof.
Based on the foregoing, and solely in reliance thereon, we are of the
opinion that: (a) there is no action, suit, or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or threatened,
against the Company or the Bank which might result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs, or business prospects of the Company or the Bank, or which might
materially and adversely affect the properties or assets thereof or which might
prevent, hinder or delay the consummation of the transactions contemplated in
the Agreements; and (b) all pending legal or governmental proceedings to which
the Company or the Bank is a party or to which any of its property or assets is
the subject, including ordinary routine litigation incidental to its business,
are, considered in the aggregate, not material.
This opinion is given solely for your benefit in connection with the
transactions contemplated by the Agreements, and no other person or entity is
entitled to rely thereon, nor may copies be delivered or furnished to any other
party, nor may all or portions of this opinion be quoted, circulated, or
referred to in any other document without our prior consent.
Respectfully submitted,
<PAGE>
EXHIBIT VI
EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into this
[__] day of [__ ], 1997, by and between DAVID E. BROYLES ("Executive") and THE
FIRST NATIONAL BANK IN ALAMOSA, a national banking association having its head
office in Alamosa, Colorado (the "Bank")
W I T N E S S E T H T H A T :
WHEREAS, the Agreement and Plan of Reorganization (the "Plan") dated as
of July 25, 1997, by and between Zions Bancorporation ("Zions Bancorp"), Val Cor
Bancorporation, Inc. ("Val Cor"), Valley National Bank of Cortez ("Valley"), Sky
Valley Bank Corp. (the "Company"), the Bank, Ralph H. Outcalt, and Donald J.
Wuckert provides that the Company will be merged into Val Cor and that Valley
will be merged with and into the Bank;
WHEREAS, Executive is the President and Chief Executive Officer of the
Bank;
WHEREAS, the Bank desires to secure the employment of Executive upon
consummation of the transactions contemplated in the Plan;
WHEREAS, Executive is desirous of entering into the Agreement for such
periods and upon the terms and conditions set forth herein; and
WHEREAS, to assist in achieving the objectives of the transactions
described in the Plan, section 4.10 of the Plan contemplates that Executive will
enter into an employment agreement as a condition to the consummation of the
transactions described therein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties agree as follows:
1. Employment; Responsibilities and Duties.
(a) The Bank hereby agrees to employ Executive, and Executive hereby
agrees to serve as [__] of the Bank during the Term of Employment. Executive
shall have such duties, responsibilities, and authority of an executive nature,
within the service area of the Bank in Alamosa, Rio Grande, and Saguache
Counties, Colorado, as shall be set forth in the bylaws of the Bank on the date
of this Agreement or as may otherwise be determined by the Bank.
(b) Executive shall devote his full working time and best efforts to
the performance of his responsibilities and duties hereunder. During the Term of
Employment, Executive shall not, without the prior written consent of the Board
of Directors of the Bank, render services as an employee, independent
contractor, or otherwise, whether or not compensated, to any person or entity
other than the Bank or its affiliates; provided that Executive may, where
involvement in such activities does not individually or in the aggregate
significantly interfere with the performance by Executive of his duties or
violate the provisions of section 4 hereof, (i) render services to charitable
organizations, (ii) manage his personal investments, and (iii) with the prior
permission of the Board of Directors of the Bank, hold such other directorships
or part-time academic appointments or have such other business affiliations as
would otherwise be prohibited under this section 1.
-1-
<PAGE>
2. Term of Employment.
(a) The term of this Agreement ("Term of Employment") shall be the
period commencing on the date hereof (the "Commencement Date") and continuing
until the Termination Date, which shall mean the earliest to occur of:
(i) the third anniversary of the Commencement Date, unless the
Term of Employment shall be extended by mutual written agreement of Executive
and the Bank;
(ii) the death of Executive;
(iii) Executive's inability to perform his duties hereunder,
as a result of physical or mental disability as reasonably determined by the
personal physician of Executive, for a period of at least 180 consecutive days
or for at least 180 days during any period of twelve consecutive months during
the Term of Employment; or
(iv) the discharge of Executive by the Bank "for cause,"
which shall mean one or more of the following:
(A) any willful or gross misconduct by Executive with
respect to the business and affairs of the Bank, or with respect to any of their
affiliates for which Executive is assigned material responsibilities or duties;
(B) the conviction of Executive of a felony (after the
earlier of the expiration of any applicable appeal period without perfection
of an appeal by Executive or the denial of any appeal as to which no further
appeal or review is available to Executive) whether or not committed in the
course of his employment by the Bank;
(C) Executive's willful neglect, failure, or refusal to
carry out his duties hereunder in a reasonable manner; or
(D) the breach by Executive of any representation or
warranty in section 6(a) hereof or of any agreement contained in section 1, 4,
5, or 6(b) hereof, which breach is material and adverse to the Bank or any of
its affiliates for which Executive is assigned material responsibilities or
duties; or
(v) Executive's resignation from his position as [_________]
of the Bank; or
(vi) the termination of Executive's employment by the Bank
"without cause," which shall be for any reason other than those set forth in
subsections (i), (ii), (iii), or (iv) of this section 2(a), at any time, upon
the thirtieth day following notice to Executive.
(b) In the event that the Term of Employment shall be terminated for
any reason other than that set forth in section 2(a)(vi) hereof, Executive shall
be entitled to receive, upon the occurrence of any such event:
(i) any salary (as hereinafter defined) payable pursuant to
section 3(a)(i) hereof which shall have accrued as of the Termination Date; and
(ii) such rights as Executive shall have accrued as of the
Termination Date under the terms of any plans or arrangements in which he
participates pursuant to sections 3(b)
-2-
<PAGE>
or (c) hereof, any right to reimbursement for expenses accrued as of the
Termination Date payable pursuant to section 3(h) hereof, and the right to
receive the cash equivalent of paid annual leave and sick leave accrued as of
the Termination Date pursuant to section 3(e) hereof.
(c) In the event that the Term of Employment shall be terminated for
the reason set forth in section 2(a)(vi) hereof, Executive shall be entitled to
receive:
(i) for the period commencing on the date immediately
following the Termination Date and ending upon and including the third
anniversary of the Commencement Date, salary payable at the rate established
pursuant to section 3(a)(i) hereof for the year in which the Termination Date
occurs, in a manner consistent with the normal payroll practices of the Bank
with respect to executive personnel as presently in effect or as they may be
modified by the Bank from time to time; and
(ii) such rights as Executive may have accrued as of the
Termination Date under the terms of any plans or arrangements in which he
participates pursuant to sections 3(b) or (c) hereof, any right to reimbursement
for expenses accrued as of the Termination Date payable pursuant to section 3(h)
hereof, and the right to receive the cash equivalent of paid annual leave and
sick leave accrued as of the Termination Date pursuant to section 3(e) hereof.
3. Compensation. For the services to be performed by Executive
for the Bank under this Agreement, Executive shall be compensated in the
following manner:
(a) Salary and Bonus.
(i) Salary. During the Term of Employment the Bank shall pay
Executive a salary, the amount of which shall be reviewed at least annually, but
which in any event shall not be less on an annual basis than the aggregate cash
compensation paid to Executive by the Bank for the year ended December 31, 1996.
Salary shall be payable in accordance with the normal payroll practices of the
Bank with respect to executive personnel as presently in effect or as they may
be modified by the Bank from time to time.
(ii) Discretionary Bonuses. During the Term of Employment and
beginning with respect to the calendar year ending as of December 31, 1998,
Executive shall be considered annually by the Executive Compensation Committee
of the Board of Directors of Zions Bancorp for a discretionary bonus payment by
the Bank made in accordance with the compensation policies of Zions Bancorp as
presently in effect or as they may be modified by Zions Bancorp from time to
time.
(b) Value-Sharing Plan and Incentive Stock Option Plan. During the Term
of Employment, Executive shall be entitled to receive units of participation
under the Value-Sharing Plan and stock options under the Incentive Stock Option
Plan of Zions Bancorp, as each is in effect as of the Commencement Date or as
may be modified by Zions Bancorp from time to time, in such amounts and upon
such terms as may be prescribed by the Executive Compensation Committee of the
Board of Directors of Zions Bancorp at its sole discretion.
(c) Employee Benefit Plans or Arrangements. During the Term of
Employment, subject to the following sentence, Executive shall be entitled to
participate in all employee benefit plans of Zions Bancorp, as presently in
effect or as they may be modified by Zions Bancorp from time to time, under such
terms as may be applicable to officers of Executive's rank employed by Zions
Bancorp or its subsidiaries, including, without limitation, plans providing
retirement benefits, medical insurance, life insurance, disability insurance,
and accidental death or dismemberment insurance.
-3-
<PAGE>
(d) Vacation and Sick Leave. During the Term of Employment, Executive
shall be entitled to paid annual vacation periods and sick leave in accordance
with the policies of Zions Bancorp as in effect as of the Commencement Date or
as may be modified by Zions Bancorp from time to time as may be applicable to
officers of Executive's rank employed by Zions Bancorp or its subsidiaries.
(e) Withholding. All compensation to be paid to Executive hereunder
shall be subject to required withholding and other taxes.
(f) Expenses. During the Term of Employment, Executive shall be
reimbursed for reasonable travel and other expenses incurred or paid by
Executive in connection with the performance of his services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as may from time to time be requested, in accordance with
such policies of Zions Bancorp as are in effect as of the Commencement Date and
as may be modified by Zions Bancorp from time to time, under such terms as may
be applicable to officers of Executive's rank employed by Zions Bancorp or its
subsidiaries.
4. Confidential Business Information; Non-Competition.
(a) Executive acknowledges that certain business methods, creative
techniques, and technical data of Zions Bancorp and the Bank and their
affiliates and the like are deemed by Zions Bancorp and the Bank to be and are
in fact confidential business information either of Zions Bancorp or the Bank or
their affiliates or are entrusted to third parties. Such confidential
information includes but is not limited to procedures, methods, sales
relationships developed while in the service of Zions Bancorp or the Bank or
their affiliates, knowledge of customers and their requirements, marketing
plans, marketing information, studies, forecasts, and surveys, competitive
analyses, mailing and marketing lists, new business proposals, lists of vendors,
consultants, and other persons who render service or provide material to Zions
Bancorp or the Bank or their affiliates, and compositions, ideas, plans, and
methods belonging to or related to the affairs of Zions Bancorp or the Bank or
their affiliates. In this regard, each of Zions Bancorp and the Bank asserts
proprietary rights in all of its business information and that of its affiliates
except for such information as is clearly in the public domain. Notwithstanding
the foregoing, information that would be generally known or available to persons
skilled in Executive's fields shall be considered to be "clearly in the public
domain" for the purposes of the preceding sentence. Executive agrees that he
will not disclose or divulge to any third party, except as may be required by
his duties hereunder, by law, regulation, or order of a court or government
authority, or as directed by Zions Bancorp or the Bank, nor shall he use to the
detriment of Zions Bancorp or the Bank or their affiliates or use in any
business or on behalf of any business competitive with or substantially similar
to any business of Zions Bancorp or the Bank or their affiliates, any
confidential business information obtained during the course of his employment
by the Bank. The foregoing shall not be construed as restricting Executive from
disclosing such information to the employees of the Bank or its affiliates.
(b) Executive hereby agrees that from the Commencement Date until the
fifth anniversary of the Commencement Date, Executive will not (i) engage in the
banking business other than on behalf of the Bank or its affiliates within the
Designated Area (as hereinafter defined), (ii) directly or indirectly own,
manage, operate, control, be employed by, or provide management or consulting
services in any capacity to any firm, corporation, or other entity (other than
the Bank or its affiliates) engaged in the banking business in the Designated
Area, or (iii) directly or indirectly solicit or otherwise intentionally cause
any employee, officer, or member of the respective Boards of Directors of the
Bank or Zions Bancorp or any of their affiliates to engage in any action
prohibited under (i) or (ii) of this section 4(b); provided that the ownership
by Executive as an investor of not more than five percent of the outstanding
shares of stock of any corporation whose stock is listed for trading on any
securities exchange or is quoted
-4-
<PAGE>
on the automated quotation system of the National Association of Securities
Dealers, Inc., or the shares of any investment company as defined in section 3
of the Investment Company Act of 1940, as amended, shall not in itself
constitute a violation of Executive's obligations under this section 4(b).
(c) Executive acknowledges and agrees that irreparable injury will
result to the Bank and Zions Bancorp in the event of a breach of any of the
provisions of this section 4 (the "Designated Provisions") and that the Bank and
Zions Bancorp will have no adequate remedy at law with respect thereto.
Accordingly, in the event of a material breach of any Designated Provision, and
in addition to any other legal or equitable remedy the Bank or Zions Bancorp may
have, the Bank and Zions Bancorp shall be entitled to the entry of a preliminary
and permanent injunction (including, without limitation, specific performance)
by a court of competent jurisdiction in Salt Lake County, Utah, Alamosa County,
Colorado, Montezuma County, Colorado, or elsewhere, to restrain the violation or
breach thereof by Executive or any affiliates, agents, or any other persons
acting for or with Executive in any capacity whatsoever, and Executive submits
to the jurisdiction of such court in any such action.
(d) It is the desire and intent of the parties that the provisions of
this section 4 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this section 4 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular juris diction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to the Bank and Zions Bancorp, to
the fullest extent permitted by applicable law, the benefits intended by this
section 4.
(e) As used herein, "Designated Area" shall mean Alamosa County,
Colorado.
5. Life Insurance. In light of the unusual abilities and experience of
Executive, the Bank and Zions Bancorp in their discretion may apply for and
procure as owner and for their own benefit insurance on the life of Executive,
in such amount and in such form as the Bank and Zions Bancorp may choose. The
Bank or Zions Bancorp shall make all payments for such insurance and shall
receive all benefits from it. Executive shall have no interest whatsoever in any
such policy or policies but, at the request of the Bank or Zions Bancorp, shall
submit to medical examinations and supply such information and execute such
documents as may reasonably be required by the insurance company or companies to
which the Bank or Zions Bancorp has applied for insurance.
6. Representations and Warranties.
(a) Executive represents and warrants to the Bank that his execution,
delivery, and performance of this Agreement will not result in or constitute a
breach of or conflict with any term, covenant, condition, or provision of any
commitment, contract, or other agreement or instrument, including, without
limitation, any other employment agreement, to which Executive is or has been a
party.
(b) Executive shall indemnify, defend, and hold harmless the Bank and
Zions Bancorp for, from, and against any and all losses, claims, suits, damages,
expenses, or liabilities, including court costs and counsel fees, which the Bank
or Zions Bancorp has incurred or to which the Bank or Zions Bancorp may become
subject, insofar as such losses, claims, suits,
-5-
<PAGE>
damages, expenses, liabilities, costs, or fees arise out of or are based upon
any failure of any representation or warranty of Executive in section 6(a)
hereof to be true and correct when made.
7. Notices. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to
the appropriate address of each party as follows:
If to the Bank:
The First National Bank in Alamosa
c/o Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Attention: Mr. Harris H. Simmons
President and Chief Executive Officer
Zions Bancorporation
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to Executive:
Mr. David E. Broyles
[________________________________]
[________________________________]
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
8. Assignment. Neither party may assign this Agreement or any rights or
obliga tions hereunder without the consent of the other party.
9. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Utah, without giving effect
to the principles of conflict of law thereof. The parties hereby designate Salt
Lake County, Utah, to be the proper jurisdiction and venue for any suit or
action arising out of this Agreement. Each of the parties consents to personal
jurisdiction in such venue for such a proceeding and agrees that he or it may be
served with process in any action with respect to this Agreement or the
transactions contem plated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of Utah. Each of the parties irrevocably and unconditionally waives and
agrees, to the fullest extent permitted by law, not to plead any objection that
he or it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
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<PAGE>
10. Entire Agreement. This Agreement constitutes the entire
understanding between the Bank and Executive relating to the subject matter
hereof. Any previous agreements or under standings between the parties hereto or
between Executive and the Company or the Bank regarding the subject matter
hereof, including without limitation the terms and conditions of employment,
compensation, benefits, retirement, competition following employment, and the
like, are merged into and superseded by this Agreement. Neither this Agreement
nor any provisions hereof can be modified, changed, discharged, or terminated
except by an instrument in writing signed by the party against whom any waiver,
change, discharge, or termination is sought.
11. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable for any reason
whatsoever:
(a) the validity, legality, and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable) shall not in any way be affected or impaired thereby;
and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any section of this Agreement
containing any such provisions held to be invalid, illegal, or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal, or unenforceable.
12. Arbitration. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or related to this Agreement, or the breach thereof, such dispute
shall be referred to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
District of Utah. In the event of any arbitration, each party shall have a
reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
Any provision in this Agreement to the contrary notwithstanding, this section
shall be governed by the Federal Arbitration Act and the parties have entered
into this Agreement pursuant to such Act.
13. Costs of Litigation. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, the prevailing party shall be
entitled to recover reasonable attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action, or right asserted in such litigation, the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.
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<PAGE>
14. Affiliation. A company will be deemed to be "affiliated" with the
Bank or Zions Bancorp according to the definition of "Affiliate" set forth in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
15. Headings. The section and subsection headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
THE FIRST NATIONAL BANK IN
ALAMOSA
Attest: ..................... By:
---------------------------
DAVID E. BROYLES
Witness: .................... ................................
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<PAGE>
EXHIBIT VII
ADVISORY AGREEMENTS
-9-
<PAGE>
ADVISORY AGREEMENT
This ADVISORY AGREEMENT (the "Agreement") made and entered into this
[________] day of [__] 1997, by and between [__] ("[Outcalt] [Wuckert]") and THE
FIRST NATIONAL BANK IN ALAMOSA, a national banking association having its head
office in Alamosa, Colorado (the "Bank")
W I T N E S S E T H T H A T :
WHEREAS, the Agreement and Plan of Reorganization (the "Plan") dated as
of July 25, 1997, by and between Zions Bancorporation ("Zions Bancorp"), Val Cor
Bancorporation, Inc. ("Val Cor"), Valley National Bank of Cortez ("Valley"), Sky
Valley Bank Corp. (the "Company"), the Bank, Ralph H. Outcalt ("Outcalt"), and
Donald J. Wuckert ("Wuckert") provides that the Company will be merged into Val
Cor and that Valley will be merged with and into the Bank;
WHEREAS, [Outcalt] [Wuckert] is the [Chairman of the Board] [Vice
Chairman of the Board] of each of the Company and the Bank;
WHEREAS, the Bank desires to secure the services of [Outcalt] [Wuckert]
upon consummation of the transactions contemplated in the Plan;
WHEREAS, [Outcalt] [Wuckert] is desirous of entering into the Agreement
for such periods and upon the terms and conditions set forth herein; and
WHEREAS, to assist in achieving the objectives of the transactions
described in the Plan, section 4.11 of the Plan contemplates that [Outcalt]
[Wuckert] will enter into an advisory agreement as a condition to the
consummation of the transactions described therein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties agree as follows:
1. Advisory Board.
(a) As soon as practical following the consummation of the transactions
contemplated in the Plan, the Bank shall create a body known as the First
National Bank in Alamosa Advisory Board (the "Advisory Board").
(b) The purpose of the Advisory Board is to provide advice and counsel
to the management and Board of Directors of the Bank upon request or as
otherwise deemed appropriate or as described in the by-laws of the Bank or in
resolutions of the board of directors of the Bank.
2. Responsibilities and Duties.
(a) [Outcalt] [Wuckert] shall serve as the [Chairman of the Advisory
Board] [Vice Chairman of the Advisory Board].
(b) As [Chairman of the Advisory Board] [Vice Chairman of the Advisory
Board], [Outcalt] [Wuckert] shall attend [and preside at] each meeting of the
Advisory Board, or use best efforts to do so.
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<PAGE>
(c) While attending meetings of the Advisory Board or otherwise
considering, analyzing or discussing the business of the Bank or Val Cor,
[Outcalt] [Wuckert] shall devote his full time and best efforts to the
performance of his responsibilities and duties as a member of the Advisory
Board.
(d) As a member of the Advisory Board, [Outcalt] [Wuckert] shall
consider and render advice on matters presented to the Advisory Board in a
manner designed to serve the best interests of the Bank and shall at all times
act in the best interests of the Bank.
3. Term of Agreement.
(a) The term of this Agreement ("Term of Agreement") shall be the
period com mencing on the date hereof (the "Commencement Date") and continuing
until the Termination Date, which shall mean the earliest to occur of:
(i) the third anniversary of the Commencement Date, unless the
Term of Agreement shall be extended by mutual written agreement of [Outcalt]
[Wuckert] and the Bank;
(ii) the death of [Outcalt] [Wuckert];
(iii) [Outcalt] [Wuckert]'s inability to perform his duties
hereunder, as a result of physical or mental disability as reasonably determined
by the personal physician of [Outcalt] [Wuckert], for a period of at least 180
consecutive days or for at least 180 days during any period of twelve
consecutive months during the Term of Agreement; or
(iv) the termination of this Agreement by the Bank "for
cause," which shall mean one or more of the following:
(A) any willful or gross misconduct by [Outcalt]
[Wuckert] with respect to the business and affairs of the Bank;
(B) the conviction of [Outcalt] [Wuckert] of a felony
(after the earlier of the expiration of any applicable appeal period without
perfection of an appeal by [Outcalt] [Wuckert] or the denial of any appeal as to
which no further appeal or review is available to [Outcalt] [Wuckert]), whether
or not committed in the course of his duties pursuant to this Agreement or in
any way related to the Bank;
(C) [Outcalt] [Wuckert]'s willful neglect, failure,
or refusal to carry out his duties hereunder in a reasonable manner; or
(D) the breach by [Outcalt] [Wuckert] of any
representation or warranty in section 6(a) hereof or of any agreement contained
in section 2, 5, or 6(b) hereof, which breach is material and adverse to the
Bank; or
(v) [Outcalt] [Wuckert]'s resignation from his position as the
[Chairman of the Advisory Board] [Vice Chairman of the Advisory Board]; or
(vi) the termination of this Agreement by the Bank "without
cause," which shall be for any reason other than those set forth in subsections
(i), (ii), (iii), or (iv) of this section 3, at any time, upon the thirtieth day
following notice to [Outcalt] [Wuckert].
(b) In the event that the Term of Agreement shall be terminated for any
reason other than that set forth in section 3(a)(vi) hereof, [Outcalt] [Wuckert]
shall be entitled to receive any compensation due him pursuant to the terms of
this Agreement as of the date of any such event.
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<PAGE>
(c) In the event that the Term of Agreement shall be terminated for the
reason set forth in section 3(a)(vi) hereof, [Outcalt] [Wuckert] shall be
entitled to receive as of the date of any such event all compensation which
would have been due him pursuant to the terms of this Agreement for the full
Term of Agreement.
4. Compensation. For the services to be performed by [Outcalt]
[Wuckert] for the Bank under this Agreement, [Outcalt] [Wuckert] shall be
compensated in the following manner:
(a) Salary. During the Term of Agreement, the Bank shall pay [Outcalt]
[Wuckert] an annual salary in the amount of $45,000. Said salary shall be
payable in semi-annual installments on the six-month and annual anniversaries of
the Commencement Date.
(b) Office and Staff. During the Term of Agreement, the Bank shall
provide [Outcalt] [Wuckert] with the use of an office equipped with a telephone
at the Bank's offices in Alamosa, Colorado, to be available to [Outcalt]
[Wuckert] at any time during business hours. While utilizing such office,
[Outcalt] [Wuckert] shall be provided with normal and reasonable secretarial
assistance.
(c) Health, Vision, and Dental Insurance. During the Term of Agreement,
the Bank shall provide [Outcalt] [Wuckert] with health, vision, and dental
insurance coverage to substantially the same extent to which he was provided
such coverage during 1996. The premiums for such insurance shall be paid by the
Bank.
(d) Withholding. All compensation to be paid to [Outcalt] [Wuckert]
hereunder shall be subject to required withholding and other taxes.
5. Confidential Business Information; Non-Competition.
(a) [Outcalt] [Wuckert] acknowledges that certain business methods,
creative techniques, and technical data of Zions Bancorp and the Bank and their
affiliates and the like are deemed by Zions Bancorp and the Bank to be and are
in fact confidential business information either of Zions Bancorp or the Bank or
their affiliates or are entrusted to third parties. Such confidential
information includes but is not limited to procedures, methods, sales
relationships developed while in the service of Zions Bancorp or the Bank or
their affiliates, knowledge of customers and their requirements, marketing
plans, marketing information, studies, forecasts, and surveys, competitive
analyses, mailing and marketing lists, new business proposals, lists of vendors,
consultants, and other persons who render service or provide material to Zions
Bancorp or the Bank or their affiliates, and compositions, ideas, plans, and
methods belonging to or related to the affairs of Zions Bancorp or the Bank or
their affiliates. In this regard, each of Zions Bancorp and the Bank asserts
proprietary rights in all of its business information and that of its affiliates
except for such information as is clearly in the public domain. Notwithstanding
the foregoing, information that would be generally known or available to persons
in [Outcalt] [Wuckert]'s position shall be considered to be "clearly in the
public domain" for the purposes of the preceding sentence. [Outcalt] [Wuckert]
agrees that he will not disclose or divulge to any third party, except as may be
required by his duties hereunder, by law, regulation, or order of a court or
government authority, or as directed by Zions Bancorp or the Bank, nor shall he
use to the detriment of Zions Bancorp or the Bank or their affiliates or use in
any business or on behalf of any business competitive with or substantially
similar to any business of Zions Bancorp or the Bank or their affiliates, any
confidential business information obtained during the course of his relationship
with the Bank. The foregoing shall not be construed as restricting [Outcalt]
[Wuckert] from disclosing such information to the employees of the Bank or its
affiliates.
(b) [Outcalt] [Wuckert] hereby agrees that from the Commencement Date
until the third anniversary of the Commencement Date, [Outcalt] [Wuckert] will
not (i) engage in the
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<PAGE>
banking business other than on behalf of the Bank or its affiliates within the
Designated Area (as hereinafter defined), (ii) directly or indirectly own,
manage, operate, control, be employed by, or provide management or consulting
services in any capacity to any firm, corporation, or other entity (other than
the Bank or its affiliates) engaged in the banking business in the Designated
Area, or (iii) directly or indirectly solicit or otherwise intentionally cause
any employee, officer, or member of the respective Boards of Directors of the
Bank or Zions Bancorp or any of their affiliates to engage in any action
prohibited under (i) or (ii) of this section 5(b); provided that the ownership
by [Outcalt] [Wuckert] as an investor of not more than five percent of the
outstanding shares of stock of any corporation whose stock is listed for trading
on any securities exchange or is quoted on the automated quotation system of the
National Association of Securities Dealers, Inc., or the shares of any
investment company as defined in section 3 of the Investment Company Act of
1940, as amended, shall not in itself constitute a violation of [Outcalt]
[Wuckert]'s obligations under this section 5(b).
(c) [Outcalt] [Wuckert] acknowledges and agrees that irreparable injury
will result to the Bank and Zions Bancorp in the event of a breach of any of the
provisions of this section 5 (the "Designated Provisions") and that the Bank and
Zions Bancorp will have no adequate remedy at law with respect thereto.
Accordingly, in the event of a material breach of any Designated Provision, and
in addition to any other legal or equitable remedy the Bank or Zions Bancorp may
have, the Bank and Zions Bancorp shall be entitled to the entry of a preliminary
and permanent injunction (including, without limitation, specific performance)
by a court of competent jurisdiction in Salt Lake County, Utah, Alamosa County,
Colorado, Montezuma County, Colorado, or elsewhere, to restrain the violation or
breach thereof by [Outcalt] [Wuckert] or any affiliates, agents, or any other
persons acting for or with [Outcalt] [Wuckert] in any capacity whatsoever, and
[Outcalt] [Wuckert] submits to the jurisdiction of such court in any such
action.
(d) It is the desire and intent of the parties that the provisions of
this section 5 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this section 5 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular juris diction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 5 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to the Bank and Zions Bancorp, to
the fullest extent permitted by applicable law, the benefits intended by this
section 5.
(e) As used herein, "Designated Area" shall mean Alamosa County,
Colorado.
6. Representations and Warranties.
(a) [Outcalt] [Wuckert] represents and warrants to the Bank that his
execution, delivery, and performance of this Agreement will not result in or
constitute a breach of or conflict with any term, covenant, condition, or
provision of any commitment, contract, or other agreement or instrument,
including, without limitation, any employment agreement, to which [Outcalt]
[Wuckert] is or has been a party.
(b) [Outcalt] [Wuckert] shall indemnify, defend, and hold harmless the
Bank and Zions Bancorp for, from, and against any and all losses, claims, suits,
damages, expenses, or liabilities, including court costs and counsel fees, which
the Bank or Zions Bancorp has incurred or to which the Bank or Zions Bancorp may
become subject, insofar as such losses, claims, suits, damages, expenses,
liabilities, costs, or fees arise out of or are based upon any failure of any
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<PAGE>
representation or warranty of [Outcalt] [Wuckert] in section 6(a) hereof to be
true and correct when made.
7. Notices. All notices, consents, waivers, or other communications
which are required or permitted hereunder, except for notice to utilize the
office provided in accordance with the provisions of section 4(b), shall be in
writing and deemed to have been duly given if delivered personally or by
messenger, transmitted by telex or telegram, by express courier, or sent by
registered or certified mail, return receipt requested, postage prepaid. All
communi cations shall be addressed to the appropriate address of each party as
follows:
If to the Bank:
The First National Bank in Alamosa
c/o Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Attention: Mr. Harris H. Simmons
President and Chief Executive Officer
Zions Bancorporation
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to [Outcalt] [Wuckert]:
Mr. [Ralph H. Outcalt][Donald J. Wuckert]
[________________________________]
[________________________________]
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
8. Assignment. Neither party may assign this Agreement or any rights or
obliga tions hereunder without the consent of the other party.
9. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Utah, without giving effect
to the principles of conflict of law thereof. The parties hereby designate Salt
Lake County, Utah, to be the proper jurisdiction and venue for any suit or
action arising out of this Agreement. Each of the parties consents to personal
jurisdiction in such venue for such a proceeding and agrees that he or it may be
served with process in any action with respect to this Agreement or the
transactions contem plated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of Utah. Each of the parties irrevocably and unconditionally waives and
agrees, to the fullest extent permitted by law, not to plead any objection that
he or it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
-5-
<PAGE>
10. Entire Agreement. This Agreement constitutes the entire
understanding between the Bank and [Outcalt] [Wuckert] relating to the subject
matter hereof. Any previous agreements or understandings between the parties
hereto or between [Outcalt] [Wuckert] and the Company or the Bank regarding the
subject matter hereof, including without limitation the terms and conditions of
compensation, benefits, competition following employment, and the like, are
merged into and superseded by this Agreement. Neither this Agreement nor any
provisions hereof can be modified, changed, discharged, or terminated except by
an instrument in writing signed by the party against whom any waiver, change,
discharge, or termination is sought.
11. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable for any reason
whatsoever:
(a) the validity, legality, and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable) shall not in any way be affected or impaired thereby;
and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any section of this Agreement
containing any such provisions held to be invalid, illegal, or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal, or unenforceable.
12. Arbitration. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or related to this Agreement, or the breach thereof, such dispute
shall be referred to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
District of Utah. In the event of any arbitration, each party shall have a
reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
Any provision in this Agreement to the contrary notwithstanding, this section
shall be governed by the Federal Arbitration Act and the parties have entered
into this Agreement pursuant to such Act.
13. Costs of Litigation. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, the prevailing party shall be
entitled to recover reasonable attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action, or right asserted in such litigation, the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.
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<PAGE>
14. Affiliation. A company will be deemed to be "affiliated" with the
Bank or Zions Bancorp according to the definition of "Affiliate" set forth in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
15. Headings. The section and subsection headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
THE FIRST NATIONAL BANK IN
ALAMOSA
Attest: By:
----------------------- --------------------------
[RALPH H. OUTCALT]
[DONALD J. WUCKERT]
Witness:
----------------------- -------------------------------
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<PAGE>
EXHIBIT VIII
OPINION OF DUANE, MORRIS & HECKSCHER LLP
<PAGE>
[____________________], 1997
Sky Valley Bank Corp.
720 Main Street
Alamosa, Colorado 81101
The First National Bank in Alamosa
720 Main Street
Alamosa, Colorado 81101
Re: Merger of Sky Valley Bank Corp. With Val Cor Bancorporation,
Inc., In Exchange for Stock of Zions Bancorporation
Mesdames and Gentlemen:
We are special counsel to Zions Bancorporation, a corporation organized
under the laws of the State of Utah with its head office located at Salt Lake
City, County of Salt Lake, State of Utah ("Zions Bancorp"), its wholly-owned
subsidiary, Val Cor Bancorporation, Inc., a corporation organized under the laws
of the State of Colorado with its head office located at Cortez, County of
Montezuma, State of Colorado ("Val Cor"), and its subsidiary, Valley National
Bank of Cortez, a national banking association organized under the laws of the
United States with its head office located at Cortez, County of Montezuma, State
of Colorado ("Valley"), in connection with the merger (the "Holding Company
Merger") of Sky Valley Bank Corp., a corporation organized under the laws of the
State of Colorado with its head office located at Alamosa, County of Alamosa,
State of Colorado (the "Company"), with and into Val Cor in exchange for which
shareholders of the Company will receive shares of the common stock of Zions
Bancorp and cash pursuant to an Agreement and Plan of Reorganization dated July
25, 1997 (the "Agreement") and an Agreement of Merger dated as of
[____________], 1997 (the "Merger Agreement"), and in connection with the merger
(the "Bank Merger") of The First National Bank of Alamosa, a national banking
association organized under the laws of the United States with its head office
located at Alamosa, County of Alamosa, State of Colorado and a wholly-owned
subsidiary of the Company (the "Bank"), with Valley pursuant to the Agreement
and an Agreement of Merger dated as of [____________], 1997 (the "Bank Merger
Agreement") (the Agreement, the Merger Agreement, and the Bank Merger Agreement
to be referred to collectively as the "Agreements").
This opinion is provided to you pursuant to Section 5.3 of the
Agreement.
<PAGE>
In our capacity as special counsel, we have participated in the
preparation of a Regis tration Statement filed with the Securities and Exchange
Commission on Form S-4 covering the shares of Zions Bancorp stock to be issued
in connection with the Holding Company Merger (the "Registration Statement")
including the Prospectus/Proxy Statement for the shareholders of the Company
(the "Prospectus/Proxy Statement"). In addition, in rendering the opinions that
follow, we have examined executed copies of the Agreements and the exhibits and
schedules appended thereto; the articles of incorporation or association and
by-laws of Zions Bancorp, Val Cor, and Valley; the minutes of certain meetings
of the board of directors of Zions Bancorp, Val Cor, and Valley; and such other
corporate documents and corporate records of Zions Bancorp, Val Cor, and Valley
as we have deemed necessary or appropriate for the purpose of rendering the
following opinions. We have also examined [set forth regulatory approvals,
consents and waivers]. In addition, we have interviewed officers of Zions
Bancorp, Val Cor, and Valley and undertaken and performed such other procedures
as we have deemed necessary or appropriate for the purpose of rendering the
following opinions. In these regards, we have examined and relied upon
representations of the Company, the Bank, Ralph H. Outcalt, and Donald J.
Wuckert contained in the Agreements, and, where we have deemed appropriate,
representations or certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. In making our examination of any documents, we have assumed that all
parties other than Zions Bancorp, Val Cor, and Valley had the corporate power
and authority to enter into and perform all obligations thereunder and, as to
such parties other than Zions Bancorp, Val Cor, and Valley, we have also assumed
the execution and delivery of such documents and the validity and binding effect
and enforceability thereof. We have also assumed that the Agreements have not
been otherwise amended by oral or written agreement or by conduct of the parties
thereto. We have assumed that the certifications and representations dated
earlier than the date hereof on which we have expressed reliance herein continue
to remain accurate, insofar as material to our opinions, from such earlier date
through the date hereof. In rendering the opinion set forth in paragraph (e)
hereof, we have assumed that neither the Company nor the Bank is subject to any
order or directive from, or memorandum of understanding or similar supervisory
agreement entered into with, any bank regulatory authority which would
necessitate the receipt of approvals or consents from any such bank regulatory
authority prior to consummation of the transactions contemplated in the
Agreements other than those approvals and consents contemplated in the Agreement
and Plan of Reorganization and those generally applicable to such transactions.
Based on the foregoing, and solely in reliance thereon, we are of the
opinion that:
(a) Organization, Powers and Qualifications.
(i) Zions Bancorp is a corporation which is duly organized,
validly existing, and in good standing under the laws of the State of Utah and
has the corporate power and authority to own and operate its properties and
assets, to lease properties used in its business, and to carry on its business
as now conducted.
(ii) Val Cor is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Colorado and has
the corporate power and authority to own and operate its properties and assets,
to lease properties used in its business, and to carry on its business as now
conducted.
<PAGE>
(iii) Valley is a national banking association which is duly
organized, validly existing, and in good standing under the laws of the United
States and has the corporate power and authority to own and operate its
properties and assets, to lease properties used in its business, and to carry on
its business as now conducted. The deposit accounts of Valley are insured by the
Bank Insurance Fund of the Federal Deposit Insurance Corporation and, to the
best of our knowledge, no proceedings for the termination of such insurance are
pending or threatened.
(b) Execution and Performance of Agreements. Each of Zions Bancorp, Val
Cor, and Valley has the corporate power and authority to execute, deliver, and
perform each of the Agreements to which it is a party and to carry out the
terms thereof and the transactions contemplated thereby.
(c) Compliance with Corporate Documents. Neither the execution,
delivery, or performance by Zions Bancorp, Val Cor, or Valley of the Agreements
nor the consummation of the transactions contemplated therein will violate,
conflict with, or constitute a breach of or default under the respective
articles of incorporation or association or by-laws of Zions Bancorp, Val Cor,
or Valley.
(d) Binding Obligations; Due Authorization. Each of the Agreements to
which it is a party has been duly authorized by all necessary corporate action
on the part of each of Zions Bancorp, Val Cor, and Valley, has been duly
executed and delivered by each of Zions Bancorp, Val Cor, and Valley, and
constitutes a valid, legal, and binding obligation of Zions Bancorp, Val Cor, or
Valley, as the case may be, enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship, or similar laws or judicial
decisions relating to or affecting creditors' rights generally or the rights of
creditors, or of the FDIC as insurer, regulator, conservator or receiver, of
banks the accounts of which are insured by the FDIC in particular, or by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law) as to whose availability we express no opinion.
No other corporate proceedings on the part of any of Zions Bancorp, Val Cor, or
Valley are necessary to authorize any of the Agreements to which it is a party
or the carrying out of the transactions contemplated thereby.
(e) Regulatory Approvals. All approvals or waivers required to be
obtained from the Federal Reserve Bank of San Francisco, the Board of Governors
of the Federal Reserve System, the Comptroller of the Currency, the Colorado
Division of Banking, and the Department of Financial Institutions of the State
of Utah to consummate the transactions contemplated by the Agreement have been
obtained. Except for those approvals or waivers, the execution and delivery by
Zions Bancorp, Val Cor, and Valley of each of the Agreements to which it is a
party and consummation of the transactions contemplated thereby do not require
the approval or consent of any bank regulatory authority.
(f) Issuance of Zions Bancorp Common Stock. The shares of the Common
Stock of Zions Bancorp, no par value, to be issued by Zions Bancorp pursuant to
the Agreement and the Holding Company Merger Agreement, when issued pursuant to
and in accordance with the Agreement and the Holding Company Merger Agreement,
will be duly authorized and legally issued, fully paid, and non-assessable.
(g) Compliance with Securities Laws.
(i) The Registration Statement has become effective under the
Securities Act of 1933, as amended (the "Act"), and, to the best of our
knowledge, no stop order proceedings
<PAGE>
with respect thereto have been instituted or are pending or threatened under the
Act with respect to the Registration Statement.
(ii) The Registration Statement complies on its face as to
form in all material respects with the requirements of the federal securities
laws and published rules and regulations of the Securities and Exchange
Commission as of the date thereof.
In connection with our participation in the preparation of the
Registration Statement, we have not independently verified the accuracy,
completeness, or fairness of the statements contained therein or of documents
incorporated by reference therein, and we make no representation to you as to
the accuracy or completeness of statements of fact contained or incorporated by
reference in the Registration Statement or the Prospectus/Proxy Statement.
Nothing, however, has come to our attention that would lead us to believe that
the Registration Statement as of the effective date or the date hereof, or the
Prospectus/Proxy Statement as of the issue date or the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (other than the
financial statements and schedules and other financial and statistical data
included or incorporated by reference therein, as to which we make no statement)
or that any event has occurred which should have been set forth in an amendment
or supplement to the Registration Statement or Prospectus/Proxy Statement and
which has not been set forth in such amendment or supplement.
This opinion is given to you for your sole benefit in connection with
the transactions contemplated in the Agreements, and no other person or entity
is entitled to rely thereon, nor may copies be delivered or furnished to any
other party, nor may all or portions of this opinion be quoted, circulated, or
referred to in any other document without our prior written consent.
Very truly yours,
Exhibit 2.2
FIRST AMENDMENT TO AGREEMENT TO PLAN OF REORGANIZATION
<PAGE>
FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (the "First
Amendment") made as of the eighth day of September, 1997, among ZIONS
BANCORPORATION ("Zions Bancorp"), a Utah corporation having its principal office
in Salt Lake City, Utah, VAL COR BANCORPORATION, INC. ("Val Cor"), a Colorado
corporation having its principal office in Cortez, Colorado, VALLEY NATIONAL
BANK OF CORTEZ ("Valley"), a national banking association organized under the
laws of the United States, SKY VALLEY BANK CORP. (the "Company"), a Colorado
corporation having its principal office in Alamosa, Colorado, THE FIRST NATIONAL
BANK IN ALAMOSA (the "Bank"), a national banking association organized under the
laws of the United States, RALPH H. OUTCALT ("Outcalt"), an adult resident of
the State of Colorado, and DONALD J. WUCKERT ("Wuckert"), an adult resident of
the State of Colorado
W I T N E S S E T H T H A T :
WHEREAS, Zions Bancorp, Val Cor, Valley, the Company, the Bank, Outcalt,
and Wuckert (together the "Parties") have entered into that certain Agreement
and Plan of Reorganization dated as of the twenty-fifth day of July, 1997 (the
"Reorganization Agreement"), providing for the merger of the Company into Val
Cor (the "Holding Company Merger"), whereby shares of the common stock of the
Company will be converted into the right to receive an aggregate 573,135 shares
of the common stock of Zions Bancorp, no par value ("Zions Bancorp Stock");
WHEREAS, one of the conditions precedent to the obligations of Zions
Bancorp, Val Cor, and the Company to consummate the Holding Company Merger and
the obligations of Valley Bank and the Bank to consummate the merger of Valley
Bank into the Bank (the "Bank Merger") is that on or before the Effective Date
Zions Bancorp and the Company shall have received a written opinion of Duane,
Morris & Heckscher LLP, or of another firm mutually agreeable to Zions Bancorp
and the Company, applying existing law, that the reorganization contemplated by
the Reorganization Agreement shall qualify as one or more reorganizations under
section 368(a)(1) of the Internal Revenue Code of 1986 and the regulations and
rulings promulgated thereunder (the "Tax Opinion");
WHEREAS, Duane, Morris & Heckscher LLP has indicated to the Parties that
it is willing to be engaged to render the Tax Opinion for a fee of $20,000,
based upon the Agreement as it reads as of the date hereof and the facts known
to it on the date hereof;
WHEREAS, the Parties desire to apportion the cost of the Tax Opinion
equally between Zions Bancorp and the shareholders of the Company;
WHEREAS, the Parties desire to effectuate such an apportionment of cost
by reducing the number of shares to be issued by Zions Bancorp to holders of the
common stock of the Company by a number of shares of Zions Bancorp Stock with a
value of one-half the cost of the Tax Opinion, based upon the valuation of
$33.50 per share of Zions Bancorp Stock that the Parties are using for other
purposes with regard to the Holding Company Merger;
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth and those set forth in the Reorganization
Agreement, the Parties agree to amend, and accordingly do hereby amend, the
Reorganization Agreement in the manner set forth below:
-3-
<PAGE>
A. Section 1.2(a)(i) of the Reorganization Agreement, which begins "each
holder of shares of Company Common Stock," is amended by striking the number
573,135 where it appears and by inserting in its place the number 572,836.
B. Section 3.1 of Exhibit I of the Reorganization Agreement, which begins
"Subject to the terms, conditions, and limitations set forth herein," is amended
by striking the number 573,135 where it appears and by inserting in its place
the number 572,836.
C. This First Amendment may be executed in two or more counterparts each
of which shall be deemed to constitute an original, but such counterparts
together shall be deemed to be one and the same instrument and to become
effective when one or more counterparts have been signed by each of the Parties.
It shall not be necessary in making proof of this First Amendment or any
counterpart hereof to produce or account for the other counterpart.
D. This First Amendment shall be governed by, construed, and enforced in
accordance with the laws of the State of Utah, without giving effect to the
principles of conflict of law thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ZIONS BANCORPORATION
Attest: By:
----------------------- --------------------------
VAL COR BANCORPORATION, INC.
Attest: By:
----------------------- --------------------------
VALLEY NATIONAL BANK OF CORTEZ
Attest: By:
----------------------- --------------------------
-4-
<PAGE>
SKY VALLEY BANK CORP.
Attest: By:
----------------------- --------------------------
Ralph H. Outcalt
Chairman of the Board
THE FIRST NATIONAL BANK IN
ALAMOSA
Attest: By:
----------------------- --------------------------
David E. Broyles
President and
Chief Executive Officer
RALPH H. OUTCALT
----------------------
DONALD J. WUCKERT
----------------------
-5-
Exhibit 5
<PAGE>
Zions Bancorporation
November , 1997
Page 1
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006-1608
(202) 776-7800
December 8, 1997
Zions Bancorporation
Suite 1380
One South Main
Salt Lake City, Utah 84111
Gentlemen:
We have acted as counsel to Zions Bancorporation ("Zions") in connection
with the Agreement and Plan of Reorganization dated as of July 25, 1997 as
amended on September 8, 1997, among Sky Valley Bank Corp. (the "Company"), The
First National Bank in Alamosa (the "Bank"), Ralph H. Outcalt ("Outcalt"),
Donald J. Wuckert ("Wuckert"), Zions, Val Cor Bancorporation, Inc. ("Val Cor"),
and Valley National Bank of Cortez ("Valley"), a related Plan of Merger between
the Company and Val Cor, and a related Plan of Merger between the Bank and
Valley (collectively, the "Plan of Reorganization"), whereby the Company will be
merged into Val Cor, with Val Cor being the surviving corporation (the "Holding
Company Merger") and Valley will be merged into the Bank, with the Bank being
the surviving entity (the "Bank Merger"; collectively the "Reorganization").
Upon consummation of the Reorganization, the holders of each outstanding share
of Company Common Stock will receive, in exchange for each share of Company
Common Stock, shares of Zions Common Stock, no par value ("Zions Common Stock").
Upon the effective date of the Reorganization, the shares of Company Common
Stock will be canceled and immediately converted into the right for holders of
Company Common Stock to receive, in exchange for each share of Company Common
Stock, that number of shares of Zions Common Stock calculated by dividing the
Merger Consideration of 572,836 shares of Zions Common Stock by the total number
of shares of Company Common Stock issued and outstanding as of the Effective
Date of the Reorganization.
We are also acting as counsel to Zions in connection with the Registration
Statement on Form S-4 (the "Registration Statement") to be filed by Zions with
the Securities and Exchange Commission for the purpose of registering under the
Securities Act of 1933, as amended, the aggregate maximum of 572,836 shares of
Zions Common Stock into which outstanding Company Common Stock will be converted
upon effectiveness of the Reorganization. This opinion is being furnished for
the purpose of being filed as an exhibit to the Registration Statement.
In connection with this opinion, we have examined, among other things:
(1) an executed copy of the Plan of Reorganization;
(2) a copy certified to our satisfaction of the Restated Articles
of Incorporation of Zions as in effect on the date hereof;
<PAGE>
Zions Bancorporation
December 8, 1997
Page 2
(3) copies certified to our satisfaction of resolutions adopted by
the Board of Directors of Zions on June 20, 1997, including
resolutions approving the Plan of Reorganization; and
(4) such other documents, corporate proceedings, and statutes as
we considered necessary to enable us to furnish this opinion.
We have assumed for the purpose of this opinion that:
(1) the Plan of Reorganization has been duly and validly
authorized, executed, and delivered by the Company and the
Bank and Outcalt and Wuckert and such authorization remains
fully effective and has not been revised, superseded or
rescinded as of the date of this opinion; and
(2) the Reorganization will be consummated in accordance with the
terms of the Plan of Reorganization.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. In making our examination of any documents, we have assumed that all
parties other than Zions, Val Cor, and Valley, had the corporate power and
authority to enter into and perform all obligations thereunder and, as to such
parties, we have also assumed the execution and delivery of such documents and
the validity and binding effect and enforceability thereof. We have also assumed
that the Plan of Reorganization has not been otherwise amended by oral or
written agreement or by conduct of the parties thereto. We have assumed that the
certifications and representations dated earlier than the date hereof on which
we have expressed reliance herein continue to remain accurate, insofar as
material to our opinions, from such earlier date through the date hereof and
that the Reorganization will be consummated in accordance with the Plan of
Reorganization.
Based upon the foregoing, we are of the opinion that the shares of
Zions Common Stock into which the outstanding shares of Company Common Stock
will be converted in the Reorganization will, when issued in accordance with the
terms of the Plan of Reorganization, be duly authorized, validly issued, fully
paid and nonassessable shares of Zions Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Opinions" in Proxy Statement/Prospectus forming a part of the Registration
Statement.
Very truly yours,
DUANE, MORRIS & HECKSCHER LLP
LSL/MSY/pmo
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Zions Bancorporation:
We consent to the use of our report dated January 16, 1997 with respect to the
consolidated financial statements of Zions Bancorporation as of December 31,
1996 and 1995, and for each of the years in the three-year period ended December
31, 1996 incorporated herein by reference, and to the reference to our firm
under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
-------------------------------
KPMG PEAT MARWICK LLP
Salt Lake City, Utah
December 9, 1997
Shareholders of Sky Valley Bank Corp.
_______________, 1997
Page 1
EXHIBIT 99.1
[Letterhead of Sky Valley]
________________, 1997
Shareholders of Sky Valley Bank Corp.
Dear Shareholder:
A Special Meeting of the shareholders of Sky Valley Bank Corp. ("the
Company") has been called for 9:00 a.m., Colorado time, ____________________ on
, 1997, at the Company's offices at 720 Main Street, Alamosa, Colorado.
The purpose of the Special Meeting is to consider and vote upon an
Agreement and Plan of Reorganization dated July 25, 1997 and amended on
September 8, 1997 among the Company, The First National Bank in Alamosa (the
"Bank"), Ralph H. Outcalt ("Outcalt"), Donald J. Wuckert ("Wuckert"), Zions
Bancorporation ("Zions"), Val Cor Bancorporation, Inc. ("Val Cor"), a
wholly-owned subsidiary of Zions, and Valley National Bank of Cortez ("Valley"),
Val Cor's 99.1% owned subsidiary, which includes an Agreement to Merge between
the Company and Val Cor and an Agreement to Merge between the Bank and Valley
(collectively, the "Plan of Reorganization"). If the Plan of Reorganization is
approved, and all conditions are met, the Plan of Reorganization will result in
the merger of the Company into Val Cor, with Val Cor being the surviving
corporation and the merger of Valley into the Bank, with the Bank being the
surviving entity.
Upon consummation of the Plan of Reorganization, each holder of Company
Common Stock will receive shares of Zions Common Stock in exchange for each
share of Company Common Stock. The terms and conditions of the Plan of
Reorganization are summarized in the accompanying Proxy Statement/Prospectus.
See "Summary--Certain Definitions" in the Proxy Statement/Prospectus.
At the Effective Date (as defined), the shares of Company Common Stock
will be canceled and immediately converted into the right for holders of Company
Common Stock to receive, in exchange for each share of Company Common Stock,
that number of shares of Zions Common Stock calculated by dividing the Merger
Consideration (as defined) of 572,836 shares of Zions Common Stock by the total
number of shares of Company Common Stock issued and outstanding as of the
Effective Date of the Reorganization. Zions will not issue fractional shares of
its common stock in the Reorganization. In lieu of fractional shares of Zions
Common Stock, if any, each shareholder of the Company who is entitled to a
fractional share of Zions Common Stock will receive an amount of cash equal to
<PAGE>
Shareholders of Sky Valley Bank Corp.
___________________, 1997
Page 2
the product of such fraction times $33.50. Such fractional share interest will
not include the right to vote or to receive dividends or any interest thereon.
On November ___, 1997, the closing price of Zions Common Stock was
$______ per share. On that date the Company had 2,200 shares of its Common Stock
issued and outstanding. Assuming that the Reorganization had been consummated as
of November ___, 1997 and the closing price of Zions Common Stock had been
$______ on that date, shareholders of the Company under such circumstances would
have received 260.38 shares of Zions Common Stock for each share of Company
Common Stock, or an equivalent value of $______ per share of Company Common
Stock.
The accompanying Proxy Statement/Prospectus details the terms of the
proposed Plan of Reorganization and provides information concerning the Company,
the Bank, Messrs. Outcalt and Wuckert, Zions, Val Cor and Valley as well as the
Plan of Reorganization. The Proxy Statement/Prospectus contains important
information necessary for the shareholders to make a decision about how to vote
at the Special Meeting. Please read it carefully.
The affirmative vote of a majority of the issued and outstanding shares
of Company Common Stock is required for approval of the Plan of Reorganization.
Failure to vote will have the same effect as a vote against the Reorganization.
Consequently, please mark, sign, date and return the enclosed proxy as soon as
possible.
Any holder of Company Common Stock may attend the Special Meeting and
vote in person if he or she desires, even if he or she has already submitted a
proxy.
Consummation of the Plan of Reorganization is subject to approval by
federal and state bank regulatory agencies which approvals have been received
and to certain other conditions, including the maintenance of the Company's
financial condition. If approved, the Plan of Reorganization will most likely be
consummated sometime in first quarter of 1998.
The Board of Directors has unanimously approved the Plan of
Reorganization and determined that the Reorganization is in the best interests
of the Company, its shareholders, employees and the community it serves. The
Board of Directors unanimously recommends that the shareholders vote to approve
the Plan of Reorganization.
Instructions describing the procedure to be followed to receive shares
of Zions Common Stock are included with the accompanying Proxy
Statement/Prospectus. If the Plan of Reorganization is approved by the
shareholders, on or shortly after the effective date of the Plan of
Reorganization, Zions will send you instructions describing the procedure to be
followed to exchange your Sky Valley Bank Corp. stock certificate for the
selected Reorganization consideration.
<PAGE>
Shareholders of Sky Valley Bank Corp.
___________________, 1997
Page 3
Please do not send your certificates to the Company prior to receiving these
instructions.
Sincerely,
Ralph H. Outcalt
Chairman of the Board
Exhibit 99.2
SKY VALLEY BANK CORP.
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
A Special Meeting of shareholders of Sky Valley Bank Corp. (the
"Company") will be held at 9:00 a.m., Colorado time, on _________________, 1997,
at the Company's offices at 720 Main Street, Alamosa, Colorado, to consider and
vote upon an Agreement and Plan of Reorganization dated as of July 25, 1997 as
amended on September 8, 1997, among the Company, The First National Bank in
Alamosa (the "Bank"), Ralph H. Outcalt, Donald J. Wuckert, Zions Bancorporation
("Zions"), Val Cor Bancorporation, Inc. ("Val Cor"), a wholly-owned subsidiary
of Zions, and Valley National Bank of Cortez ("Valley"), Val Cor's 99.1% owned
subsidiary, an Agreement to Merge between the Company and Val Cor and an
Agreement to Merge between Valley and the Bank (collectively, the "Plan of
Reorganization"). The Plan of Reorganization provides for the merger of the
Company into Val Cor, with Val Cor being the surviving corporation and for the
merger of Valley into the Bank with the Bank being the surviving entity (the
aforementioned mergers being referred to herein collectively as the
"Reorganization").
Upon the consummation of the Plan of Reorganization, each
holder of shares of Company Common Stock will receive shares of Zions Common
Stock in exchange for each share of Company Common Stock held as of the
effective date of the Plan of Reorganization. The terms and conditions of the
Reorganization are set forth in the accompanying Proxy Statement/Prospectus.
The Board of Directors has set _________________, 1997, as the record
date for determining shareholders entitled to notice of and to vote at the
Special Meeting.
Holders of Company Common Stock are entitled to assert
dissenters' rights under Colorado law.
By order of the Board of Directors
Dated: __________________, 1997.
Ralph H. Outcalt
Chairman of the Board
Please mark, sign and return the enclosed proxy in the envelope
provided.
Exhibit 99.3
EXHIBIT 99.3
PROXY
SPECIAL MEETING OF SHAREHOLDERS
OF SKY VALLEY BANK CORP.
______________, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints _______________,
_______________, and _______________, and any of them, as proxies of the
undersigned to vote as designated below on behalf of the undersigned as a holder
of the common stock of Sky Valley Bank Corp. ("Company Common Stock") and to
vote as designated below all shares of Company Common Stock that the undersigned
held of record on ________________, 1997, which the undersigned is entitled to
vote, at the special meeting of shareholders of Sky Valley Bank Corp. (the
"Company") to be held ______________, 1997, or at any postponement or
adjournment thereof, for the purpose of considering and acting on the proposal
to approve the Agreement and Plan of Reorganization dated July 25, 1997 as
amended on September 8, 1997, among the Company, The First National Bank in
Alamosa (the "Bank"), Ralph H. Outcalt, Donald J. Wuckert, Zions Bancorporation
("Zions"), Val Cor Bancorporation, Inc. ("Val Cor"), a wholly-owned subsidiary
of Zions, and Valley National Bank of Cortez ("Valley"), Val Cor's 99.1% owned
subsidiary, an Agreement to Merge between the Company and Val Cor and an
Agreement to Merge between Valley and the Bank (collectively, the "Plan of
Reorganization"), whereby the Company will merge into Val Cor with Val Cor being
the surviving corporation and Valley will merge into the Bank with the Bank
being the surviving entity (the aforementioned mergers being referred to
collectively as the "Reorganization"). Pursuant to the Plan of Reorganization,
the holders of shares of Company Common Stock will receive shares of Zions
Common Stock in exchange for each share of Company Common Stock. The terms and
conditions of the Plan of Reorganization are set forth in the accompanying Proxy
Statement/Prospectus. Each Proxy shall have full power of substitution. Approval
of the Plan of Reorganization requires the affirmative vote of a majority of the
outstanding shares of Company Common Stock. The act by a majority of the Proxies
or their substitutes present at the meeting shall control; however, if only one
proxy be present, that one shall have all powers hereunder.
The Directors recommend a vote FOR Proposal 1.
1. Approval of the Plan of Reorganization and the Reorganization.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The Proxies, in their discretion, are authorized to vote on such other
business as may properly come before the meeting.
-1-
<PAGE>
When properly completed, this proxy will be voted in the manner directed
herein by the undersigned. If no direction is given, this proxy will be voted
FOR the approval of the Plan of Reorganization and the Reorganization.
(Each person whose name is on the Company Common
Stock certificate should sign below in the same
manner in which such person's name appears. If
signing as a fiduciary, give title.)
----------------------------------
Signature
----------------------------------
Printed Name
Dated:
---------------------------
Please date, sign,
and return promptly
