As filed with the Securities and Exchange Commission on _________ , 1998
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)
UTAH 6712 87-0227400
- ------------------------------- --------------------------- -----------------
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
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. Ernest J. Panasci, Esq.
Laurence S. Lese, Esq. Slivka Robinson Waters & O'Dorisio, P.C.
Duane, Morris & Heckscher LLP 1099 Eighteenth Street
Suite 700 Suite 2600
1667 K Street, N.W. Denver, CO 80202-1926
Washington, D.C. 20006-1608 (303) 297-2600
(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>
- --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================================================================
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
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par 650,000
value Shares NA $6,808,914 $2,009
===================================================================================================
</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, $0.01 par value, of Routt County
National Bank Corporation on December 31, 1997 (the latest practicable date
prior to filing the registration statement) of $6,808,914, 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>
ROUTT COUNTY NATIONAL BANK CORPORATION
Proxy Statement
For
Special Meeting of Shareholders
To be Held on , 1998
and
ZIONS BANCORPORATION
Prospectus
Up to 650,000 Shares of
Common Stock
This Proxy Statement/Prospectus is being furnished to the shareholders
of Routt County National Bank Corporation, 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 _____________, 1998 (the "Special Meeting") and at any adjournments or
postponements thereof. This Proxy Statement/Prospectus and accompanying notice
of special meeting and form of proxy ("Proxy") are first being mailed on or
about ____________, 1998 to the shareholders of the Company of record as of
_____________, 1998 (the "Record Date").
At the Special Meeting, the holders of each outstanding share of
Company common stock, par value $0.01 per share (the "Company Common Stock")
will consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Reorganization, dated as of January 21, 1998, among the Company, the
Company's wholly-owned subsidiary, First National Bank of Colorado, a national
banking association organized under the laws of the United States (the "Bank"),
Zions Bancorporation, a Utah corporation ("Zions"), Zions' wholly-owned
subsidiary, Val Cor Bancorporation, Inc., a Colorado corporation ("Val Cor"),
and Val Cor's wholly-owned subsidiary, Bank Colorado, National Association, a
national banking association organized under the laws of the United States
("Bank Colorado"), an accompanying Agreement of Merger between the Company and
Val Cor, and an accompanying Agreement of Merger between the Bank and Bank
Colorado (collectively the "Plan of Reorganization"), and the transactions
contemplated by 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 the Bank will merge
with and into Bank Colorado, with Bank Colorado being the surviving national
banking association (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 650,000 shares of Zions Common Stock, subject to downward adjustment
if Transaction Expenses, as defined, exceed $100,000, 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 and assuming that
Transaction Expenses do not exceed $100,000, the shareholders of the Company
will receive approximately 2.04 shares of Zions
<PAGE>
Common Stock for each share of Company Common Stock. Zions will not issue
fractional shares of its common stock in the Reorganization.
On ______________, 1998, the closing price of Zions Common Stock was
$_________ per share. On that date the Company had 318,664.47 shares of its
Common Stock issued and outstanding. Assuming that the Reorganization had been
consummated as of _____________, 1998, that the closing price of Zions Common
Stock had been $__________ per share on that date, and that Transaction Expenses
had not exceeded $100,000, shareholders of the Company under such circumstances
would have received approximately 2.04 shares of Zions Common Stock for each
share of Company Common Stock, or an equivalent value of approximately
$__________ 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 COMPANY COMMON STOCK MUST VOTE
IN FAVOR OF THE REORGANIZATION. ALL REGULATORY APPROVALS HAVE [NOT YET] 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
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
<PAGE>
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, within the meaning of Section 27A of the
Securities Act of 1933, as amended, 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 ______________, 1998.
<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, NY 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 (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, Executive 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 ________________, 1998.
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY ................................................................1
The Parties.....................................................1
The Special Meeting; Purpose....................................2
Record Date; Voting Rights......................................3
Voting and Revocation of Proxies................................3
Quorum; Vote Required for Approval..............................3
Proposed Reorganization.........................................4
Certain Definitions.............................................4
Reasons for the Reorganization..................................6
Board of Directors Recommendation...............................6
Interests of Certain Persons in the Transaction.................6
Tax Consequences................................................7
Dissenters' Rights..............................................7
Conditions; Regulatory Approval.................................7
Amendment; Termination..........................................8
Effective Date of the Reorganization............................8
Accounting Treatment............................................8
Comparison of Shareholders' Rights..............................8
"Anti-Takeover" Provisions......................................9
Exchange of Certificates........................................9
Trading Markets; Pre-Announcement Prices........................9
Selected Financial Information..................................9
Comparative Per Share Data......................................11
Unaudited Pro Forma Combined Financial Information..............11
Recent Developments.............................................12
PLAN OF REORGANIZATION...................................................16
The Reorganization..............................................16
Background of and Reasons for the Reorganization................17
Voting Agreements...............................................19
Required Vote; Management Recommendation........................20
No Opinion of a Financial Advisor...............................20
Conversion of Company Shares....................................21
Federal Income Tax Consequences of the Reorganization...........22
Rights of Dissenting Shareholders...............................23
Interests of Certain Persons in the Transaction.................25
Inconsistent Activities.........................................26
Conduct of Business Pending the Reorganization..................27
Conditions to the Reorganization................................28
Representations and Warranties..................................30
Amendment and Waiver............................................30
Authorized Termination and Damages for Breach...................30
Restrictions on Resales by Company Affiliates...................31
Expenses .......................................................31
Government Approvals............................................32
Effective Date of the Reorganization............................32
Accounting Treatment............................................32
Relationship Between Zions and the Company......................32
Unaudited Pro Forma Combined Financial Information..............32
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 THE COMPANY AND THE BANK..........................49
General .......................................................49
Investment Securities...........................................54
Deposits .......................................................56
Competition.....................................................57
The Bank's Facilities...........................................57
Legal Proceedings...............................................57
Employees.......................................................58
Regulatory Matters..............................................58
i
<PAGE>
Selected Financial Data.........................................58
Certain Transactions of the Company.............................60
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF ROUTT COUNTY NATIONAL BANK
CORPORATION.....................................................62
COMPARISON OF THE RIGHTS OF SHAREHOLDERS OF ZIONS AND THE COMPANY........68
LEGAL OPINIONS...........................................................75
EXPERTS ................................................................75
OTHER MATTERS............................................................75
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY.........................77
Appendix A -Form of Opinion of Slivka Robinson Waters & O'Dorisio, P.C.
as to Tax Matters
Appendix B -Rights of Dissenters under ss.ss. 7-113-101 to 701-113-302
of the Colorado Business Corporation Act
ii
<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 multi-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.
In 1997, Zions achieved a significant expansion of commercial banking
operations in Utah, Nevada, and Arizona, and expanded its franchise by adding
banking operations in Colorado, New Mexico, Idaho and California. Its principal
subsidiaries are banking subsidiaries which include Zions First National Bank,
the second largest commercial banking organization in the state of Utah; Nevada
State Bank, the fifth largest commercial bank in Nevada; and National Bank of
Arizona, the fifth largest commercial bank in Arizona. Acquisitions consisted of
Aspen Bancshares and its affiliate banks with branches in Colorado and New
Mexico; Tri-State Bank in Idaho, which was merged into Zions First National
Bank; 31 Wells Fargo branches in Utah, Idaho, Arizona and Nevada; Sun State Bank
in Nevada which was merged into Nevada State Bank; Grossmont Bank in San Diego,
California; and the public finance firms of Howarth & Associates in Nevada and
Kelling, Northcross and Nobriga, Inc. in California.
On December 29, 1997, Zions and FP Bancorp, Inc. ("FP Bancorp"), the
holding company of First Pacific National Bank ("First Pacific"), announced that
a definitive agreement had been signed under which FP Bancorp will merge with
and into Zions, and First Pacific with and into Grossmont Bank, in exchange for
common shares of Zions. As of December 31, 1997, First Pacific had assets of
$353 million. The merger is subject to approval by banking regulators and the
shareholders of FP Bancorp. This acquisition is pending. On January 6, 1998,
Zions acquired Vectra Banking Corporation ("Vectra"), the parent company of
Vectra Bank which has 9 offices in the Denver metropolitan area. In the
transaction, Vectra merged with and into Zions in exchange for common shares of
Zions. As of December 31, 1997, Vectra had assets of $701 million. On January
23, 1998, Zions wholly-owned subsidiary, Val Cor, and Sky Valley Bank
Corporation ("Sky Valley"), parent company of The First National Bank in Alamosa
("FNBA"), completed their merger whereby Sky Valley merged with and into Val
Cor. As of September 30, 1997, Sky Valley had assets of approximately $122
million and FNBA had three offices in Alamosa, Center, and Saguache, Colorado.
On February 27, 1998, Val Cor and Tri-State Finance Corporation ("Tri-State"),
the parent of Tri-State Bank, completed their merger whereby Tri-State merged
with and into Val Cor and Tri-State Bank, with offices in Denver and Boulder,
Colorado, merged with and into Bank Colorado. As of September 30, 1997,
Tri-State had assets of approximately $124 million. On March 25, 1998, Zions and
Sumitomo Bank of California ("Sumitomo") entered into a definitive agreement
whereby Sumitomo will merge with a subsidiary of Zions. Zions will pay
approximately $546 million in
<PAGE>
cash for Sumitomo. Sumitomo is currently California's sixth largest bank, with
assets of approximately $5.1 billion as of December 31, 1997, and with 47
branches. Zions will combine its present Grossmont Bank subsidiary with Sumitomo
and First Pacific when these acquisitions have been completed. See "Summary--
Recent Developments," below. As of December 31, 1997 Zions had total
consolidated assets of $9.5 billion, deposits of $6.9 billion, and shareholders'
equity of $655 million. See "Information Concerning Zions Bancorporation."
Val Cor Bancorporation, Inc. ("Val Cor"), a Colorado corporation, is a
bank holding company registered under the Bank Holding Company Act. Zions
acquired Val Cor in May 1997. Val Cor's principal asset consists of its 100%
ownership interest in Bank Colorado, National Association.
Bank Colorado, National Association ("Bank Colorado") is a national
banking association with its primary market areas located in Denver, Boulder,
Montezuma, Alamosa, and Saguache Counties, Colorado. Bank Colorado is the result
of the merger of Valley National Bank of Cortez, The First National Bank in
Alamosa, and Tri-State Bank. Bank Colorado offers traditional banking services
through offices in Denver, Boulder, Alamosa, Center, Cortez, Delores, and
Saguache, Colorado. At January 31, 1998, Bank Colorado had total assets of $213
million, total deposits of $175 million, and shareholders' equity of $32
million. Bank Colorado's main office is located at 616 East Speer Boulevard,
Denver, Colorado 80203, and its telephone number is 303/782-7440.
Routt County National Bank Corporation (the "Company"), a Colorado
corporation, is a bank holding company registered under the Bank Holding Company
Act whose sole activity is the ownership and operation of First National Bank of
Colorado (the "Bank"). The Company has no other subsidiaries. The Company's
principal asset consists of its 100% ownership interest in the Bank. The
Company's main office is located at 2155 Resort Drive, Steamboat Springs,
Colorado 80477, and its telephone number is 970/879-4949. As of December 31,
1997, the Company had total consolidated assets of $92.9 million and
shareholders' equity of $6.8 million.
First National Bank of Colorado (the "Bank") is a national banking
association organized under the laws of the United States and has operated at
its current location in Steamboat Springs since November 1986. In addition to
its main location in Steamboat Springs, the Bank has a full-service branch
office located at 803 Lincoln Avenue, Steamboat Springs, Colorado. At December
31, 1997, the Bank had total assets of $92.9 million, total deposits of $83.4
million and shareholders' equity of $6.8 million. The Bank's main office is
located at 2155 Resort Drive, Steamboat Springs, Colorado 80477, and its
telephone number at that address is 970/879-4949.
The Special Meeting; Purpose
The Special Meeting of Shareholders of the Company (the "Special
Meeting") will be held at _____ a.m., local time, on ______________, 1998 at the
offices of the Company, 2155 Resort Drive, Steamboat Springs, Colorado.
The purpose of the Special Meeting is to consider and vote upon a
proposal to approve the Plan of Reorganization and the Reorganization.
2
<PAGE>
Record Date; Voting Rights
The Board of Directors of the Company has fixed the close of business
on _____________, 1998 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. Only holders of record of Common Stock,
$0.01 par value, of the Company (the "Company Common Stock") at the close of
business on the record date will be entitled to vote at the Special Meeting. At
that date, 318,664.47 shares of Company Common Stock were outstanding, held by
eighteen 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."
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 and properly executed 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.
Quorum; Vote Required for Approval
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares of Company Common Stock is necessary to constitute
a quorum at the Special Meeting. Approval of the Plan of Reorganization requires
the affirmative vote of a majority of the outstanding shares of Company Common
Stock entitled to vote at the Special Meeting. 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 ___________, 1998, fifteen individuals and their affiliated
entities beneficially owned all 318,664.47 shares, or 100% of the outstanding
shares of Company Common Stock. As an inducement to Zions to enter into the Plan
of Reorganization, these various shareholders of the Company, including
affiliated entities, 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 the Reorganization. Some of these shareholders
are officers and directors of the Company; all of the Company's directors and
executive officers have so agreed. See "Plan of Reorganization--Voting
Agreements" and "Information Concerning the Company and the Bank--Stockholdings
of Directors, Officers and Certain Others." Such a vote will be sufficient to
approve the Plan of Reorganization and the Reorganization. If each of these
shareholders votes his, her or its shares in favor of the Plan of Reorganization
and the
3
<PAGE>
Reorganization as each has agreed, approval of the Plan of Reorganization and
the Reorganization is assured.
Proposed Reorganization
At the Special Meeting, the holders of Company Common Stock will be
asked to consider and approve the Plan of Reorganization and the Reorganization.
The Plan of Reorganization provides for the merger of the Company into Val Cor,
whereby Val Cor will be the surviving corporation, and for the merger of the
Bank into Bank Colorado, with Bank Colorado being the surviving national banking
association. 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. 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
650,000 shares of Zions Common Stock, which may be adjusted downward if
Transaction Expenses exceed $100,000, by the total number of shares of Company
Common Stock issued and outstanding as of the Effective Date. In accordance with
this formula, assuming that Transaction Expenses do not exceed $100,000, the
shareholders of the Company will receive approximately 2.04 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 (after aggregating
all shares of Zions Common Stock to which such shareholder is entitled) will
receive an amount of cash equal to the product of such fraction times $43.9375.
Such fractional share interest will not include the right to vote or to receive
dividends or any interest thereon.
On ____________, 1998, the closing price of Zions Common Stock was
$_________ per share and the Company had issued and outstanding 318,664.47
shares of its Common Stock. Assuming that the Reorganization had been
consummated as of ____________, 1998, that the closing price of Zions Common
Stock had been $_________ per share, and that Transaction Expenses had not
exceeded $100,000, shareholders of the Company under such circumstances would
have received approximately 2.04 shares of Zions Common Stock for each share of
Company Common Stock, or an equivalent value of approximately $_________ 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 Bank with and into Bank Colorado,
with Bank Colorado being the surviving national banking association.
"Effective Date" means the date which is the latest of (a) the day upon
which the shareholders of the Company approve, ratify, and confirm the Holding
4
<PAGE>
Company Merger; (b) the day upon which the shareholder of Bank Colorado
approves, ratifies, and confirms the Bank Merger; (c) the first to occur of (i)
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 (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 Office of the Comptroller of the Currency
(the "Comptroller") approving the Bank Merger, or (2) if, pursuant to section
321(b) 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) if such an order shall be required by law, the date ten days
following the date of the order of the Colorado State Banking Board (the "State
Banking 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, or the State Banking 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 650,000 shares of Zions
Common Stock to be issued to the holders of Company Common Stock upon
consummation of the Holding Company Merger, except that if the Transaction
Expenses determined on a pre-tax basis in accordance with generally accepted
accounting principles exceed $100,000, then the "Merger Consideration" shall be
the difference between 650,000 and the number calculated by dividing such
excess, net of any associated tax benefit, by $43.9375.
"Transaction Expenses" means (i) all expenses incurred through the
Effective Date with respect to attorneys, accountants, investment bankers,
consultants, brokers and finders who will have rendered services to the Company
or the Bank in connection with the transactions contemplated by the Plan of
Reorganization, and (ii) all of the other expenses incurred through the
Effective Date outside of the ordinary course of business of the Company and the
Bank, but does not include expenses of the annual audit of the Company and the
Bank for the year ended December 31, 1997.
5
<PAGE>
Reasons for the Reorganization
Management and the Board of Directors of the Company believe that it is
in the best interests of the Company and its shareholders for the Company to
merge with Zions. In considering the Plan of Reorganization and the transactions
contemplated thereby, the Board determined that the Zions offer would maximize
value for the Company's shareholders, while providing a favorable structure for
the transaction in which the Company's shareholders will receive liquid
securities without triggering tax consequences (except for shareholders
receiving cash in the Reorganization). Further, the Board believes that the
Zions transaction will result in positive effects for the employees of the
Company and the Bank, the customers of the Bank, and the communities in which
the Bank operates. 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 Plan of Reorganization and
the Reorganization to the Company's shareholders for their approval.
For Zions, the Reorganization will provide the opportunity to further
broaden its franchise in Colorado through its expansion into the Steamboat
Springs 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. 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 compete more effectively 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 Company, its shareholders, and
the employees and customers of the Bank and recommends that the shareholders of
the Company vote "FOR" approval of the Plan of Reorganization and the
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,
James A. Simon, currently president and chief executive officer of the Bank,
will become an executive officer of Bank Colorado. Mr. Simon will enter into an
employment agreement with Bank Colorado effective as of the Effective Date. The
Plan of Reorganization further provides that, following the Reorganization,
Timothy S. Borden, currently chairman of the board and a significant shareholder
of the Company, and John R. Adams, currently a director and a significant
shareholder of the Company, will each enter into a non-competition agreement
with Bank Colorado effective as of the Effective Date. Mr. Borden at the
Effective Date will also acquire the trade mark "First National Bank of
Colorado" from Bank Colorado. Mr. Borden will agree at the Effective Date not to
use that trade mark in Routt County or Craig, Colorado for three years after the
Effective Date. The
6
<PAGE>
Company Board of Directors was aware of these interests when it considered and
approved the Plan of Reorganization and the Reorganization. See "Plan of
Reorganization--Interests of Certain Persons in the Transaction."
Tax Consequences
The Company will receive an opinion from Slivka Robinson Waters &
O'Dorisio, P.C., legal counsel to the Company (the "Slivka 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 in the
Reorganization 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 Slivka Opinion is attached as
Appendix A to this Proxy Statement/Prospectus.
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 cash equal to
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--Rights of Dissenting Shareholders,"
"Comparison of Zions Common Stock and Company Common Stock--Rights of Dissenting
Shareholders" and Appendix B to this Proxy Statement/Prospectus, where the
statutory provisions are set forth.
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 State Banking Board, (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, (v) a determination by Zions' independent auditors that the
Reorganization will be treated for accounting purposes as a pooling of
interests, and (vi) the satisfaction of other customary closing conditions. See
"Plan of Reorganization--Conditions to the Reorganization." All regulatory
approvals have [not yet] been obtained.
7
<PAGE>
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 or the Bank was materially incorrect when made or 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 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 Bank Colorado was materially incorrect when
made or in the event of a material breach or material failure by Zions, Val Cor
or Bank Colorado of any covenant or agreement of Zions, Val Cor or Bank Colorado
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 board of directors of either has determined in good faith
that the Holding Company Merger has become inadvisable or impracticable by
reason of federal or state litigation to restrain or invalidate the
Reorganization; or (v) by either Zions or the Company after _____________, 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 second 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. Receipt of a determination by Zions' independent auditors that the
Reorganization should be treated as a pooling of interests is a condition of
closing of the Reorganization. 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.
8
<PAGE>
"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. The Company's Articles of
Incorporation and Bylaws do not contain any similar provision. See "Comparison
of the Rights of Shareholders of Zions and the Company."
Exchange of Certificates
Instructions on how to effect the exchange of Company Common Stock
certificates for Zions Common Stock certificates and cash in lieu of any
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
Common Stock on the NASDAQ-NMS on January 21, 1998, the last trading day prior
to the first public announcement of the Reorganization, was $44.00.
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 the
Company and the Bank--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.
9
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Zions
Earnings
Net interest income........... $ 351,799 $ 289,166 $ 233,547 $ 198,606 $ 174,657
Provision for loan losses..... 6,175 4,640 3,000 2,181 2,993
Net income.................... 122,362 107,423 82,385 63,827 58,205
Per Share
Net income (diluted) ......... $ 1.89 $ 1.68 $ 1.37 $ 1.09 $ 1.02
Cash Dividends................ .4700 .4250 .3525 .2900 .2450
Statement of Condition at Period
End
Assets........................ $9,521,770 $7,116,413 $6,095,515 $4,934,095 $4,801,054
Deposits...................... 6,854,462 5,119,692 4,511,184 3,705,976 3,432,289
Long-term debt................ 258,566 251,620 56,229 58,182 59,587
Shareholders' equity.......... 655,460 554,610 469,678 365,770 312,592
Routt County
Earnings
Net interest income........... $ 4,535 $ 4,073 $ 3,520
Provision for loan losses..... -- -- --
Net income.................... 1,769 1,788 1,188
Per Share
Net income ................... $ 5.56 $ 5.70 $ 3.84
Cash Dividends................ 1.86 3.00 1.60
Statement of Condition at Period
End
Assets........................ $ 92,854 $ 81,271 $ 71,456
Deposits...................... 83,437 74,108 64,323
Long-term debt................ -- -- --
Shareholders' equity.......... 6,809 5,566 4,738
</TABLE>
10
<PAGE>
Comparative Per Share Data
The following table sets forth for the periods indicated historical net
income, book values and dividends per share for Zions Common Stock 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.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net Income Per Common Share (diluted)
Zions...................................................... $ 1.89 $ 1.68 $ 1.37
Routt County............................................... 5.56 5.70 3.84
Book Value Per Common Share
Zions...................................................... $10.25 $ 8.72 $ 7.46
Routt County............................................... 21.37 17.57 15.20
Cash Dividends Declared Per Common Share
Zions (1).................................................. $.4700 $.4250 $.3525
Routt County............................................... 1.86 3.00 1.60
</TABLE>
- ----------
(1) While Zions is not obligated to pay cash dividends, the Board of
Directors presently intends to continue its policy of paying quarterly
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 of Zions as incorporated herein by reference to other
documents and of the Company as included herein. The pro forma data in the
table, presented as of and for each of the years in the three year period ended
December 31, 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.
11
<PAGE>
<TABLE>
<CAPTION>
Historical Pro Forma
----------------------- ------------------------------------
Zions and
Routt County Routt County
Pro-Forma Equivalent
Per Common Share Zions Routt County Combined(4) Pro-Forma(5)
- ---------------- ----- ------------ ----------- ------------
<S> <C> <C> <C> <C>
NET INCOME (diluted)(1)
For the years ended
December 31, 1997 $1.89 $ 5.56
December 31, 1996 1.68 5.70
December 31, 1995 1.37 3.84
CASH DIVIDENDS(2)
For the years ended
December 31, 1997 $.4700 $ 1.86
December 31, 1996 .4250 3.00
December 31, 1995 .3525 1.60
BOOK VALUE:(3)
As of December 31, 1997 $10.25 $21.37
As of December 31, 1996 8.72 17.57
As of December 31, 1995 7.46 15.20
</TABLE>
- ----------------
(1) Net income per share is based on weighted average common and common
equivalent shares outstanding.
(2) Pro forma cash dividends per share represent historical cash dividends of
Zions.
(3) Book value per common share is based on total period-end 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
and the Company 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 2.04 shares of Zions Common
Stock for each share of Company Common Stock.
Recent Developments
On December 29, 1997, Zions and FP Bancorp, Inc.("FP Bancorp"), the parent
company of First Pacific National Bank ("First Pacific") announced that a
definitive agreement had been signed under which FP Bancorp will merge with and
into Zions, with FP Bancorp shareholders receiving common shares of Zions. First
Pacific has approximately $359 million in assets in eight offices in San Diego
and Riverside Counties in California. The merger is subject to the approval of
FP Bancorp shareholders and banking regulators and is expected to close in the
second quarter of 1998. The merger is structured to be tax-free and is intended
to be accounted for as a pooling-of-interests. The agreement provides for the
exchange of each common share of FP Bancorp for 0.627 of a share of Zions Common
Stock. Based upon Zions' stock price of $43.50 per share as of December 29,
1997, the transaction is valued at approximately $90 million. Zions will incur
approximately $2 million in after-tax, merger-related charges in the second
quarter of 1998 in conjunction with this transaction.
On January 23, 1998, Zions and Sky Valley Bank Corp.("Sky Valley"), the
parent company of The First National Bank in Alamosa ("FNBA"), completed their
12
<PAGE>
reorganization pursuant to which Sky Valley merged with Val Cor, and Val Cor's
wholly-owned subsidiary Bank Colorado (formerly known as Valley National Bank of
Cortez) merged with Sky Valley's wholly-owned subsidiary, FNBA, which was the
surviving corporation and which upon consummation of its merger with Bank
Colorado adopted the name Bank Colorado, National Association. Sky Valley
shareholders received 572,836 shares of Zions Common Stock. Sky Valley had
approximately $120 million in assets at September 30, 1997, and FNBA had three
offices in southern Colorado. The merger was structured as a tax-free
reorganization and has been accounted for as a pooling-of-interests.
On February 27, 1998, Zions and Tri-State Finance Corporation
("Tri-State") completed their reorganization whereby Tri-State merged with and
into Val Cor and the subsidiary bank of Tri-State merged with and into Bank
Colorado. At September 30, 1997, Tri-State had assets of approximately $124
million. Upon consummation of the reorganization Zions issued a total of 710,000
shares of Zions Common Stock to the former shareholders of Tri-State. Tri-State
had one office in Denver and one office in Boulder, Colorado.
Zions and SBT Bankshares, Inc. ("SBT"), the holding company of State Bank
and Trust of Colorado Springs ("SBTCS"), announced on December 22, 1997 that a
definitive agreement had been signed under which SBT will merge with and into
Val Cor in exchange for an estimated 615,000 shares of Zions Common Stock. The
merger is structured to be tax-free and is intended to be accounted for as a
pooling-of-interests. The merger is subject to the approval of banking
regulators and the shareholders of SBT. SBTCS operates through two banking
offices in Colorado Springs, Colorado. At September 30, 1997, SBT had assets of
$88 million. The transaction is expected to close in the [second] quarter of
1998.
On March 25, 1998, Zions and Sumitomo Bank of California ("Sumitomo")
entered into a definitive agreement whereby Sumitomo will merge with a
subsidiary of Zions. Zions will pay approximately $546 million in cash for
Sumitomo. Sumitomo is currently California's sixth largest bank, with assets of
approximately $5.1 billion as of December 31, 1997, and with 47 branches. Zions
will combine its present Grossmont Bank subsidiary with Sumitomo and First
Pacific when these acquisitions have been completed. The combined subsidiary,
with California assets of over $6 billion and 71 banking offices in California,
will rank as the fifth largest commercial bank in the state. The merger is
subject to the approval of Sumitomo shareholders and banking regulators and is
expected to close in the third quarter of 1998. Zions expects to finance the
purchase with existing resources as well as the issuance of securities in the
capital markets. The acquisition will be accounted for as a purchase. Zions
expects to name Robert Sarver, currently chairman of Grossmont and a director of
Zions, as chief executive officer of the combined company. In order to provide
an appropriate incentive to Mr. Sarver to expand Zions' California franchise,
Zions has agreed to sell him a portion of Sumitomo at Zions' cost basis. When
Sumitomo is combined with Grossmont Bank and First Pacific, he will control 5%
of the combined company at a purchase price of approximately $34 million. Zions
will retain the exclusive right to repurchase this ownership interest.
13
<PAGE>
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, Executive 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 the Bank into Bank Colorado, with Bank Colorado
being the surviving national banking association (the "Bank Merger"). Val Cor is
a bank holding company incorporated in Colorado. Val Cor is a wholly-owned
subsidiary of Zions.
Val Cor, a Colorado corporation, is a bank holding company registered
under the Bank Holding Company Act. Val Cor's principal asset consists of its
100% ownership interest in its wholly-owned subsidiary, Bank Colorado, which
operates a commercial banking business in Colorado through seven offices.
Bank Colorado is a national banking association. Bank Colorado is the
result of the merger of Valley National Bank of Cortez, with operations
primarily in Montezuma County, Colorado, The First National Bank in Alamosa,
with operations in Alamosa and Saguache Counties, Colorado, and Tri-State Bank,
with offices in Denver and Boulder Colorado. Bank Colorado offers traditional
banking services to customers through its seven branch offices located in
Denver, Boulder, Alamosa, Center, Cortez, Dolores, and Saguache, Colorado. As of
February 28, 1998, Bank Colorado had assets of $348.3 million.
The Company is a bank holding company incorporated in Colorado. The
Company operates through its wholly-owned subsidiary, First National Bank of
Colorado (the "Bank"). The Bank operates a commercial banking business through
two offices in Steamboat Springs, Colorado.
Upon consummation of the Reorganization, the holders of each outstanding
share of Company Common Stock participating in the Reorganization will receive,
in exchange for each share of Company Common Stock, their pro rata share of the
Merger Consideration, consisting of 650,000 shares of Zions Common Stock, which
may be adjusted downward if Transaction Expenses exceed $100,000 and cash in
exchange for any fractional shares. 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 650,000 shares of Zions Common Stock, which may be adjusted
downward if Transaction Expenses exceed $100,000, by the total number of shares
of Company Common Stock issued and outstanding as of the Effective Date of the
Reorganization or, assuming that Transaction Expenses do not exceed $100,000,
approximately 2.04 shares of Zions Common Stock for each share of Company Common
Stock. Zions will not issue fractional shares of its Common Stock in the
14
<PAGE>
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 (after aggregating all shares of Zions Common Stock to which such
shareholder is entitled) will receive an amount of cash equal to the product of
such fraction times $43.9375. Such fractional share interest will not include
the right to vote or to receive dividends or any interest thereon.
On __________, 1998, the closing price of Zions Common Stock was $________
per share. On that date there were issued and outstanding 318,664.47 shares of
Company Common Stock. Assuming that the Reorganization had been consummated as
of ___________, 1998, that the closing price of Zions Common Stock had been
$___________ per share on that date, and that Transaction Expenses had not
exceeded $100,000, shareholders of the Company under such circumstances would
have received approximately 2.04 shares of Zions Common Stock for each share of
Company Common Stock, or an equivalent value of approximately $___________ per
share of Company Common Stock.
Background of and Reasons for the Reorganization
The Company. During the fall of 1997, Directors John R. Adams and James A.
Simon discussed with the Board of Directors of the Bank that the economic,
business and competitive climate for banking and financial institutions had
reached a state that might warrant consideration by the shareholders of the
Company of a business combination transaction with a major regional banking
organization. After consideration of research of bank merger and acquisition
transactions, a select number of potential acquirors were identified, including,
but not limited, to Zions. In evaluating potential acquirors, the Board of
Directors of the Company considered a variety of factors, including, but not
limited to, the following: (a) maximizing value to the Company's shareholders;
(b) potential transaction structures offered by potential acquirors; (c) the
risks and benefits (including tax benefits) of associating with an acquiror in a
stock-for-stock transaction; (d) the ability of potential acquirors to complete
the transaction, (e) the tax consequences to the Company's shareholders of a
cash transaction; and (f) the effect of any proposed transaction on employees,
customers, and the local community. In considering the effect of any proposed
transaction on employees, customers, and the local community, the Board of
Directors of the Company gave due consideration to whether a proposed
transaction would result in improved banking services for the community or
branch closings and employee layoffs.
It was learned through marketplace research that Zions was in a favorable
acquisition mode for high performing commercial banking institutions in the
mountain states, including Colorado. Research of Zions and other potential
acquirors was conducted, including research in filings with the SEC pursuant to
the Exchange Act and research in other market sources. Based on the results of
such research, the prices Zions had paid for similarly performing financial
institutions in the past, and Zions' status as one of the nation's
top-performing banking organizations, Mr. Adams identified Zions as a favored
potential acquiror. Subsequently, contact was initiated with management of
Zions. Several rounds of discussions resulted in an initial offer in October
1997 for an exchange of the stock of the Company for stock of Zions. After
discussing the initial offer, the Board authorized Timothy S. Borden, Chairman
of the Company, to negotiate a definitive agreement with Zions.
15
<PAGE>
In November and December 1997, Mr. Borden and the Board negotiated the
terms of a definitive agreement with Zions. The Board met again during December
1997, to review and vote upon the Plan of Reorganization and the transactions
contemplated thereby. In considering the Plan of Reorganization and the
transactions contemplated thereby, the Board determined that the Zions offer
would maximize value for the Company's shareholders, while providing a favorable
structure for the transaction in which the Company's shareholders would receive
liquid securities without triggering tax consequences (except for shareholders
receiving cash in the Reorganization). Further, the Board believes that Zions is
fully capable of consummating the Reorganization. Moreover, the Board believes
that the Zions transaction will result in positive effects for the employees of
the Company and the Bank, the customers of the Bank, and the communities in
which the Bank operates. Based on the foregoing, the Board of Directors of the
Company approved the Plan of Reorganization, and the Plan of Reorganization was
executed on behalf of the Company and the Bank effective January 21, 1998.
The Company Board believes that the Reorganization is fair to, and in the
best interests of, the Company and its shareholders. Accordingly, the Board of
Directors of the Company 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 of Directors
of the Company 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 and the Bank
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 merger and acquisition pricing reported by
qualified and informed investment banking organizations, 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 the
Company Common Stock if the Company were to remain independent;
o the historically greater liquidity 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
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combined institution in the Company's market area and its ability
to serve the depositors, customers and communities currently
served by the Company and the Bank;
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 AND ADOPTION OF THE PLAN OF REORGANIZATION AND THE REORGANIZATION.
Zions. For Zions, the Reorganization will provide the opportunity to
continue its recent expansion. In acquiring the Company, Zions will be
broadening its Colorado presence into Northwest Colorado and into Steamboat
Springs, Colorado. Zions does not currently have any offices in Northwest
Colorado or Steamboat Springs. The expansion will be evidenced by Zions'
broadening its geographical base in Colorado by establishing a presence in this
market. Additionally, the Zions' expansion in the Northwest 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
All of the directors and executive officers of the Company have agreed to
support the Plan of Reorganization and to recommend its adoption by the other
shareholders of the Company. As of , 1998, fifteen individuals and their
affiliated entities beneficially owned 100% of the outstanding shares of Company
Common Stock. All of such shareholders, including all Board members, and such
affiliated entities 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. Various of such shareholders are officers and
directors of the Company. Such vote will be sufficient to approve the Plan of
Reorganization and the Reorganization. If these individuals vote their shares of
Company Common Stock in accordance with the requirements of the voting
agreements, approval of the Plan of Reorganization and the Reorganization by the
Company shareholders is assured.
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
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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 and the 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 vote 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 and the Reorganization. See "Voting
Agreements" immediately above for a discussion of the ownership of Company
Common Stock by various officers, directors, and shareholders of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE COMPANY
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE PLAN OF REORGANIZATION AND THE
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's
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
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
650,000 shares of Zions Common Stock, which may be adjusted downward if
Transaction Expenses exceed $100,000, 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 and assuming that Transaction
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Expenses do not exceed $100,000, the shareholders of the Company will receive
approximately 2.04 shares of Zions Common Stock for each share of Company Common
Stock.
On ___________, 1998, the closing price of Zions Common Stock was
$_________ per share. On that date there were 318,664.47 issued and outstanding
shares of Company Common Stock. Assuming that the Reorganization had been
consummated as of ___________, 1998, that the closing price of Zions Common
Stock had been $___________ per share on that date, and that Transaction
Expenses had not exceeded $100,000, shareholders of the Company under such
circumstances would have received approximately 2.04 shares of Zions Common
Stock for each share of Company Common Stock, or an equivalent value of
approximately $___________ 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"), is the exchange agent designated by the
parties in the Plan of Reorganization (the "Exchange Agent"), and as 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
by the surrendered certificates, cash in an amount equal to the product of such
fraction times $43.9375. 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
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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 Slivka Robinson Waters &
O'Dorisio, P.C., legal counsel to the Company (the "Slivka 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 Slivka Opinion, such opinion will provide, among other
things, that the Company will not recognize gain or loss for federal income tax
purposes upon the Merger and that the shareholders of the Company will have the
following federal income tax consequences upon the Merger: (i) no taxable gain
or loss will be recognized upon the receipt of Zions Common Stock; (ii) the tax
basis of the Company Common Stock surrendered in the Merger will be allocated to
the Zions Common Stock to be received in the Merger; (iii) the holding period of
the Zions Common Stock to be received in the Merger will include the holding
period of the Company Common Stock surrendered in exchange therefor; and (iv) if
any cash is received in lieu of a fractional share of Zions Common Stock, gain
(or loss) will be recognized in an amount equal to the difference between the
cash received and the shareholder's basis in that fractional share.
The foregoing is intended only as a summary of certain federal income tax
consequences of the Merger 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 Merger. Among other things, this 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
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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 Slivka Opinion to be rendered as to the material federal
income tax consequences relating to the Reorganization is attached and set forth
in Appendix A of this 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 Val Cor 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 Routt 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 vote is taken at 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 2155 Resort Drive, Steamboat Springs, Colorado 80477-
4747 long enough before the Special Meeting so that the Company receives it
before the vote is taken at 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 the Reorganization,
such shareholder will not have the right to dissent and will be required to
participate in the Reorganization. A vote by a shareholder at the Special
Meeting against the Plan of Reorganization and the Reorganization will not
constitute notice under Colorado law of an intent to exercise appraisal rights.
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
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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 the end of its most recent fiscal year, 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 Val Cor's offer to pay fair value
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 Routt 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
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.
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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, James A. Simon, currently president and chief executive officer of
the Bank, will become an executive officer of Bank Colorado. Mr. Simon will
enter into an employment agreement with Bank Colorado 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. Simon will receive a salary
not less than the aggregate salary paid to Mr. Simon by the Bank as of September
30, 1997. Mr. Simon will be eligible to be considered for salary increases, upon
review, and will be entitled to other benefits normally afforded executive
employees, including employee benefit plan participation, retirement and life
insurance policies. Mr. Simon will have exclusive use of a Ford Explorer vehicle
which the Bank purchased for his use in 1997, and the reasonable expenses of
maintaining, insuring and garaging the vehicle will be paid by Bank Colorado.
The employment agreement provides for severance benefits for Mr. Simon
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. Simon 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, payable until the third anniversary of the
commencement of the agreement. Mr. Simon 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.
Under his employment agreement, Mr. Simon has agreed that he will not
during the term of his employment and until the second anniversary of the date
of termination of his employment by Bank Colorado pursuant to the employment
agreement (i) engage in the banking business other than on behalf of Zions or
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Bank Colorado or their affiliates within the market area of Routt County,
Colorado and the town of Craig, Colorado; (ii) directly or indirectly own,
manage, operate, control, be employed by, or provide management or consulting
services in any capacity to any firm, corporation, or other entity (other than
Zions or Bank Colorado or their 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 Bank Colorado or any of its affiliates to engage in any action
prohibited under (i) or (ii) above.
The Plan of Reorganization further provides that after the Reorganization
becomes effective, Timothy S. Borden, currently chairman of the board and a
significant shareholder of the Company, and John R. Adams, currently a director
and a significant shareholder of the Company, will each enter into a
non-competition agreement with Bank Colorado effective of the Effective Date.
The Company Board of Directors was aware of these interests when it considered
and approved the Plan of Reorganization. Mr. Borden's non-competition agreement
also governs the assignment of the trademark "First National Bank of Colorado,"
and the associated logo wherein for $1,000 to be paid by Mr. Borden, Bank
Colorado will assign to Mr. Borden all right, title and interest in and to the
trademark and logo, and goodwill of the business associated with the trademark.
Mr. Borden has agreed that he will not during the term of three years commencing
with the date of his non-competition agreement use the trademark "First National
Bank of Colorado" and associated logo within the prescribed market area of Routt
County, Colorado and the town of Craig, Colorado.
Under their non-competition agreements, Mr. Borden and Mr. Adams have
agreed that they will not during the term of 16 months after January 21, 1998,
(i) engage in the banking business other than on behalf of Zions or Bank
Colorado or their affiliates within the prescribed market area of Routt County,
Colorado and the town of Craig, Colorado; (ii) directly or indirectly own,
manage, operate, control, be employed by, or provide management or consulting
services in any capacity to any firm, corporation or other entity (other than
Zions or Bank Colorado or their 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 Bank Colorado or any of its affiliates to engage in any action
prohibited under (i) or (ii) above.
Inconsistent Activities
The Company has agreed in the Plan of Reorganization that unless and until
the Holding Company Merger has been consummated or the Plan of Reorganization
has been 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
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assets or of any other matter which could adversely affect the Plan of
Reorganization, the Holding Company Merger, or the Bank Merger, the Company is
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 (a) cash dividends paid by
the Company to holders of its Common Stock in amounts not to exceed $0.48 per
share with respect to the fourth quarter of 1997 and $0.49 per share with
respect to subsequent quarters or (b) cash dividends paid by the Bank to the
Company to fund any cash dividend paid pursuant to the foregoing clause (a);
(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 November 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) enter into any employment or personal services
contract with any person or firm except to directly facilitate the
Reorganization; nor (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.
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 the 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.
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Conditions to the Reorganization
The obligations of the Company, the Bank, Zions, Val Cor and Bank
Colorado 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) 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 laws 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; (iv) 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 (v) there shall be no adverse legislation or
government regulation which would make the transaction contemplated impossible.
The obligations of Zions, Val Cor and Bank Colorado 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 and the Bank in the Plan
of Reorganization shall be true and correct in all material respects on the
Effective Date and the Company and the Bank shall have performed all of their
respective obligations under the Plan of Reorganization on or prior to the
Effective Date; (iii) Slivka Robinson Waters & O'Dorisio, P.C., legal 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 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 October
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 Company
as determined in accordance with generally accepted accounting principles shall
not be less than the sum of (a) $6,570,000 and (b) the aggregate contributions
to capital caused by the payments accompanying the exercise of any stock options
on or after October 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 $441,000; (ix)
the CRA rating of the Bank shall be no lower than "satisfactory"; (x) Mr. Simon
shall have entered into an employment agreement with Bank Colorado in the form
set forth in the Plan of Reorganization; (xi) Bank Colorado and the lessor of
the Bank premises located at 2155 Resort Drive, Steamboat Springs, Colorado (the
"Lessor") shall have executed and delivered such consents, lease agreements,
26
<PAGE>
lease amendments, assignments, assumptions, estoppel certificates, and other
documents, in form and substance reasonably acceptable to Bank Colorado, as are
necessary to secure to Bank Colorado a leasehold interest in such premises
pursuant to the following terms: (a) an initial lease term of five years
commencing on the Effective Date, (b) a weighted rental rate during such initial
lease term not exceeding fair market value for such term in the Steamboat
Springs, Colorado real estate market generally, and (c) four five-year renewals,
at the option of the tenant, at a weighted rental rate during each of such
option periods whose increase over the weighted rental rate of the prior
five-year period shall not exceed the lesser of (1) rental-rate increases
prevailing in the Steamboat Springs, Colorado real estate market generally for a
similar period or (2) 75% of the change in the Colorado Consumer Price Index (or
in the absence thereof such other price inflation index upon which Zions and the
Lessor shall mutually agree) for a similar period; (xii) Mr. Borden and Mr.
Adams shall have each entered into a non-competition agreement with Bank
Colorado in the form set forth in the Plan of Reorganization; (xiii) 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; and (xiv) the audit of the
consolidated accounts of the Company and the Bank by Fortner, Bayens, Levkulich
and Co., P.C. as of December 31, 1997 and for the year then ended shall have
been completed, and no material adverse change to the financial condition of the
Company shall have been revealed, nor shall any material adjustments to the
financial accounts of the Company or the Bank have been recorded, as a result
thereof.
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 Bank Colorado shall have
authorized the Bank Merger; (ii) all representations and warranties made by
Zions, Val Cor and Bank Colorado in the Plan of Reorganization shall be true and
correct in all material respects on the Effective Date and Zions, Val Cor and
Bank Colorado 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, legal counsel to Zions, in form
and substance as set forth in the Plan of Reorganization; (iv) during the period
from September 30, 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, Bank Colorado,
the Company and the Bank 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
October 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 October 31, 1997 no material deterioration
in the
27
<PAGE>
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.
Amendment and Waiver
Notwithstanding prior approval by the shareholders of the Company or
Bank Colorado, 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 Bank Colorado 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 its
shareholders.
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 Bank Colorado, 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 or the Bank was materially
incorrect when made or 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
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 Bank Colorado was materially incorrect when
made or in the event of a material breach or material failure by Zions, Val Cor
or Bank Colorado of any covenant or agreement of Zions, Val Cor or Bank Colorado
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 Holding Company Merger 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 _________, 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
28
<PAGE>
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 the actual, reasonable out-of-pocket expenses, not to exceed
$500,000.
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, be 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
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. Additionally, such Company affiliates will not be permitted to
sell any shares of Company Common Stock or Zions Common Stock during the 30 day
period preceding the Effective Date, nor will they be permitted to sell any
shares of Zions Common Stock following the Effective Date until such time as
financial results covering at least 30 days of post-Holding Company Merger
combined operations shall have been published by Zions. 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. Zions will pay the costs attributable to registering
its stock issuable pursuant to this Proxy Statement/Prospectus under federal and
state securities laws.
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
Division. 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 [not yet] been obtained.
29
<PAGE>
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 [second] 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
[second] 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 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, and the Company shall have received a letter to the above effect
from Fortner, Bayens, Levkulich & Co., P.C., 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 each
of the years in the three year period ended December 31, 1997 is presented for
comparative and illustrative purposes only and is 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.
30
<PAGE>
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------- ---------------------------------------
Zions and
Routt County Routt County
Pro-Forma Equivalent
Per Common Share Zions Routt County Combined(4) Pro-Forma(5)
- ---------------- ----- ------------ ----------- ------------
<S> <C> <C> <C>
NET INCOME (diluted)(1)
For the years ended
December 31, 1997 $ 1.89 $ 5.56 $ $
December 31, 1996 1.68 5.70
December 31, 1995 1.37 3.84
CASH DIVIDENDS(2)
For the years ended
December 31, 1997 $.4700 $ 1.86 $ $
December 31, 1996 .4250 3.00
December 31, 1995 .3525 1.60
BOOK VALUE:(3)
As of December 31, 1997 $10.25 $21.37 $ $
December 31, 1996 8.72 17.57
December 31, 1995 7.46 15.20
</TABLE>
(1) Net income per share is based on weighted average common and common
equivalent shares outstanding.
(2) Pro forma cash dividends per share represent historical cash dividends of
Zions.
(3) Book value per common share is based on total period-end 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
and the Company 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 one share of Company Common Stock
for 2.04 shares of Zions 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
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<PAGE>
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
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
32
<PAGE>
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.
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, 1997, Zions' Tier 1 and Total Capital ratios were 11.74% and
13.75%, 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 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
December 31, 1997 under the risk-based capital guidelines.
33
<PAGE>
Risk-Based Capital
(Dollars in thousands)
Percent
of Risk-
Adjusted
Amount Assets
------ ------
Tier 1 Capital............................. $ 660,446 11.74%
Minimum Requirement........................ 224,975 4.00
---------- -------
Excess................................... $ 435,471 7.74%
========== =======
Total Capital.............................. $ 773,245 13.75%
Minimum Requirement........................ 449,950 8.00
---------- -------
Excess................................... $ 323,295 5.75%
========== =======
Risk-Adjusted Assets,
net of goodwill, excess deferred
tax assets and excess allowance.......... $5,624,373 100.00%
========== =======
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
December 31, 1997, Zions' leverage ratio was 6.75%.
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 December 31,
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.
34
<PAGE>
Percent
of Average
Assets, Net
Amount of Goodwill
------ -----------
(Dollars in thousands)
Tier 1 Capital............................. $ 660,446 6.75%
Minimum Requirement........................ 293,537 3.00
---------- ------
Excess..................................... $ 366,909 3.75%
========== ======
Average Assets, net of goodwill and
deferred tax assets...................... $9,784,570 100.00%
========== ======
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 hiring of senior executive officers.
35
<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 impose other
operating restrictions.
FDICIA also contains provisions which, among other things, restrict
investments and activities as principal by state nonmember banks to those for
which national banks are eligible, 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
36
<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 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 June 30, 1998, 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
of up to five
37
<PAGE>
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, established by the Federal Housing Finance Board pursuant to
FIRREA, to enable it to pay interest and certain other expenses on bonds which
it issued 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 first semi-annual period of 1998 have been set at
1.256 basis points annually for the first quarter and 1.211 basis points for the
second quarter for BIF-assessable deposits and 6.28 and 6.22 basis points
annually, respectively, for SAIF-assessable deposits.
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 and 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
38
<PAGE>
"host state" merger filing requirements to the extent that those requirements do
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 Division, 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 and certain other requirements are satisfied.
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.
39
<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."
40
<PAGE>
ZIONS BANCORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share and ratio data)
<TABLE>
<CAPTION>
As of, and for the
Year Ended December 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
EARNINGS SUMMARY
- ----------------
<S> <C> <C> <C> <C> <C>
Taxable-equivalent net interest income $ 358,676 $ 296,372 $ 238,880 $ 203,313 $ 178,636
Net interest income 351,799 289,166 233,547 198,606 174,657
Noninterest income 143,167 114,270 88,811 73,202 79,880
Provision for loan losses 6,175 4,640 3,000 2,181 2,993
Noninterest expenses (1) 301,218 235,272 195,186 174,900 167,750
Income taxes 65,211 56,101 41,787 30,900 27,248
Income before cumulative effect of changes
in accounting principles 122,362 107,423 82,385 63,827 56,546
Cumulative effect of changes in
accounting principles (2) - - - - 1,659
Net income 122,362 107,423 82,385 63,827 58,205
COMMON STOCK DATA
- -----------------
Earnings per common share:
Income before cumulative effect of
changes in accounting principles - diluted $ 1.89 $ 1.68 $ 1.37 $ 1.09 $ .99
Net income - basic 1.92 1.70 1.39 1.11 1.03
Net income - diluted 1.89 1.68 1.37 1.09 1.02
Dividends declared per share .4700 .4250 .3525 .2900 .2450
Dividend payout ratio (%) 23.20% 23.27% 24.95% 27.06% 21.81%
Book value per share at year end 10.25 8.72 7.46 6.28 5.50
Market to book value at year end (%) 442.73% 298.17% 268.90% 142.83% 168.18%
Average common shares outstanding 63,868,000 63,194,000 59,435,000 57,754,000 56,636,000
Weighted average common and common
equivalent shares outstanding during the year 64,629,000 63,787,000 60,013,000 58,404,000 57,120,000
Common shares outstanding at year end 63,962,100 63,468,480 62,773,280 58,238,208 56,805,468
6201,3672 7,544
AVERAGE BALANCE SHEET DATA
- --------------------------
Money market investments $ 1,490,772 $ 923,670 $ 945,842 $ 869,709 $ 788,694
Securities 2,575,295 1,977,875 1,665,500 1,545,704 1,209,165
Loan and leases, net 4,341,674 3,432,347 2,662,753 2,574,995 2,222,182
Total interest-earning assets 8,407,741 6,333,892 5,274,095 4,990,408 4,220,041
Total assets 9,214,155 6,914,213 5,779,025 5,456,613 4,643,918
Interest-bearing deposits 4,410,491 3,653,420 3,095,714 2,744,976 2,449,275
Total deposits 5,783,370 4,731,889 3,963,702 3,583,094 3,178,926
FHLB advances and other borrowings over one 136,381 87,700 96,305 118,607 111,974
year
Long-term debt 257,779 55,187 57,506 59,493 75,623
Total interest-bearing liabilities 7,067,324 5,208,318 4,397,582 4,197,865 3,556,746
Shareholders' equity 615,535 512,739 407,498 339,181 286,331
YEAR END BALANCE SHEET DATA
- ---------------------------
Money market investments $ 814,088 $ 613,429 $ 687,251 $ 403,446 $ 597,680
Securities 2,712,094 1,983,643 1,694,669 1,663,433 1,258,939
Loans and leases, net 4,871,650 3,837,149 3,068,057 2,391,278 2,486,346
Allowance for loan losses 80,481 76,803 73,437 67,018 68,461
Total assets 9,521,770 7,116,413 6,095,515 4,934,095 4,801,054
Total deposits 6,854,462 5,119,692 4,511,184 3,705,976 3,432,289
FHLB advances and other borrowings over one 210,681 81,875 95,817 101,571 152,109
year
Long-term debt 258,566 251,620 56,229 58,182 59,587
Shareholders' equity 655,460 554,610 469,678 365,770 312,592
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
As of, and for the
Year Ended December 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonaccrual loans $ 11,907 $ 12,704 $ 10,875 $ 13,635 $ 23,364
Restructured loans 691 857 249 567 4,006
Other real estate owned and other
nonperforming assets 3,371 138 1,609 4,741 3,267
Total nonperforming assets 15,969 13,699 12,733 18,943 30,637
Accruing loans past due 90 days or more 9,944 3,563 5,309 3,041 10,821
SELECTED RATIOS
- ---------------
Net interest margin (3) 4.27% 4.68% 4.53% 4.07% 4.23%
Return on average assets 1.33% 1.55% 1.43% 1.17% 1.25%
Return on average common equity 19.88% 20.95% 20.22% 18.82% 20.33%
Ratio of average common equity to average assets 6.68% 7.42% 7.05% 6.22% 6.17%
Tier I risk-based capital - year end 11.74% 14.16% 11.33% 11.81% 10.85%
Total risk-based capital - year end 13.75% 17.52% 14.03% 14.96% 14.12%
Leverage ratio - year end 6.75% 8.70% 6.33% 6.24% 5.44%
Ratio of nonperforming assets to total
assets - year end .17% .19% .21% .38% .64%
Ratio of nonperforming assets to net loans and
leases and other real estate owned and
other nonperforming assets at year end .33% .36% .41% .79% 1.23%
Ratio of net charge-offs (recoveries) to average
loans and leases .19% .11% .10% .19% (.23)%
Ratio of allowance for loan losses to net loans
and leases outstanding at year end 1.65% 2.00% 2.39% 2.80% 2.75%
Ratio of allowance for loan losses to
nonperforming loans at year end 638.84% 566.35% 660.17% 471.89% 250.13%
</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 earlier 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 Bancorporation 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.
42
<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-NMS. 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
---- --- --------
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 21.94 .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........................... 46.00 37.63 .12
--------
$ .47
========
1998
First Quarter............................ $______ $______ $ .12
Second Quarter (through ______, 1998).... ______ ______ ____
On January 21, 1998, the last NASDAQ-NMS trading day prior to the
public announcement of the Reorganization, the closing sale price for the Zions
Common Stock was $44.00. On ___________, 1998, 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 _______________, 1998, there were
approximately [67,877,722] shares of Zions Common Stock outstanding, held by
approximately [5,350] 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 February 27, 1998, the record and
beneficial ownership of Zions Common Stock by the principal common shareholders
of Zions.
43
<PAGE>
<TABLE>
<CAPTION>
No. of % of
Name and Address Type of Ownership Shares Class
- ---------------- ----------------- ------ -----
<S> <C> <C> <C>
Roy W. Simmons Record and Beneficial 2,279,815 3.30%
One South Main Beneficial(1) 1,991,376 2.88%
Salt Lake City, Utah 84111 --------- ----
4,271,191 6.18%
Zions First National Bank Record(2) 4,581,741 6.60%
One South Main
Salt Lake City, Utah 84111
</TABLE>
- ----------
(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 February 17, 1998, 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 3,296,197
shares (4.7% 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 1,007,804 shares (1.4% of the class) and the
Zions Bancorporation PAYSOP Plan, which holds 277,740 shares (.4% 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 February 27, 1998,
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 9,800 * (1)
Grant R. Caldwell 7,000 * (1)
R.D. Cash(3) 27,000 * (1)
Richard H. Madsen 197,622 * (1)
Roger B. Porter(3) 3,000 * (1)
Robert G. Sarver(3) 818,124 1.18
Harris H. Simmons 2,498,662(2) 3.62
L. E. Simmons(3) 2,296,229(2) 3.33
Roy W. Simmons(3) 4,271,191(2) 6.19
44
<PAGE>
I. J. Wagner(3) 285,000(2) * (1)
All directors and officers
as a group (31 persons) 7,945,288 11.44
- ----------
(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.
(3) These individuals also own phantom stock through the Company's Deferred
Compensation Plan for Directors which are not included in the above
totals. The amount of phantom stock held as of December 31, 1997 was as
follows: Mr. Cash, 24,134 shares; Mr. Porter, 8,313 shares; Mr. Sarver,
3,545 shares; Mr. L.E. Simmons, 5,193 shares; Mr. Roy Simmons, 20,137
shares; and Mr. Wagner, 2,891 shares.
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,
1997 ("Zions Form 10-K");
2. Zions' Current Reports on Form 8-K filed by Zions on February
6, 1998 and April 15, 1998;
3. The description of Zions Common Stock which is contained in
Zions' registration statement on Form 10, and any amendment or
report filed for the purpose of updating such description; and
4. The description of the Zions Rights Plan contained in Zions'
registration statement on Form 8-A dated October 10, 1996, and
any amendment or report filed for the purpose of updating such
description.
The Company shareholders who wish to obtain copies of any Zions
document incorporated by reference herein may do so by following the
instructions under the section titled "Available Information" in the initial
pages of this Proxy Statement/Prospectus.
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
45
<PAGE>
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
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Proxy Statement/Prospectus.
INFORMATION CONCERNING THE COMPANY AND THE BANK
General
The First National Bank of Colorado (formerly known as the First
National Bank of Steamboat Springs) was organized under national law on November
1, 1984. The Bank is a wholly-owned subsidiary of the Company. The Company
became a registered bank holding company under the Bank Holding Company Act in
May 1991. The outstanding common stock of the Company is owned by eighteen
shareholders of record with 318,664.47 shares issued and outstanding. Since its
formation, the activities of the Company have been limited to ownership and
operation of the Bank. As a registered bank holding company, the Company is
subject to regulation and examination by the Federal Reserve Bank. The Bank is
subject to regulation and examination by the Office of the Comptroller of the
Currency (the "OCC").
Since its inception, the Bank has grown to become a strong community
banking franchise, with over $92 million in assets. Over the past 13 years, the
bank has prospered by establishing and maintaining beneficial relationships with
large and small commercial businesses and increasing the Bank's visibility as a
construction, permanent mortgage and real estate lending bank in the Bank's
geographic area.
The Bank serves its depositors and customers by delivering a broad
range of traditional retail deposit and loan services through its two locations.
The main office of the Bank is located at 2155 Resort Drive, Steamboat Springs,
Colorado, and the Bank's only branch facility is located in downtown Steamboat
Springs at the corner of 8th and Lincoln Avenue.
Business
The Bank is the second largest bank in Routt County, Colorado and is
one of three banks with operations in Steamboat Springs, Colorado. As of
December 31, 1997, the Bank had total assets of $92.9 million, total deposits of
$83.5 million, and total stockholders' equity of $6.8 million.
Strategy. The Bank's strategy has been to build and maintain profitable
relationships while continuing its focus on the community banking market segment
and improving services through adoption of new technologies.
Marketing/Customer Service. The Bank seeks to build and maintain
profitable relationships by instituting programs such as: a four-tiered program
to prioritize the bank's customer base; a referral and cross-marketing program;
various training programs; and a performance evaluation, incentive and reward
program for employees.
Technology. Management of the Bank believes that investments in technology
improve the service provided by the Bank to depositors and customers. In
furtherance of this belief, the Bank has installed automated teller machines
46
<PAGE>
("ATMs") at each of its two locations. In addition to furnishing ATMs, the Bank
has introduced a voice response unit (VRU) that provides inquiry, balance and
loan transfer capabilities. Further, the bank has invested in computers and
network capabilities. However, management of the Bank believes that affiliation
with a larger banking organization is necessary to keep pace with rapidly
changing technologies and services.
Market Areas Served. The Bank's two facilities are both located within
the Steamboat Springs area. The main office (with attached drive-up facility) is
located at the corner of Pine Grove and Mt. Wemer Road, and the downtown branch,
is located at the corner of 8th and Lincoln. The Bank's primary market area, as
defined by the Bank's Community Reinvestment Plan, is Steamboat Springs and
Routt County, Colorado.
Loans. The Bank follows a uniform credit policy for its loans, which
sets forth underwriting and loan administration criteria, including levels of
loan commitments, loan types, credit criteria, concentration limits, loan
administration, loan review and grading and related matters. The Bank monitors
asset quality utilizing an internal and external loan review program. Interest
rates charged on loans vary with the degree of risk, maturity, underwriting and
servicing costs, loan amount and extent of other banking relationships
maintained with customers, and are further subject to competitive pressures,
money market rates, availability of funds and government regulations.
Approximately 62% of the Bank's loan portfolio at December 31, 1997, had
interest rates that float with the Bank's base rate or some other published
reference rate.
In the ordinary course of business, the Bank enters into various types
of transactions that include commitments to extend credit and standing letters
of credit. The Bank uses the same credit policies in underwriting these
commitments as it uses in all its lending activities and includes these
commitments in its lending risk evaluations. The Bank's exposure to credit loss
under commitments to extend credit is represented by the amount of the
commitments. Under applicable federal and state law, permissible loans by the
Bank to one borrower were limited to an aggregate of $1,073,848 at December 31,
1997.
Loan Portfolio. The following table sets forth the classification of
loans of the Bank by major categories at the dates indicated.
(In Thousands)
December 31,
1997 1996
---- ----
Commercial $36,570 $29,283
Construction 8,844 9,916
Real Estate Mortgage 5,316 5,625
Consumer 4,736 3,900
------- -------
Total Loans 55,466 48,724
Less Unearned Income (2) (10)
Less Allowance for Loan Losses (443) (438)
------- -------
Net Loans 55,021 48,276
======= =======
47
<PAGE>
The Bank's focus has been on real estate secured commercial loans for
small to medium size businesses; consequently, this category represents a large
percentage of the Bank's loan portfolio. The Bank primarily accepts real estate
as collateral, but also accepts accounts receivable, inventory and furniture,
fixtures and equipment.
The real estate loan category consists principally of improved real
estate loans. The Bank makes some land loans but is not actively engaged in the
origination of first mortgage loans for single family homes. The Bank does have
a mortgage loan department which brokers and sells conventional first mortgage
loans to the secondary market.
Personal loans and credit lines represent a small percentage of total
loans. These loans are typically to individuals for non-business purposes (such
as household, family and other personal purposes), including new and used car
loans. The Bank has minimal student loans. For the past seven years, the Bank's
strategy has been to focus on floating rate loans with maturities up to five
years. Accordingly, a majority of the Bank's existing loans are floating rate
loans. Most floating rate loans have interest rates from 1.5% to 2% over prime
as reported in the Wall Street Journal. Of the Bank's $56 million of outstanding
credit commitments and $19 million of unfunded commitments at December 31, 1997,
the majority were loans with floating rates.
The following table presents at December 31, 1997, and December 31,
1996, loans by maturity. Actual maturities may differ from the contractual
maturities as a result of renewals and prepayments. In addition, all loans due
after one year that have predetermined interest rates and that have floating or
adjustable rates are shown below:
(In Thousands)
Maturity December 31, 1997
- -------- -----------------
Less than 1 year $20,549
One year to 5 years 24,479
Over 5 years 10,438
-------
Total $55,466
=======
Loans due after one year
- ------------------------
Fixed interest rate $15,796
Floating rate 19,121
Approximately $25,463,000 at December 31, 1997, and $19,924,000 at
December 31, 1996, represent loans collateralized by commercial real estate.
Non-Performing Assets. The Bank knows of no material loans that are now
current where there are serious doubts as to the ability of the borrower to
48
<PAGE>
comply with present loan repayment terms. At December 31, 1997, the Bank had
total criticized assets (i.e. non-performing, doubtful, substandard, or loss
loans) of $487,000, representing 0.9% of total loans and 6.75% of capital.
<TABLE>
<CAPTION>
December 31,
------------
1997 1996
---- ----
(Dollars in thousands)
Non performing loans:
<S> <C> <C>
Loans 90 days or more delinquent and still accruing............... $ 10 $ 33
Nonaccrual loans.................................................. 161 --
Troubled debt restructurings...................................... -- --
---- ----
Total nonperforming loans......................... $171 $ 33
==== ====
Other real estate owned............................................. -- --
Other assets acquired by foreclosure................................ -- --
---- ----
Total nonperforming assets........................ $171 $ 33
==== ====
Allowance for loan losses........................................... $442 $438
==== ====
Ratio of total nonperforming assets to total assets................. 0.18% 0.04%
Ratio of total nonperforming loans to total loans................... 0.31% 0.07%
Ratio of allowance for loan losses to total loans................... 0.80% 0.90%
Ratio of allowance for loan losses to total nonperforming loans..... 258% 1,327%
</TABLE>
Non-performing loans. Non-performing loans consist of loans 90 days or
more delinquent and still accruing interest, non-accrual loans and troubled debt
restructurings. At December 31, 1997, the recorded investment in loans for which
impairment has been recognized totaled $161,000. There were no impaired loans at
December 31, 1996. The average recorded investment in impaired loans was
approximately $160,000 for 1997.
Non-accrual loans are loans on which the accrual of interest has been
discontinued. When, in the opinion of the Bank management, a reasonable doubt
exists as to the full, timely collection of interest or principal, regardless of
the delinquency status of a loan, the accrual or interest income is discontinued
and all interest previously accrued, but not collected, is reversed against
current period interest income. While the loan is on a non-accrual status,
interest income is recognized only upon receipt and only if, in the judgment of
management, future collection of principal is probable. Loans 90 days or more
delinquent are changed to non-accrual status unless the loan is in the process
of collection and management determines that full collection of principal and
accrued interest is probable. Interest accruals are resumed on non-accrual loans
only when, in the judgment of the Bank management, the loans are estimated to be
fully collectible as to both principal and interest.
Troubled debt restructurings are loans that have been re-negotiated to
provide a reduction or deferral of interest or principal balance because of a
deterioration in the financial position of the borrower.
Additional interest income on non-accrual loans that would have been
recognized in 1997 had the loans been current in accordance with their original
terms was not material. No interest income was collected in 1997 on non-accrual
loans.
49
<PAGE>
Other Real Estate Owned. Other real estate owned ("OREO") includes
property acquired in foreclosure proceedings or under agreements with delinquent
borrowers. As of December 31, 1997 and 1996, the Bank had OREO.
Analysis of Allowance for Loan Losses. The allowance for loan losses is
established through charges to earnings in the form of provisions for loan
losses. Charge off(s) or recoveries are charged or credited directly to the
allowance. In general, the amount charged to earnings each year, if any, by the
Bank is based on the Bank management's judgment, which takes into consideration
a number of factors, including: (a) the Bank's historic loss experience in
relation to outstanding loans and the existing level of the allowance; (b)
recommendations by the Bank's external auditors; and (c) estimates by lending
officers of the true dollar loss exposure on classified loans. At December 31,
1997, the Bank had an allowance for loan losses of $442,000.
The following table sets forth the historical relationship between the
Bank's loan charge off(s) and recoveries and allowance for loan losses at the
dates indicated:
Year ended December 31,
-----------------------
1997 1996
---- ----
(Dollars in thousands)
Balance of allowance for loan losses at
beginning of period $438 $359
Charge Offs:
Real Estate loans -- --
Installment loans -- 2
Credit cards and related plans 8 7
Commercial and all other loans 6 0
Lease financing receivables -- --
---- ----
Total charge-offs 14 9
---- ----
Recoveries:
Real Estate loans -- --
Installment loans 1 1
Credit cards and related plans 1 --
Commercial and all other loans 16 87
Lease financing receivables -- --
---- ----
Total recoveries 18 88
---- ----
Net (charge-offs) recoveries 4 79
Provision for loan losses -- --
---- ----
Balance of allowance for loan losses
at end of period $442 $438
==== ====
Ratio of net (charge-offs) recoveries
to average loans 0.01% 0.19%
Average loans outstanding during period $51,960 $42,126
50
<PAGE>
Investment Securities
The Bank maintains a portfolio of investment securities to provide
additional diversification and earnings on funds not being utilized for loan
activity or other purposes. The Bank has formalized an investment policy that
the Bank may invest in direct obligations of the U.S. Treasury; securities
backed by Federal agencies; state, county and municipal securities that
represent general obligations of the issuer; revenue bonds rated Baa or higher
by Moody's or Standard & Poor's; money market instruments of federally insured
institutions; and corporate securities rated Baa or higher. To reduce investment
risk and ensure that investments do not exceed legal investment limits, the
Bank's Asset Liability Committee meets at least monthly to consider the
investment securities portfolio and its quality, maturity, marketability and
risk diversification. The Asset Liability Committee reports to the Board of
Directors of the Bank on a monthly basis.
The following table sets forth the amortized cost and market value of
the Bank's investment securities by class of security at the date indicated.
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------- -----------------
Amortized Market Amortized Market
Cost Value Cost Value
---- ----- ---- -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasury $3,244 $3,251 $4,727 $4,750
U.S. Agency 1,479 1,483 1,487 1,506
Mortgage-backed 6,047 6,127 7,795 7,802
Federal Home Loan Bank and
Federal Reserve Bank Stock 405 405 405 405
------- ------- ------- -------
Total securities available for sale $11,175 $11,266 $14,414 $14,463
======= ======= ======= =======
Securities held to maturity:
U.S. Treasury $1,003 $1,007 $501 $493
U.S. Agency 7,603 7,623 2,654 2,670
Mortgage-backed 4,547 4,624 6,379 6,412
States & political subdivisions 40 40 135 135
------- ------- ------ ------
Total securities available for sale $13,193 $13,294 $9,669 $9,710
======= ======= ====== ======
</TABLE>
51
<PAGE>
The following table sets forth the carrying values, maturities and
weighted average yields of the Bank's securities portfolio at December 31, 1997.
<TABLE>
<CAPTION>
Due after
Due in one Due after one year five years Due after
year or less through five years through ten years ten years Total
------------ ------------------ ----------------- --------- -----
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasury $2,750 6.10% $ 501 6.17% $ -- 0.00% $ -- 0.00% $ 3,251 6.11%
U.S. government agencies 507 8.03% 976 6.39% -- 0.00% -- 0.00% 1,483 6.95%
Mortgage backed securities 188 6.50% 567 6.62% 331 8.80% 5,041 6.76% 6,127 6.84%
State and political subdivisions -- 0.00% -- 0.00% -- 0.00% -- 0.00% -- 0.00%
Federal Home Loan Bank and
Federal Reserve Bank Stock -- 0.00% -- 0.00% -- 0.00% 405 0.00% 405 0.00%
------ ------ ---- ------ -------
TOTAL $3,445 6.40% $2,044 6.40% $331 8.80% $5,446 6.76% $11,266 6.64%
====== ====== ==== ====== =======
Securities held to maturity:
U.S. Treasury $ 501 5.07% $ 502 6.61% $ -- 0.00% $ -- 0.00% $ 1,003 5.84%
U.S. government agencies 1,100 5.91% 6,503 6.67% -- 0.00% -- 0.00% 7,603 6.56%
Mortgage backed securities 149 7.75% 714 6.65% 538 7.65% 3,146 7.17% 4,547 7.17%
State and political subdivisions 20 4.25% 20 4.45% -- 0.00% -- 0.00% 40 4.35%
------ ------ ---- ------ -------
TOTAL $1,770 5.81% $7,739 6.66% $538 7.65% $3,146 7.17% $13,193 6.71%
====== ====== ==== ====== =======
</TABLE>
52
<PAGE>
Deposits
The following table presents the average balances of the Bank for each
major category of deposits and the weighted average interest rate paid for
interest-bearing deposits for the periods indicated:
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------------------
1997 1996
--------------------------- --------------------------
Weighted Weighted
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- ------------- ------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
NOW and MMDA $24,748 3.409% $19,595 3.077%
Savings 4,041 2.731% 4,397 2.731%
Time Cd's < 100k 12,215 5.882% 13,174 5.423%
Time Cd's > 100k 20,415 6.114% 14,850 6.049%
------- -------
Total Interest Bearing Deposits 61,419 4.755% 52,016 4.490%
Non-interest bearing DDA 15,341 14,035
------- -------
Total Deposits $76,760 $66,051
======= =======
</TABLE>
The following table sets forth the amount and maturity of certificates of
deposit with balances of more than $100,000 as of December 31, 1997.
December 31, 1997
-----------------
Remaining maturity (In thousands)
Under 3 months $ 7,476
3 to 6 months 4,823
6 to 12 months 6,299
Over 12 months 2,938
-------
Total $21,536
=======
Return on Bank Assets and Equity. The following table sets forth for
the Bank as of December 31, 1997, 1996 and 1995 returns on assets, returns on
equity and certain related ratios:
53
<PAGE>
Years ended December 31,
--------------------------------------------
1997 1996 1995
---- ---- ----
Return on assets* 2.08% 2.41% 1.80%
Return on equity** 28.59% 34.48% 28.29%
Equity to assets ratio*** 7.26% 7.00% 6.37%
Dividend payout ratio**** 33.45% 52.63% 41.67%
- ----------
* Net income divided by average total assets.
** Net income divided by average stockholders' equity.
*** Average total equity divided by average total assets.
**** Dividends paid per share divided by net income per share.
Competition
The banking industry in the Steamboat Springs area is highly
competitive. The Bank faces competition from regional bank holding companies,
such as Community First Bankshares, Inc. and Norwest Corporation. Additionally,
there is competition from savings and loan companies, credit unions, investment
companies and other types of financial services companies and from smaller
independent banks located in nearby communities.
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/credit, general and local
economic conditions and the quality of service and loan approval turn-around
provided to the customers. Some of the Bank's competitors are larger and
substantially more capitalized than the Bank for lending and to pay for mass
advertising, technology and physical facilities. Furthermore, because larger
financial institutions frequently benefit from economies of scale, many of the
Bank's competitors are able to offer more attractive interest rates, lower cost
services and a wider range of services and products.
The Bank believes that it has been successful in the past in competing
due to its focus in the community banking market segment on building and
maintaining comprehensive banking relationships. However, in light of
competitive trends in the industry and the Bank's geographic area, management of
the Company and the Bank believe that the Bank will face increasing competitive
pressure from larger, regional bank holding companies that currently have
acquired or will acquire banks or branches serving the Routt County market.
The Bank's Facilities
The Bank's main office facility, and the attached drive-up facility,
are leased from the First National Land Company, which is principally owned by
the Bank's major shareholders, John R. Adams and Timothy S. Borden. Lease costs
are considered competitive with the local marketplace. The downtown Steamboat
Springs branch is leased from an unaffiliated landlord at competitive rates.
54
<PAGE>
Legal Proceedings
From time to time, the Bank is involved in routine litigation,
including foreclosure proceedings, in the ordinary course of its business. Other
than one foreclosure proceeding, the Bank is not involved in any litigation as
of the date of this Proxy Statement/Prospectus. The Company is involved in no
litigation as of the date of this Proxy Statement/Prospectus.
Employees
At December 31, 1997, the Company and Bank had 34 full-time equivalent
employees. None of the employees is covered by a collective bargaining
agreement. Management of the Bank and Company believe that their relationships
with their employees are good.
Regulatory Matters
As a registered bank holding company under the Bank Holding Company
Act, the Company is subject to the 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
thereby.
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 OCC.
Selected Financial Data
The following selected financial data should be read in conjunction
with the Company's Consolidated Financial Statements and the related notes and
with the Company's Management's Discussion and Analysis of Financial Condition
and Results of Operations, which are included in this Proxy
Statement/Prospectus.
55
<PAGE>
ROUTT COUNTY NATIONAL BANK CORPORATION AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
As of, and for the Year Ended December 31,
------------------------------------------
1997 1996 1995
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
Earnings Summary
- ----------------
Net interest income $4,535 $4,073 $3,520
Provisions for loan losses -- -- --
Noninterest income 889 946 505
Noninterest expense 2,638 2,263 2,145
Income taxes 1,017 968 692
Net income 1,769 1,788 1,188
Common Stock Data
- -----------------
Net income per common share $ 5.56 $ 5.70 $ 3.84
Dividends per common share 1.86 3.00 1.60
Book value per share outstanding
at period end 21.37 17.57 15.20
Weighted average common shares
outstanding during the period 317,908.01 313,711.69 309,621.54
Average Balance Sheet Data
- --------------------------
Securities $25,347 $26,012 $24,164
Loans and leases, net 51,517 41,710 34,070
Total interest-earning assets 80,787 70,039 62,036
Total assets 85,187 74,136 65,933
Interest-bearing deposits 61,419 52,016 46,542
Total deposits 76,735 66,021 58,398
Equity 6,188 5,186 4,200
End of Period Balance Sheet Data
- --------------------------------
Securities $24,459 $24,132 $25,707
Loans and leases, net 55,021 48,276 36,296
Allowance for loan losses 442 438 359
Total assets 92,854 81,271 71,456
Total deposits 83,437 74,108 64,323
Shareholders' equity 6,809 5,566 4,738
Nonperforming assets:
Nonaccrual loans and loans past
due 90 days or more $ 171 $ 33 $ 23
Other real estate owned -- -- --
------- ------- -------
Total non performing assets $ 171 $ 33 $ 23
======= ======= =======
Selected Ratios
- ---------------
Net interest margin 5.61% 5.82% 5.67%
Return on average assets 2.08% 2.41% 1.80%
Return on average equity 28.59% 34.48% 28.29%
Ratio of ending equity to ending
assets 7.33% 6.85% 6.63%
Ratio of nonperforming assets to
total assets 0.18% 0.04% 0.03%
Ratio of allowance for loan losses
to loans and leases outstanding
at period end 0.80% 0.90% 0.98%
Ratio of allowance for loan losses
to nonperforming loans 258.48% 1327.27% 1560.87%
</TABLE>
56
<PAGE>
Stock Prices and Dividends on Company Common Stock
No established trading market for the Company Common Stock exists. Over
the years, little trading in the Company Common Stock has occurred. Reliable
information concerning the prices at which the Company Common 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 a fair market price for the Company Common Stock
during any particular period. Since January 21, 1998, the date the Plan of
Reorganization was executed and publicly announced, there have been no trades in
the Company's Common Stock.
The following table sets forth the per share cash dividends declared
and paid by the Company during each of the last three years.
1995...................................................... $1.60
1996...................................................... $3.00
1997...................................................... $1.86
As of ________, 1998 there were eighteen holders of record of the
Company Common Stock.
Certain Transactions of the Company
James A. Simon, president and chief executive officer of the Bank, will
serve as an executive officer of Bank Colorado pursuant to an employment
agreement to be executed at Closing. See "Plan of Reorganization--Interests of
Certain Persons in the Transaction" for information concerning the employment
agreement and other matters relating to Mr. Simon and the transaction.
Timothy S. Borden, chairman of the board and a principal shareholder of
the Company, and John R. Adams, a director and a principal shareholder of the
Company, each will execute a non-competition agreement at Closing. Mr. Borden
will also acquire the trademark "First National Bank of Colorado" from Bank
Colorado at the Effective Date. Mr. Borden will agree at the Effective Date not
to use that trade mark in Routt County or Craig, Colorado for three years after
the Effective Date. See "Plan of Reorganization--Interests of Certain Persons
in the Transaction."
The Bank's main office facility is leased from the First National Land
Company. The First National Land Company is principally owned by John R. Adams
and Timothy S. Borden, major shareholders of the Company. Following the
Reorganization, Bank Colorado will continue to lease such facility from the
First National Land Company pursuant to the existing lease agreement.
The Bank has had banking transactions in the ordinary course of its
business with directors, officers, principal shareholders and their associates
on substantially 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
57
<PAGE>
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 December 31, 1997, the Company's directors and executive officers and their
related parties were indebted to the Bank in the aggregate amount of $1,610,664,
none of which loans were delinquent.
Stockholdings of Directors, Officers and Certain Others
The following table sets forth as of March 31, 1998, the beneficial
ownership of the Company's Common Stock (i) by each person known by the Company
to own beneficially more than 5% of the outstanding shares of such class, (ii)
by each executive officer of the Company, (iii) by each director of the Company,
and (iv) by all directors and executive officers of the Company as a group.
Except as set forth in the notes to the table, each person, to the Company's
knowledge, has sole voting and investment power over the shares stated as
beneficially owned.
<TABLE>
<CAPTION>
Name and Title (and address of 5%
Beneficial Owners) Number of Shares Percent of Class
- ------------------ ---------------- ----------------
<S> <C> <C>
Timothy S. Borden
Chairman of the Board
P.O. Box 770570
Steamboat Springs, Colorado 80477........................... 97,535.99 30.6077%
John R. Adams
Director
P.O. Box 770298
Steamboat Springs, Colorado 80477........................... 97,535.99(1) 30.6077%
James A. Simon
President and Chief Executive Officer of
the Bank
P.O. Box 880789
Steamboat Springs, Colorado 80488............................ 28,714.00(2) 9.0108%
J. Edwin Hill
Director..................................................... 7,845.70 2.4621%
Steven A. Dawes
Director..................................................... 13,183.12 4.1370%
</TABLE>
- ----------
(1) Includes 97,335.99 shares held in trust.
(2) Includes 25,711 shares held by Mr. Simon and his wife as tenants in
common, 1,003 shares held by the James A. Simon Profit Sharing Trust with
Mr. Simon as sole Trustee, and 2,000 shares held by Mr. Simon as custodian
for his minor children.
58
<PAGE>
<TABLE>
<S> <C> <C>
Donald D. Valentine
Director
P.O. Box 881090
Steamboat Plaza, Colorado 80488............................. 21,879.843 6.8661%
Peter L. Kurtz
Director
25545 Routt County Road, #56
Steamboat Springs, Colorado 80487........................... 21,679.84 6.8033%
Mark A. McElhinney
Director
P.O. Box 775223
Steamboat Springs, Colorado 80477........................... 13,170.01 4.1329%
All directors and executive officers as a 301,544.49
group (8 persons)............................................
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
ROUTT COUNTY NATIONAL BANK CORPORATION
The following analysis of the Company's financial condition and the
results of operations for the years ended December 31, 1997, 1996, and 1995
should be read in conjunction with the audited Consolidated Financial Statements
of the Company and notes thereto, and information presented elsewhere herein.
Average balance sheet data are based on average daily balances outstanding for
the period.
The Company's Consolidated Financial Statements show its financial
condition and information on a consolidated basis. The Bank is the only
operating unit of the Company.
- --------
(3) Includes 200 shares owned by Mr. Valentine's wife; Mr. Valentine disclaims
beneficial interest over these shares.
59
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------- ---------------------------- -------------------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------ ------- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Securities - Taxable..................... $25,225 $1,680 6.66% $25,832 $1,707 6.61% $23,898 $1,476 6.18%
Securities - Nontaxable.................. 122 6 4.92% 180 8 4.44% 266 12 4.51%
Federal Funds Sold....................... 3,732 205 5.49% 2,215 120 5.42% 3,487 201 5.76%
Other investments........................ 199 11 5.53% 201 11 5.4% 265 16 6.04%
Loans.................................... 51,960 5,639 10.85% 42,127 4,685 11.12% 34,442 4,039 11.73%
Less allowance for loan losses........... (443) (417) (372)
Less unrealized gain (loss) on
securities available for sale.......... (8) (99) 50
------- ----- ------- ----- ------- -----
Net interest-earning assets.............. 80,787 7,541 9.33% 70,039 6,531 9.32% 62,036 5,744 9.26%
Noninterest earning assets............... 4,400 4,097 3,897
------- ----- ------- ----- ------- -----
Total Assets............................. $85,187 7,541 8.85% $74,136 6,531 8.81% $65,933 5,744 8.71%
======= ----- ======= ----- ======= -----
LIABILITIES
Interest-bearing DDA..................... $ 7,939 225 2.83% $ 6,572 166 2.53% $ 7,463 195 2.61%
MMDA..................................... 16,809 619 3.68% 13,023 437 3.36% 12,104 408 3.37%
Savings.................................. 4,041 110 2.72% 4,397 120 2.73% 4,989 155 3.11%
Time Deposits $100,000 & over............ 20,415 1,248 6.11% 14,850 898 6.05% 8,349 554 6.64%
Other time deposits...................... 12,215 719 5.89% 13,174 715 5.43% 13,637 768 5.63%
------- ----- ------- ----- ------- -----
Total Interest-bearing deposits.......... 61,419 2,921 4.76% 52,016 2,336 4.49% 46,542 2,080 4.47%
Fed funds & repurchase agreements........ 1,592 85 5.34% 2,301 122 5.30% 2,888 145 5.02%
------- ----- ------- ----- ------- -----
Total interest-bearing liabilities....... 63,011 3,006 4.77% 54,317 2,458 4.53% 49,430 2,225 4.50%
Non-interest bearing DDA................. 15,316 14,005 11,856
------- ----- ------- ----- ------- -----
Total Deposits and Interest-
Bearing Liabilities.................... $78,327 3,006 3.84% $68,322 2,458 3.60% $61,286 2,225 3.63%
======= ----- ======= ----- ======= -----
Net Interest Income...................... $4,535 $4,073 $3,519
====== ====== ======
Interest Rate Spread..................... 4.56% 4.79% 4.76%
Net Interest Rate Margin................. 5.61% 5.82% 5.67%
</TABLE>
60
<PAGE>
The following table illustrates the changes in the net interest income
due to changes in volume and changes in interest rate. Changes attributable to
the combined effect of volume and interest rate have been allocated to the
change due to volume.
<TABLE>
<CAPTION>
December 31, December 31,
1997 over 1996 1996 over 1995
-------------- --------------
Due to Due to Due to Due to
Volume Rate Total Volume Rate Total
------ ---- ----- ------ ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Securities- Taxable........................... $ (40) $13 $(27) $128 $103 $231
Securities-Nontaxable......................... (3) 1 (2) (4) -- (4)
Federal Funds Sold............................ 83 2 85 (69) (12) (81)
Other investments............................. -- -- -- (4) (1) (5)
Loans......................................... 1,067 (113) 954 855 (209) 646
------ ----- ------ ---- ----- ----
Total interest income......................... $1,107 $ (97) $1,010 $906 $(119) $787
------ ----- ------ ---- ----- ----
Interest-bearing liabilities
Interest-bearing DDA.......................... $39 $20 $59 $(23) $(6) $(29)
MMDA.......................................... 139 43 182 31 (2) 29
Savings accounts.............................. (10) -- (10) (16) (19) (35)
Time deposits $100,000 and over............... 320 30 350 394 (49) 345
Other time deposits........................... (29) 33 4 (25) (28) (53)
------ ----- ------ ---- ----- ----
Total interest-bearing deposits............... 459 126 585 361 (104) 257
Fed funds & repurchase agreements............. (38) 1 (37) (31) 8 (23)
------ ----- ------ ---- ----- ----
Total interest-bearing liabilities............ $ 421 $ 127 $ 548 $330 $(96) $234
------ ----- ------ ---- ----- ----
Increase (decrease) in net interest income.... $ 686 $(224) $ 462 $576 $ (23) $553
====== ===== ====== ==== ===== ====
</TABLE>
The change in interest income/expense attributable to volume reflects
the change in volume times the current year's rate and the change in interest
income/expense attributable to rate reflects the change in rates times the prior
year's volume.
61
<PAGE>
General
The Company's Consolidated Financial Statements show its financial
condition and information on a consolidated basis. The Company's sole business
is ownership and operation of the Bank.
Results of Operations
Years ended December 31, 1997 and 1996
Overview. Net income decreased by $19,000 for 1997 to $1,769,000 from
$1,788,000 for 1996. The principal component of the Bank's net income, net
interest income (i.e., the difference between interest income, principally from
loans, and interest expense, principally on customer deposits and borrowings),
increased $462,000 to $4,535,000 for 1997 from $4,073,000 for 1996. Noninterest
income decreased $57,000 from $946,000 for 1996 to $889,000 for 1997.
Noninterest expense increased by $375,000 for 1997 to $2,638,000 from $2,263,000
for 1996. Income tax expense increased $49,000 for 1997 to $1,017,000 from
$968,000 for 1996. Return on average assets and return on average equity were
2.08% and 28.59%, respectively, for 1997 compared to 2.41% and 34.48%,
respectively, for 1996.
Interest Income. Interest income increased $1,010,000 to $7,541,000 for
1997 from $6,531,000 for 1996. Interest income on loans increased $954,000 and
interest income on securities and federal funds sold increased $56,000 for 1997
compared to 1996. The increase in interest income on loans was due to a
prosperous local economy and the Bank's business development efforts. The
increase in interest income from securities was the result of the overall growth
of the Bank and interest income generated from the sale of federal funds. The
rates earned on loans and investments have remained relatively stable.
Interest Expense. Interest expense increased $548,000 to $3,006,000 for
1997 from $2,458,000 for 1996. The increase in interest expense was primarily
due to increased interest-bearing deposits. Interest-bearing deposits were up
$9,403,000 for 1997 to $61,419,000 from $52,016,000 for 1996. Rates paid on
interest-bearing deposits have remained relatively stable.
Net Interest Income. Net interest income increased $462,000 to
$4,535,000 for 1997 from $4,073,000 for 1996. During 1997, average loans
outstanding increased $9,833,000, average securities, including federal funds
sold, increased $850,000, while net interest margin (i.e., net interest income
divided by average interest-earning assets) decreased 0.21% (from 5.82% for 1996
to 5.61% for 1997).
Noninterest Income. Noninterest income decreased $57,000 to $889,000
for 1997 from $946,000 for 1996. The decrease was due primarily to the sale in
1996 of the Bank's MasterCard/Visa merchant portfolio for $373,000, which
resulted in abnormally high noninterest income for 1996, and a $21,000 decrease
in service charges and fee income during 1997.
Noninterest Expense. Noninterest expense increased $375,000 to
$2,638,000 for 1997 from $2,263,000 for 1996. The increase was primarily the
result of an increase in salaries and employee benefits of $218,000 during 1997.
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Allowance for Loan Losses. Although the Company made no provisions to
its loan loss reserves in 1997, allowance for loan losses increased $4,000 in
1997 to $442,000 from $438,000 in 1996 because recoveries on previously
charged-off loans credited to the loan loss allowance exceeded charges thereto.
Income Taxes. The Company's income tax expense increased $49,000 to
$1,017,000 for 1997 from $968,000 for 1996.
Years ended December 31, 1996 and 1995
Overview. Net income increased by $600,000 for 1996 to $1,788,000 from
$1,188,000 for 1995. Net interest income increased $553,000 to $4,073,000 for
1996 from $3,520,000 for 1995. Noninterest income increased $441,000 from
$505,000 for 1995 to $946,000 for 1996. Noninterest expense increased by
$118,000 for 1996 to $2,263,000 from $2,145,000 for 1995. Income tax expense
increased $276,000 for 1996 to $968,000 from $692,000 for 1995. Return on
average assets and return on average equity were 2.41% and 34.48%, respectively,
for 1996 compared to 1.80% and 28.29%, respectively, for 1995.
Interest Income. Interest income increased $787,000 to $6,531,000 for
1996 from $5,744,000 for 1995. Interest income on loans increased $646,000 and
interest income on securities increased $141,000 for 1996 compared to 1995. The
increase in interest income on loans was due to a prosperous local economy and
the Bank's business development efforts. The increase in interest income from
securities was the result of the overall growth of the Bank and a shift from
investing in federal funds sold to short term investment securities. The rates
earned on loans and investments increased slightly from 1995 to 1996.
Interest Expense. Interest expense increased $233,000 to $2,458,000 for
1996 from $2,225,000 for 1995. The increase in interest expense was primarily
due to increased interest-bearing deposits. Interest-bearing deposits were up
$5,474,000 for 1996 to $52,016,000 from $46,542,000 for 1995. Rates paid on
interest-bearing deposits increased slightly from 1995 to 1996.
Net Interest Income. Net interest income increased $554,000 to
$4,073,000 for 1996 from $3,519,000 for 1996. During 1996, average loans
outstanding increased $7,685,000, average securities increased $512,000, and net
interest margin increased 0.15% (from 5.67% for 1995 to 5.82% for 1996).
Noninterest Income. Noninterest income increased $441,000 to $946,000
for 1996 from $505,000 for 1995. The increase was due primarily to the sale in
1996 of the Bank's MasterCard/Visa merchant portfolio for $373,000, which
resulted in abnormally high noninterest income for 1996. Service charges and fee
income decreased $69,000 during 1996.
Noninterest Expense. Noninterest expense increased $118,000 to
$2,263,000 for 1996 from $2,145,000 for 1995. The increase was primarily the
result of an increase in salaries and employee benefits of $89,000 during 1996.
Allowance for Loan Losses. Although the Company made no provisions to
its loan loss reserves in 1996, allowance for loan losses increased $79,000 in
1996 to $438,000 from $359,000 for 1995 because recoveries on previously
charged-off loans credited to the loan loss allowance exceeded charges thereto.
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Income Taxes. The Company's income tax expense increased $276,000 for 1996
to $968,000 from $692,000 for 1995.
Liquidity and Sources of Funds
The Bank's primary sources of funds are customer core deposits, sales
and maturities of investment securities, loan repayments, and federal funds
purchased or borrowings from the Federal Home Loan Bank of Topeka, Kansas. These
funds are used to make loans, acquire investment securities and other assets,
and to fund the operations of the Bank. During 1997, deposits increased to
$83,454,000 at December 31, 1997 from $74,142,000 at December 31, 1996 and
$64,348,000 at December 31, 1995. None of the deposits at December 31, 1997,
1996 or 1995 were brokered funds. Management believes the increases in deposits
in 1997, 1996 and 1995 were from (1) referrals from existing customers, (2) the
opening of the downtown branch, and (3) the overall growth in Steamboat Springs
and Routt County. At December 31, 1997, net loans were $55,021,000 compared to
$48,276,000 at December 31, 1996 and $36,296,000 at December 31, 1995.
Management believes that the Bank will continue to rely primarily on
core customer deposits, sales of investment securities, loan repayments, and
retained earnings to provide liquidity, and will use the funds so provided to
make loans and purchase securities. The Bank believes that customer deposits
provide a strong source of liquidity because of the high percentage of core
deposits. As a secondary source of funds, management uses federal funds
purchased and borrowings from the Federal Home Loan Bank of Topeka, Kansas.
Capital Resources
The Company's total shareholders' equity increased to $6,809,000 at
December 31, 1997 from $5,566,000 at December 31, 1996. This is an increase of
$1,243,000 and is the result of increased retained earnings. At December 31,
1997 shareholders' equity was 7.33% of total assets compared to 6.85% of total
assets at December 31, 1996. Dividends paid were $592,000 in 1997 and $950,000
in 1996.
The Federal Reserve Board and the FDIC call for a 4% Tier 1 capital to
risk weighted assets ratio, 8% total capital to risk weighted assets ratio, and
a 5% leverage ratio. The Bank currently exceeds the applicable regulatory
capital requirements. The following table sets forth the Bank's capital ratios
at December 31, 1997.
Company Bank
------- ----
Tier 1 Capital $ 6,749,000 $ 6,717,000
Tier 2 Capital 7,251,000 7,219,000
Risk Weighted Assets 62,493,000 62,479,000
Tier 1 Capital to Risk Weighted Assets 10.8% 10.8%
Total Capital to Risk Weighted Assets 11.6% 11.6%
Leverage Ratio 7.9% 7.9%
The Company anticipates no material capital expenditures during calendar year
1998.
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Effects of Inflation and Changing Prices
The primary impact of inflation on the Bank's operations is the effect
it has on operating costs. Unlike most industrial companies, almost all of the
Bank's resources are monetary in nature. As a result, increases in interest
rates have more of an impact on the Bank (and therefore the Company) than does
inflation. Although interest rates do not necessarily track with inflation, the
Federal Reserve has generally used an increase in interest rates to dampen
inflation. The effects of inflation can magnify the growth of assets in the
banking industry. This could serve to cause the demands on capital to be greater
than would otherwise be necessary.
For the Bank, as with most financial institutions, the primary
component of earnings is net interest income. Net interest income is the
difference between interest income and interest expense. Changes in net interest
income result from changes in volume, net interest spread and net interest
margin. Volume refers to the average dollar level of interest-earning assets and
interest-bearing liabilities. Net interest spread refers to the difference
between the average yield on interest-earning assets and the average cost of
interest-bearing liabilities. Net interest margin refers to net interest income
divided by average interest-earning assets and is influenced by the level and
relative mix of interest-earning assets and interest-bearing liabilities.
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. Zions' Articles have authorized Zions to issue a total of
103,000,000 shares of capital stock, divided into two classes: 100,000,000
shares of common stock, without par value ("Zions Common Stock"), and 3,000,000
shares of preferred stock, without par value. Zions' Board of Directors has
proposed that Zions shareholders consider and vote on a proposal at the Zions
annual meeting of shareholders to be held on April 24, 1998 to amend Zions'
Articles to increase the number of authorized shares of Zions Common Stock from
100,000,000 to 200,000,000. The Company's Articles of Incorporation have
authorized the Company to issue 500,000 shares of common stock, with par value
of $0.01 per share ("Company Common Stock"), and 500,000 shares of preferred
stock, which may be issued in one or more series as may be determined from time
to time by the Board of Directors ("Company Preferred Stock"). Each holder of
Company Common Stock is entitled to one vote for each share held 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
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majority of the outstanding shares of Zions Common Stock constitute a quorum for
the transaction of business.
Cumulative Voting. Neither Zions nor the Company's shareholders have
cumulative voting rights in the election of directors. The absence of cumulative
voting means that a nominee for director must receive the votes of a plurality
of the shares voted in order to be elected.
Anti-takeover Matters
Utah and Colorado Law. Utah's only anti-takeover statute is the Control
Shares Acquisitions Act, which is discussed below. Colorado law, on the other
hand, does not include any anti-takeover statutes.
Utah law provides that the voting rights to be accorded Control Shares
(as defined below) of a Utah corporation that has (i) one hundred or more
shareholders, (ii) its principal place of business, its principal office, or
substantial assets in Utah, and (iii) either (a) more than 10% of its
shareholders reside in Utah, (b) more than 10% of its shares owned by Utah
residents, or (c) 10,000 shareholders residing in Utah, must be approved by a
majority of each class of voting securities of the corporation, excluding those
shares held by interested persons, before the Control Shares will be granted any
voting rights.
"Control Shares" are defined under Utah law to be shares acquired by a
person, either directly or indirectly, that when added to all other shares of
the issuing corporation owned by such a person, would entitle such person to
exercise, either directly or indirectly, voting power of 20% or more of all
voting power of the corporation's voting securities. Such provisions do not
apply to shares acquired pursuant to, among other things, an agreement or plan
of merger or share exchange effected in compliance with the relevant provisions
of Utah's Revised Business Corporation Act and to which the corporation is a
party or an acquisition of shares previously approved by the board of directors
of the corporation.
In addition, unless otherwise provided in a corporation's articles of
incorporation or bylaws, in the event Control Shares acquired in a control share
acquisition are accorded full voting rights and the acquiring person has
acquired Control Shares with a majority or more of all voting power, all
shareholders of the issuing public corporation will have dissenters' rights.
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.
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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.
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 do not contain any provision requiring a special
shareholder vote to approve such related party transactions referred to above.
Rather, the Company's Articles provide that holders of a majority of the issued
and outstanding shares of Company Common Stock must vote in favor of significant
transactions. Therefore, were a related party transaction to occur, approval of
such a transaction would require the affirmative vote of a majority of the
issued and outstanding shares of Company Common Stock.
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 commenced 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
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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.
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 provide that the personal liability of a
director for monetary damages for breach of fiduciary duty as a director is
limited to the full extent provided by Colorado law.
The Company's Bylaws provide that the Company has the power to
indemnify current or former directors to the fullest extent provided by Colorado
law.
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.
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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
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 Bylaws provide for a Board of Directors
consisting of not less than three individuals, who are to be elected by the
shareholders annually. Any vacancy occurring on 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 Bylaws provide that the shareholders may remove directors
at a meeting called for the express purpose of removing directors, by a majority
vote of the shares entitled to vote at an election of directors, with or without
cause.
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 of shareholders to be
called for any purpose or purposes by the President or the Board of Directors,
and shall be called by the President at the request of not less than 10 percent
of all outstanding shares of the Company entitled to vote at such meeting.
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 certain
amendments 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 Articles may be amended by the Company's shareholders at
any annual or special meeting of the shareholders by the affirmative vote of a
majority of the shares present in person or by proxy at the meeting. The
Company's Bylaws may be amended at the annual meeting of the Board or at any
special meeting of the Board called for that purpose at which a quorum is
present, or at the annual shareholders meeting or any special meeting.
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Dissenters' Rights
Zions is incorporated under the laws of Utah. Utah law provides for
dissenters' rights in a variety of transactions including: (i) consummation of
any plan of merger to which a corporation is a party (other than mergers or
consolidations not requiring a shareholder vote); (ii) consummation of certain
sales, leases, exchanges or other dispositions of all or substantially all of
the assets of a corporation; and (iii) consummation of 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 NASDAQ-NMS 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 NASDAQ-NMS 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 NASDAQ-NMS and has more than 2,000 shareholders of record.
See "Plan or Reorganization--Rights of Dissenting Shareholders" for a more
detailed discussion of dissenters' rights under Colorado law.
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) consummation of a merger to which
the corporation is a party if approval by the shareholders is required for the
merger or the corporation is a subsidiary that is merged with its parent
corporation; (ii) consummation of a plan of exchange where the corporation is a
party as the corporation whose subject owner's interests will be acquired; (iii)
consummation of a disposition of all or substantially all of the property of the
corporation for which a shareholder vote is required; (iv) consummation of a
disposition of all or substantially all of the property of an entity controlled
by the corporation if the shareholders of the corporation were entitled to vote
upon the consent of the corporation to such disposition; or (v) in the event of
any corporate action to the extent provided by the bylaws or a board resolution.
Colorado law regarding dissenters' rights contains the same provisions as Utah
law described in the third and fourth sentences of the previous paragraph.
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 do not have the preemptive right to
acquire additional shares of Company Common Stock.
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
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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
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 authorize the Company to issue up to 500,000
shares of preferred stock. The authorized shares of preferred stock are issuable
in one or more series on the terms set by the Board of Directors of the Company
providing for the issuance thereof. The Board of Directors would give each
series of preferred stock a distinctive designation so as to distinguish it from
the shares of all other series and classes and would fix the number of shares in
such series. All shares of any one series of preferred stock would be the same,
except that there may be variation as to the following preferences, rights, and
restrictions: the distribution rate; the redemption price, terms and conditions;
the amount payable upon shares for distributions of any kind; sinking fund
provisions; conversion rights; and voting rights. No shares of preferred stock
are issued and outstanding.
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 have 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.
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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.
Miscellaneous
There are no sinking fund provisions, conversion rights, or redemption
provisions applicable to Zions Common Stock or Company Common Stock. 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, and by Slivka Robinson Waters & O'Dorisio, P.C.,
Denver, Colorado, as counsel for the Company.
EXPERTS
The consolidated financial statements of Zions as of December 31, 1997
and 1996, and for each of the years in the three-year period ended December 31,
1997, incorporated by reference herein have been incorporated by reference
herein as 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.
The consolidated financial statements of the Company as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, incorporated by reference herein have been incorporated by reference
herein as reliance upon the report of Fortner, Bayens, Levkulich & Co.,
independent certified public accountants, incorporated by reference herein, and
upon the authority of such firm as experts in auditing and accounting.
The balance sheets at December 31, 1997 and 1996 and the related
statements of income, changes in shareholders' equity and cash flows for the
years ended December 31, 1997, 1996 and 1995 for Sumitomo Bank of California
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report (dated January 16, 1998) with respect thereto, and
have been incorporated by reference herein in reliance upon the report of said
firm, and upon the authority of such firm as experts in accounting and auditing.
72
<PAGE>
OTHER MATTERS
In addition to solicitation by mail, directors, officers and employees
of the Company may solicit Proxies from the shareholders of the Company in
person or by telephone or otherwise for no additional compensation. 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."
The Company's principal accountants are not expected to be present at
the Special Meeting.
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.
By Order of the Board of Directors
April __, 1998 -------------------------------------
Timothy S. Borden
Chairman of the Board
Routt County National Bank Corporation
73
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS' REPORT
ROUTT COUNTY NATIONAL BANK CORPORATION
AND SUBSIDIARY
December 31, 1997 and 1996
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Routt County National Bank Corporation
Steamboat Springs, Colorado
We have audited the accompanying consolidated balance sheets of Routt
County National Bank Corporation as of December 31, 1997 and 1996 and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Routt County
National Bank Corporation at December 31, 1997 and 1996 and the results of its
operations and cash flows for the three years in the three-year period ended
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Fortner, Bayens, Levkulich & Co., P.C.
Denver, Colorado
February 5, 1998
<PAGE>
Routt County National Bank Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1997 1996
----------- -----------
ASSETS
<S> <C> <C>
Cash and due from banks $ 4,064,935 $ 4,378,573
Interest bearing deposits with banks 199,000 199,000
Federal funds sold and overnight deposits at Federal
Home Loan Bank 7,900,000 2,900,000
Securities available for sale 11,266,214 14,463,004
Securities held to maturity 13,193,350 9,669,456
Loans, net of unearned income and allowance for loan losses 55,021,072 48,275,503
Leasehold improvements and equipment 284,300 428,278
Accrued income receivable 704,581 607,186
Deferred income tax asset 107,365 105,640
Other assets 112,963 244,330
------------ ------------
Total assets $ 92,853,780 $ 81,270,970
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $ 83,436,887 $ 74,108,086
Securities sold under agreements to repurchase 2,009,131 1,068,893
Accrued interest payable 490,571 411,973
Income taxes payable 13,315 40,877
Other liabilities 94,962 75,391
------------ ------------
Total liabilities 86,044,866 75,705,220
Commitments (notes G and H)
Stockholders' equity
Common stock - 500,000 shares of $0.01 par value
authorized, 318,664.47 and 316,733.65 shares issued
and outstanding in 1997 and 1996, respectively 3,187 3,168
Paid in capital 2,443,798 2,405,529
Retained earnings 4,301,860 3,124,992
Unrealized gain on securities available for sale,
net of taxes 60,069 32,061
------------ ------------
Total stockholders' equity 6,808,914 5,565,750
------------ ------------
Total liabilities and stockholder's equity $ 92,853,780 $ 81,270,970
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
Routt County National Bank Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $ 5,638,926 $ 4,684,891 $ 4,039,471
Interest and fees on loans 1,680,169 1,706,794 1,476,144
Interest on non-taxable investment securities 5,604 8,119 11,925
Interest on federal funds sold and overnight
deposits at Federal Home Loan Bank 204,627 119,843 200,737
Interest on deposits in banks 11,491 11,520 16,321
---------- ----------- -----------
Total interest income 7,540,817 6,523,048 5,744,598
Interest expense
Interest on deposits 2,920,738 2,335,909 2,080,201
Interest on federal funds purchased and
securities sold under agreements to
repurchase 85,115 122,378 144,762
----------- ----------- -----------
Total interest expense 3,005,853 2,458,287 2,224,963
----------- ----------- -----------
Net interest income 4,534,964 4,064,761 3,519,635
Provision for loan losses - - -
----------- ----------- -----------
Net interest income after provision for loan losses 4,534,964 4,064,761 3,519,635
Other income
Service charges on deposit accounts 368,580 390,169 321,561
Gain on sale of merchant credit card accounts - 373,000 -
Mortgage referral fees 394,061 37,660 -
Other income 126,715 145,703 183,506
----------- ----------- -----------
889,356 946,532 505,067
Other expenses
Salaries and employee benefits 1,339,040 1,121,046 1,031,676
Occupancy expense of premises 296,020 287,568 287,508
Furniture and equipment expense 264,573 238,084 225,904
Other expenses 738,702 616,540 599,929
----------- ----------- -----------
2,638,335 2,263,238 2,145,017
----------- ----------- -----------
Income before income taxes 2,785,985 2,748,055 1,879,685
Income tax expense 1,017,270 968,495 691,709
----------- ----------- -----------
NET INCOME $ 1,768,715 $ 1,779,560 $ 1,187,976
=========== =========== ===========
Net income per share of common stock $ 5.56 $ 5.70 $ 3.84
=========== =========== ===========
Average shares outstanding 317,908.01 313,711.69 309,621.54
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE>
Routt County National Bank Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three years ended December 31, 1997
<TABLE>
<CAPTION>
Unrealized
gain (loss) on
securities Common stock
Common available in treasury
stock Common Paid-in Retained for sale -------------------
issued stock capital earnings net of taxes Shares Amount Total
------ ----- ------- -------- ------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 318,664.47 $ 3,187 $ 2,341,975 $1,598,484 $ (238,255) 12,872.41 $(98,989) $ 3,606,402
Sale of common stock in treasury - - 34,730 - - (5,974.68) 45,945 80,675
Net income for 1995 - - - 1,187,976 - - - 1,187,976
Cash dividends paid - $1.60 per
common share - - - (498,755) - - - (498,755)
Change in unrealized gain (loss)
on securities available for sale - - - - 362,003 - - 362,003
---------- ------- ----------- ---------- ---------- --------- -------- ----------
Balance at December 31, 1995 318,664.47 3,187 2,376,705 2,287,705 123,748 6,897.73 (53,044) 4,738,301
Sale of common stock in treasury - - 43,653 - - (4,966.91) 38,196 81,849
Retirement of common stock
in treasury (1,930.82) (19) (14,829) - - (1,930.82) 14,848 -
Net income for 1996 - - 1,787,679 - 1,787,679
Cash dividends paid - $3.00 per
common share - - (950,392) - (950,392)
Change in unrealized gain (loss)
on securities available for sale - - - (91,687) (91,687)
---------- ------- ---------- ---------- ---------- ---------- ------- -----------
Balance at December 31, 1996 316,733.65 3,168 2,405,529 3,124,992 32,061 - - 5,565,750
Sale of common stock 1,930.82 19 38,269 - - - - 38,288
Net income for 1997 - - 1,768,715 - 1,768,715
Cash dividends paid - $1.86 per
common share - - (591,847) - (591,847)
Change in unrealized gain (loss)
on securities available for sale - - - 28,008 28,008
---------- ------- ---------- ---------- ---------- --------- ------- -----------
Balance at December 31, 1997 318,664.47 $ 3,187 $2,443,798 $4,301,860 $ 60,069 - $ - $ 6,808,914
========== ======= ========== ========== ========== ========= ======= ===========
</TABLE>
The accompanying notes are an integral part of this consolidated statement.
5
<PAGE>
Routt County National Bank Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 1,768,715 $ 1,787,679 $ 1,187,976
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for deferred income taxes (16,153) (11,776) (10,968)
Depreciation and amortization 230,391 217,630 198,025
Premium amortization - net 80,794 57,364 126,318
Changes in accruals and deferrals
Income receivable (97,395) (68,747) (96,497)
Other assets 131,367 (167,601) 98,374
Interest payable 78,598 97,584 124,162
Taxes payable (27,562) 6,492 526
Other liabilities 19,571 (10,337) 50,513
----------- ----------- -----------
Net cash provided by operating activities 2,168,326 1,908,288 1,678,429
Cash flows from investing activities
Change in federal funds sold and overnight deposits at
Federal Home Loan Bank (5,000,000) 2,100,000 (3,400,000)
Purchase of interest bearing deposits in other banks (199,000) - (198,000)
Maturities of interest bearing deposits in other banks 199,000 99,000 -
Purchase of securities held to maturities (6,986,035) (2,222,900) (4,405,475)
Proceeds from maturities of securities held to maturity 3,447,192 5,160,015 3,675,293
Purchase of securities available for sale (1,479,688) (5,973,165) (6,487,346)
Proceeds from maturities of securities available for sale 4,653,068 4,414,787 2,472,699
Change in assets purchased under agreement to resell - - 300,000
Change in loans made to customers (6,745,569) (11,979,148) (2,312,430)
Expenditures for premises and equipment (86,412) (226,483) (107,706)
----------- ----------- -----------
Net cash applied to investing activities (12,197,444) (8,627,894) (10,462,965)
Cash flows from financing activities
Change in deposits 9,328,801 9,785,379 8,532,746
Change in securities sold under agreements to
repurchase 940,238 (838,946) (419,046)
Sale of common stock 38,288 81,849 80,675
Dividends paid (591,847) (950,392) (498,755)
---------- - ------------ ------------
Net cash provided by financing activities 9,715,480 8,077,890 7,695,620
----------- ------------ ------------
Net increase (decrease) in cash and due from banks (313,638) 1,358,284 (1,088,916)
Cash and due from banks at beginning of year 4,378,573 3,020,289 4,109,205
----------- ------------ ------------
Cash and due from banks at end of year $ 4,064,935 $ 4,378,573 $ 3,020,289
=========== ============ ============
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Interest $ 2,927,255 $ 2,360,703 $ 2,100,801
Income taxes 770,244 1,111,653 611,000
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES
Nature of Operations
Routt County National Bank Corporation (the Company) and it's subsidiary
provide a full range of banking services to individual and corporate
customers principally in the northwest Colorado area. A majority of the
Company's loans are related to real estate activities. Borrowers'
abilities to honor their loans are dependent upon the continued economic
viability of the area. The Company is subject to competition from other
financial institutions for loans and deposit accounts. The Company is
also subject to regulation by certain governmental agencies and undergoes
periodic examinations by those regulatory agencies.
Basis of Financial Statement Presentation
The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance
sheet and revenues and expenses for the period. Actual results could
differ significantly from those estimates.
Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the allowance for
loan losses. In connection with the determination of the allowance for
loan losses, management obtains independent appraisals for significant
properties and assesses estimated future cash flows from borrowers'
operations and the liquidation of loan collateral.
7
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Basis of Financial Statement Presentation (Continued)
Management believes that the allowance for loan losses is adequate.
While management uses available information to recognize loan losses,
changes in economic conditions may necessitate revisions in future
years. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance
for loan losses. Such agencies may require the Company to recognize
additional losses based on their judgments about information available
to them at the time of their examination.
Basis of Consolidation
The accompanying consolidated financial statements include Routt County
National Bank Corporation and its subsidiary, First National Bank of
Colorado. All significant intercompany transactions have been
eliminated.
Investment Securities
The Company revalues securities designated as available for sale at each
reporting period with the unrealized gain or loss, net of tax effect
recorded as an element of stockholders' equity.
The designation of a security as held to maturity or available for sale
is made at the time of acquisition. The held to maturity classification
includes debt securities that the Company has the positive intent and
ability to hold to maturity which are carried at amortized cost. The
available for sale classification includes debt and equity securities
which are carried at fair value. Unrealized gains and losses on
securities available for sale are included as a separate component of
stockholders' equity, net of tax effect. Gains or losses on sales of
securities are recognized by the specific identification method.
8
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Loans
The Company recognizes substantially all income and expense on the
accrual method of accounting. Loan fees are recognized over the term of
the loan. Loan origination and commitment fees and certain costs are
being deferred, and the net amount is amortized as an adjustment of the
related loans yield.
The accrual of interest on loans is discontinued when management
believes that interest or principal may not be collectible in the normal
course of business. When placing a loan in nonaccrual status, interest
accrued to date is generally reversed unless the net realizable value of
the underlying collateral is sufficient to cover principal and accrued
interest. When such a reversal is made, interest accrued during prior
years is charged to the allowance for loan losses. All other interest
reversed on nonaccrual loans is charged against current year interest
income.
Allowance for Loan Losses
The Company provides for possible loan losses by a charge to operations
based on the character of the loan portfolio, current economic
conditions, past loan loss experience and such other factors as, in
management's best judgement, deserve current recognition in estimating
loan losses.
Leasehold Improvements and Equipment
Leasehold improvements and equipment are stated at cost, less
accumulated depreciation. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over
their estimated service lives. Leasehold improvements are amortized over
the life of the lease. Depreciation is computed generally on the
straight-line method.
Cash Flows
For purposes of the statement of cash flows, the Company has defined
cash equivalents as those amounts included in the balance sheet caption
"Cash and Due from Banks."
9
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Net Income Per Share
Net income per share of common stock has been computed on the basis of
the weighted-average number of shares of common stock outstanding.
Income Taxes
Current and deferred income tax assets or liabilities are recognized
subject to certain limitations, for the tax consequences of all events
that have been recognized in the financial statements. The deferred
income tax asset or liability is measured by the provisions of enacted
tax laws.
NOTE B - INVESTMENT SECURITIES
The following presents information related to the Company's portfolio of
securities held to maturity and available for sale.
<TABLE>
<CAPTION>
1997
---------------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Securities available for sale
U.S. Treasury $ 3,243,826 $ 7,691 $ - $ 3,251,517
Mortgage-backed securities 7,526,591 104,843 21,520 7,609,914
Federal Home Loan Bank and
Federal Reserve Bank stock 404,783 - - 404,783
----------- -------- ------- -----------
$11,175,200 $112,534 $21,520 $11,266,214
=========== ======== ======= ===========
</TABLE>
10
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE B - INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
1997
-------------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Securities held to maturity
U.S. Treasury $ 1,002,895 $ 3,792 $ - $ 1,006,687
Mortgage-backed securities 12,150,480 115,379 18,720 12,247,139
States and municipal 39,975 - 152 39,823
----------- -------- ------- -----------
$13,193,350 $119,171 $18,872 $13,293,649
=========== ======== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
1996
--------------------------------------------------------
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Securities available for sale
U.S. Treasury $ 4,726,994 $ 26,986 $ 4,006 $ 4,749,974
U.S. government agencies 1,487,485 18,573 - 1,506,058
Mortgage-backed securities 7,795,164 59,858 52,833 7,802,189
Federal Home Loan Bank and
Federal Reserve Bank stock 404,783 - - 404,783
----------- -------- ------- -----------
$14,414,426 $105,417 $56,839 $14,463,004
=========== ======== ======= ==========
Securities held to maturity
U.S. Treasury $ 501,067 $ - $ 7,667 $ 493,400
U.S. government agencies 2,653,942 16,212 238 2,669,916
States and municipal 134,949 148 568 134,529
Mortgage-backed securities 6,379,498 78,077 45,804 6,411,771
----------- -------- ------- -----------
$ 9,669,456 $ 94,437 $54,277 $ 9,709,616
=========== ======== ======= ===========
</TABLE>
11
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE B - INVESTMENT SECURITIES (CONTINUED)
The amortized cost and estimated market value of investment securities at
December 31, 1997 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
---------------------- ------------------------
Amortized Market Amortized Market
Cost Value Cost Value
---------- ----- --------- -----
<S> <C> <C> <C> <C>
Due in one year or less $ 2,744,553 $ 2,750,277 $ 520,524 $ 517,302
Due after one year through
five years 499,273 501,240 522,346 529,208
Due after five years through
ten years - - - -
Due after ten years - - - -
----------- ----------- ----------- ----------
3,243,826 3,251,517 1,042,870 1,046,510
Mortgage-backed securities 7,526,591 7,609,914 12,150,480 12,247,139
----------- ----------- ----------- -----------
$10,770,417 $10,861,431 $13,193,350 $13,293,649
=========== =========== =========== ===========
</TABLE>
12
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE B - INVESTMENT SECURITIES (CONTINUED)
The Company realized no gains or losses on the sales and early redemptions
of investment securities for the years ending December 31, 1997 and 1996.
Investment securities with amortized cost of $4,331,879 and $5,579,849 were
pledged at December 31, 1997 and 1996, respectively, as collateral for
public deposits and for other purposes as required or permitted by law.
Securities sold under repurchase agreements of $6,647,035 and $1,068,893 as
of December 31, 1997 and 1996, respectively, are collateralized by related
securities.
NOTE C - LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
Major classifications of loans at December 31, are as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Commercial $36,569,920 $29,282,908
Construction 8,844,022 9,915,533
Real estate mortgage 5,315,709 5,625,193
Consumer 4,736,127 3,900,413
----------- -----------
55,465,778 48,724,047
Less unearned income (2,323) (10,960)
Less allowance for loan losses (442,383) (437,584)
----------- -----------
Loans, net of unearned income $55,021,072 $48,275,503
=========== ===========
</TABLE>
13
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE C - LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES (CONTINUED)
Transactions in the allowance for possible loan losses for the three years
ended December 31, are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- -------
<S> <C> <C> <C>
Balance at beginning of year $437,584 $358,721 $418,748
Provision for loan losses - - -
-------- -------- -------
Total 437,584 358,721 418,748
Loans charged off (13,746) (9,336) (78,886)
Recoveries 18,545 88,199 18,859
-------- -------- --------
Net recoveries (charge-offs) 4,799 78,863 (60,027)
-------- -------- --------
Balance at end of year $442,383 $437,584 $358,721
======== ======== ========
</TABLE>
The principal balance of loans having payments delinquent more than sixty
days at December 31, 1997 and 1996 amounted to $181,161 and $72,944,
respectively. At December 31, 1997, the loans outstanding where the accrual
of interest had been discontinued was $160,725. There were no loans
outstanding where the accrual of interest had been discontinued as of
December 31, 1996.
At December 31, 1997, the recorded investment in loans for which impairment
has been recognized totaled $160,725. There were no impaired loans at
December 31, 1996 or during 1996. The average recorded investment in
impaired loans in 1997 was $160,000. No interest income was recognized on
impaired loans in 1997 and 1996.
14
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE D - LEASEHOLD IMPROVEMENTS AND EQUIPMENT
At December 31, leasehold improvements and equipment, less accumulated
amortization and depreciation, consisted of the following:
<TABLE>
<CAPTION>
1997
----------------------------------------------
Accumulated
amortization and Net
Cost depreciation amount
---- ------------ ------
<S> <C> <C> <C>
Leasehold improvements $ 384,596 $ 293,168 $ 91,428
Furniture and equipment 1,181,488 988,616 192,872
---------- ---------- --------
$1,566,084 $1,281,784 $284,300
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
1996
-----------------------------------------------
Accumulated
amortization and Net
Cost depreciation amount
---- ------------ ------
<S> <C> <C> <C>
Leasehold improvements $ 381,028 $ 228,841 $152,187
Furniture and equipment 1,120,537 844,446 276,091
---------- ---------- --------
$1,501,565 $1,073,287 $428,278
========== ========== ========
</TABLE>
15
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE E - DEPOSITS
Deposits are comprised of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
-------------- ---------
<S> <C> <C>
Non-interest bearing $17,844,282 $16,006,492
NOW accounts 8,846,547 7,542,368
Savings 3,703,176 4,193,546
Money market accounts 20,118,671 14,792,185
Other time deposits under $100,000 11,405,109 13,001,103
Other time deposits - $100,000 and over 21,535,848 18,606,589
---------- ----------
$83,453,633 $74,142,283
========== ==========
</TABLE>
At December 31, 1997, the scheduled maturities of certificates of deposit
are as follows:
<TABLE>
<S> <C>
1998 $27,826,986
1999 3,029,306
2000 819,955
2001 587,812
2002 and thereafter 676,898
-----------
$32,940,957
===========
</TABLE>
NOTE F - INCOME TAXES
Following is an analysis of income taxes included in the statements of
income for the three years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1996
---------- -------- --------
<S> <C> <C> <C>
Current federal tax provision $1,033,423 $980,271 $702,677
Deferred federal tax benefit (16,153) (11,776) (10,968)
---------- -------- --------
$1,017,270 $968,495 $691,709
========== ======== ========
</TABLE>
16
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE F - INCOME TAXES (CONTINUED)
A deferred tax asset or liability is recognized for the tax consequences of
temporary differences in the recognition of revenue and expense for
financial reporting and tax purposes.
Listed below are the components of the net deferred tax asset.
<TABLE>
<CAPTION>
1997 1996
--------- -------
<S> <C> <C>
Deferred tax assets
Allowance for loan losses $ 33,084 $ 33,084
Deferred loan fees 7,461 11,191
Branch costs 6,462 809
Depreciation 91,302 77,073
-------- --------
Total deferred tax assets 138,309 122,157
Deferred tax liabilities
Unrealized gain on securities available for sale 30,944 16,517
-------- --------
Net deferred tax asset $107,365 $105,640
======== ========
</TABLE>
17
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE F - INCOME TAXES (CONTINUED)
The effective income tax rate varies from the statutory federal rate because
of several factors, the most significant being nontaxable interest income
earned on obligations of state and municipalities and Colorado income taxes.
The following table reconciles the Company's effective tax rate to the
statutory federal rate.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- -------------- ------------
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Tax expense at statutory rate $ 947,235 34% $937,099 34% $639,093 34%
Increase (decrease) in taxes due to:
Colorado income taxes 96,964 3 50,504 2 55,588 3
Other (26,929) (1) (19,108) (1) (2,972) -
---------- -- -------- -- -------- --
Total provision for income taxes $1,017,270 36% $968,495 35% $691,709 37%
========== == ======== == ======== ==
</TABLE>
NOTE G - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK
The Company is a party to financial instruments with off balance sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and stand-by letters of credit.
Those instruments involve, to a varying degree, elements of credit risk in
excess of the amount recognized in the statement of financial position. The
contract amounts of those instruments reflect the extent of involvement the
Company has in particular classes of financial instruments.
18
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE G - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK (CONTINUED)
The Company's exposure to credit loss in the event of non-performance by the
other party to the financial instrument for commitments to extend credit and
stand-by letters of credit is represented by the contractual notional amount
of those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on balance sheet
instruments.
<TABLE>
<CAPTION>
1997 1996
-------------- ------------
<S> <C> <C>
Financial instruments whose contract amounts
represent credit risk
Commitments to extend credit $18,701,656 $12,403,000
Stand-by letters of credit 515,593 736,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments may
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's credit worthiness on a case-by-case basis. The amount of
collateral obtained if deemed necessary by the Company upon extension of
credit is based on management's credit evaluation. Collateral held varies,
but may include accounts receivable, inventory, property, plant and
equipment and income-producing commercial properties.
Stand-by letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.
19
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE H - COMMITMENTS
The Company leases it's main premises under an operating lease which expires
December 31, 2000. Rent may be raised annually by the lessor at a rate not
to exceed 10% of the previous year's rental rate. The lease is with a
partnership related through common major ownership of the Company. The
Company also leases a branch facility under an operating lease which expires
December 31, 2002. The total future minimum rental commitments at December
31, 1997 are as follows:
Year ended
December 31,
------------
1998 $163,476
1999 163,476
2000 163,476
2001 24,000
2002 24,000
--------
$538,428
========
Total rent expense for 1997, 1996 and 1995 was $155,724, $156,928 and
$157,729, respectively.
NOTE I - RELATED PARTIES
At December 31, 1997 and 1996, the Company had loans receivable from
directors, officers and principal owners and their related business
interests aggregating $1,610,664 and $1,419,000, respectively.
The Company participates in loan transactions and repurchase agreements with
banks related through common major ownership. Loan participations sold by
the Company to Rawlins National Bank were $-0- and $111,000 at December 31,
1997 and 1996, respectively. Loan participations sold by the Company to
First National Bank of Wyoming - Laramie were $-0- and $92,511 at December
31, 1997 and 1996, respectively.
20
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE I - RELATED PARTIES (CONTINUED)
Loan participations purchased from Rawlins National Bank were $244,861 and
$277,872 at December 31, 1997 and 1996. Loans purchased from First National
Bank of Wyoming - Laramie were $732,314 and $204,872 at December 31, 1997
and 1996.
NOTE J - EMPLOYEE BENEFIT PLANS
The Company established a defined contribution plan in the form of a
qualified 401(K) profit sharing plan during 1989 for the benefit of its
employees. Eligible employees may elect to defer a portion of their salary
as contributions to the plan. At the discretion of the Board of Directors,
the Company may elect to make additional contributions. Contributions of
$37,245, $11,914 and $11,608 were made to the plan for the years ended
December 31, 1997, 1996 and 1995, respectively, and is included in salaries
and benefits expense.
During 1991, the Company implemented an Employee Stock Option profit sharing
plan that covers all of the Company's eligible employees. The amount of the
contribution to the plan is determined by the Board of Directors. The
Company may choose not to contribute to the plan for a particular year;
however, its contribution shall not exceed 25% of compensation paid to the
participants under the plan in the year for which the contribution is being
determined. No contributions were made for 1997 and 1996. The Company's
contribution to the plan during 1995 was $25,000.
NOTE K - DIVIDENDS
Various restrictions limit the extent to which dividends may be paid by the
Company's subsidiary.
The approval of the Comptroller of the Currency is required for a bank to
pay dividends in any calendar year which exceed the bank's net profit for
that year combined with its retained profits for the preceding two years.
Contributions to the Employee Stock Option plan of $12,550, $18,000, and
$25,000 were made for the years ended December 31, 1997, 1996, and 1995,
respectively.
21
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE L - REGULATORY MATTERS
The Company is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company must meet specific capital guidelines that involve quantitative
measures of the Company's assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices. The Company's
capital amounts and classification are also subject to qualitative judgments
by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier 1 capital (as defined) to
average assets (as defined). Management believes, as of December 31, 1997,
that the Company meets all capital adequacy requirements to which it is
subject.
As of March 31, 1996, the most recent notification from the Office of the
Comptroller of the Currency categorized the Company's subsidiary as well
capitalized under the regulatory framework for prompt corrective action. To
be categorized as well capitalized the Bank must maintain minimum total
risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the
table. There are no conditions or events since that notification that
management believes have changed the institution's category.
22
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE L - REGULATORY MATTER (CONTINUED)
<TABLE>
<CAPTION>
To be well
capitalized under
For capital prompt corrective
Actual adequacy purposes action provisions
--------------- ----------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <S> <S> <S> <S>
As of December 31, 1997
Total capital
(to risk weighted assets) $7,251,000 11.6% =>$4,999,000 =>8.0% =>$6,249,000 =>10.0%
Tier 1 capital
(to risk weighted assets) 6,749,000 10.8 => 2,500,000 =>4.0 => 3,750,000 =>6.0
Tier 1 capital
(to average assets) 6,749,000 7.9 => 3,408,000 =>4.0 => 4,260,000 =>5.0
As of December 31, 1996
Total capital
(to risk weighted assets) 6,003,000 11.6 => 4,134,000 =>8.0 => 5,168,000 =>10.0
Tier 1 capital
(to risk weighted assets) 5,534,000 10.7 => 2,067,000 =>4.0 => 3,101,000 =>6.0
Tier 1 capital
(to average assets) 5,5534,000 7.5 => 2,965,000 =>4.0 => 3,707,000 =>5.0
</TABLE>
NOTE M - SUBSEQUENT EVENT
During January, 1998, the Company signed an Agreement and Plan of
Reorganization (Agreement) with Val Cor Bancorporation, Inc. and Zions
Bancorporation. Under the Agreement, shareholders of the Company will
exchange their stock for stock of Zions Bancorporation. The exchange is
expected to be completed during the second quarter of 1998.
23
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE N - PARENT COMPANY FINANCIAL INFORMATION
Condensed parent company only financial information follows:
Balance Sheets
December 31,
(Amounts in thousands)
<TABLE>
<CAPTION>
1997 1996
------ ------
ASSETS
<S> <C> <C>
Cash $ 17 $ 34
Investment in subsidiary - First National Bank of Colorado
Equity in net assets 6,777 5,529
Other assets 15 3
------ ------
$6,809 $5,566
====== ======
STOCKHOLDERS' EQUITY
Stockholders' equity $6,809 $5,566
====== ======
</TABLE>
24
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE N - PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)
Statements of Income
Years ended December 31,
(Amounts in thousands)
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -----
<S> <C> <C> <C>
Revenue
Dividends from subsidiary $ 562 $ 875 $ 455
Expense
Professional fees 20 5 19
------ ------ ------
Income before income taxes and equity
in undistributed earnings of subsidiary 542 870 436
Income tax benefit 7 2 6
------ ------ ------
Income before equity in undistributed
earnings of subsidiary 549 872 442
Equity in undistributed earnings of subsidiary 1,220 916 746
------ ------ ------
NET INCOME $1,769 $1,788 $1,188
====== ====== ======
</TABLE>
25
<PAGE>
Routt County National Bank Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997 and 1996
NOTE N - PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)
Statements of Cash Flows
Years ended December 31,
(Amounts in thousands)
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -----
<S> <C> <C> <C>
Cash flows from operating activities
Net income $1,769 $1,788 $1,188
Adjustments to reconcile net loss to net
cash provided by operating activities
Equity in undistributed earnings of subsidiary (1,220) (916) (746)
Changes in accruals not requiring cash (5) - -
Income taxes due from unconsolidated subsidiary 1 5 (5)
------ ------ ------
Net cash provided by operating activities 545 877 437
Cash flows from investing activities
Increase in other assets (8) - -
Cash flows from financing activities
Sale of common stock 38 82 81
Dividends paid (592) (950) (499)
------ ------- ------
Net cash used in financing activities (554) (868) (418)
------ ------- ------
Net increase (decrease) in cash (17) 9 19
Cash, beginning of year 34 25 6
------ ------- ------
Cash, end of year $ 17 $ 34 $ 25
====== ======= ======
</TABLE>
26
<PAGE>
APPENDIX A
LAW OFFICES OF
SLIVKA ROBINSON WATERS & O'DORISIO
A Professional Corporation
April 22, 1998
Zions Bancorporation
Attn: Mr. Harris Simmons, President
and Chief Executive Officer
One South Main, Suite 1380
Salt Lake City, Utah 84111
Ladies and Gentleman:
This letter sets forth the opinion of Slivka Robinson Waters &
O'Dorisio, P.C., regarding material Federal income tax consequences of the
merger (the "Holding Company Merger") of Routt County National Bank Corporation,
a Colorado corporation ("RCNB"), with and into Val Cor Bancorporation, Inc., a
Colorado corporation ("VCBI"), and the merger (the "Bank Merger") of the First
National Bank of Colorado ("Bank") with and into Valley National Bank of Cortez
("Valley"), in the manner and on the terms described in the Agreement and Plan
of Reorganization dated January 21, 1998 ("Plan of Merger"). Zions
Bancorporation ("Zions") is a bank holding company and the sole shareholder of
VCBI. The holders of RCNB Common Stock shall be entitled to receive, in exchange
for each share of RCNB Common Stock held of record by such stockholder as of the
Effective Date, that number of shares of Zions Common Stock as set forth in the
Plan of Merger. Capitalized terms used herein and not otherwise defined shall
have the meaning assigned to them in the Plan of Merger.
In rendering the opinions expressed in this letter, Slivka Robinson
Waters & O'Dorisio, P.C. has, without verification, relied upon and assumed the
accuracy of all of the information contained in the following documents (the
"Relevant Documents"): (1) the Plan of Merger; (2) the RCNB 1998 statement of
facts and representations provided to us by the management of RCNB (the "RCNB
Statement of Facts and Representation"); and (3) other documents we considered
relevant. Slivka Robinson Waters & O'Dorisio, P.C. also has assumed, without
independent verification, that the parties to the Plan of Merger have acted (and
will continue to act) in accordance with all of the information and descriptions
contained in the Relevant Documents. Further, Slivka Robinson Waters &
O'Dorisio, P.C. has assumed, without independent verification, that the Holding
Company Merger and the Bank Merger will be consummated as mergers in accordance
with applicable Colorado law and the National Banking Act.
Based on our analysis of Federal income tax law in light of the facts,
representations and other information stated in the Relevant Documents, and
subject to and contingent upon the accuracy of the RCNB Statement of Facts and
Representations and of the assumptions identified in this letter, Slivka
Robinson Waters & O'Dorisio, P.C. is of the opinion that, for Federal income tax
purposes:
SRWO
1099 18th STREET, SUITE 2600 o DENVER, COLORADO 80202-1926
TELEPHONE (303) 297-2600 FAX (303) 297-2750
<PAGE>
Slivka Robinson Waters & O'Dorisio, P.C.
Legal Tax Opinion
April 15, 1998
Page 2
(1) The Holding Company Merger will be treated as a reorganization within
the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code");
(2) Zions, VCBI and RCNB will each be a party to the reorganization within
the meaning of Section 368(b) of the Code;
(3) Shareholders of RCNB who exchange their shares of RCNB Common Stock
for shares of Zions Common Stock will not recognize gain or loss,
except to the extent of the cash received in lieu of fractional
shares;
(4) The tax basis of the RCNB Common Stock surrendered in the Holding
Company Merger will be allocated to the Zions Common Stock to be
received in the Holding Company Merger (including any fractional share
to which that shoulder may be entitled);
(5) The holding period of the Zions Common Stock to be received in the
Holding Company Merger by a shareholder of RCNB will include the
holding period of the RCNB Common Stock surrendered in exchange
therefor provided the RCNB Common Stock is held as a capital asset by
the shareholder on the Effective Date of the Holding Company Merger;
(6) RCNB will not recognize gain or loss as a result of the Holding
Company Merger;
(7) Neither Zions nor VCBI will recognize gain or loss as a result of the
Holding Company Merger;
(8) The basis of RCNB's assets in the hands of VCBI will be the same as
the basis of those assets in the hands of RCNB immediately prior to
the Holding Company Merger;
(9) The holding period of RCNB's assets received by VCBI will include the
period during which such assets were held by RCNB immediately prior to
the Holding Company Merger;
(10) A shareholder of RCNB 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
-2-
<PAGE>
Slivka Robinson Waters & O'Dorisio, P.C.
Legal Tax Opinion
April 15, 1998
Page 3
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
(11) Cash received by a shareholder of RCNB 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 RCNB 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.
The scope of this opinion letter is expressly limited to the Federal
income tax issues directly addressed in the eleven (11) enumerated paragraphs
above. Slivka Robinson Waters & O'Dorisio, P.C. expresses no opinion regarding
any other issue.
The opinions expressed herein are based upon the provisions of the Code
and the Treasury Regulations promulgated thereunder, as well as upon the
Internal Revenue Service rulings and guidelines and court decisions, all valid
as of the date of this letter. However, these opinions are not binding upon the
Internal Revenue Service or any court, and no ruling confirming these opinions
will be sought from the Internal Revenue Service or any court. Moreover, the
provisions, rulings, guidelines and court decisions upon which Slivka Robinson
Waters & O'Dorisio, P.C. has relied in forming its opinions are subject to
revision, and in come cases such revisions may be given effect retroactively. In
the event of such a retroactive revision, the opinions expressed in this letter
may be invalidated. Slivka Robinson Waters & O'Dorisio, P.C. assumes no
obligation to update this opinion letter to reflect changes in facts or law
occurring after the date of this letter.
The opinions expressed in this letter are provided solely for the
benefit of VCBI and RCNB, and their respective shareholders. This letter should
not be distributed to, nor may it be relied upon by, and other organization or
person.
We consent to the filing of this opinion letter as an exhibit to the
Registration Statement pertaining to the registration of shares of Zions Common
Stock to be issued to the shareholders of RCNB upon consummation of the Merger
and to all references to us therein. In giving this consent, we do not admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules or regulations
of the SEC thereunder.
Very truly yours,
/s/ SLIVKA ROBINSON WATERS & O'DORISIO, P.C.
SLIVKA ROBINSON WATERS & O'DORISIO, P.C.
-3-
<PAGE>
APPENDIX B
COLORADO BUSINESS CORPORATION ACT
Rights of Dissenting Owners
7-113-101 DEFINITIONS.--For purposes of this article:
1. "Beneficial shareholder" means the beneficial owner of shares held
in a voting trust or by a nominee as the record shareholder.
2. "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
3. "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
4. "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
5. "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
6. "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
7. "Shareholder" means either a record shareholder or a beneficial
shareholder.
7-113-102 RIGHT TO DISSENT.--1. A shareholder, whether or not entitled
to vote, is entitled to dissent and obtain payment of the fair value of the
shareholder's shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party if:
(I) Approval by the shareholders of that corporation is required for
the merger by section 7-111-103 or 7-111-104 or by the articles of
incorporation; or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired;
B-1
<PAGE>
(c) Consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of the corporation for which a
shareholder vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote upon
the consent of the corporation to the disposition pursuant to section
7-112-102(2).
1.3. A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended or on
the national market system of the national association of securities dealers
automated quotation system, or were held of record by more than two thousand
shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine
shareholders entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action
is authorized other than by a vote of shareholders.
1.8. The limitation set forth in subsection (1.3) of this section shall
not apply if the shareholder will receive for the shareholder's shares, pursuant
to the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) Shares of any other corporation which at the effective date of the
plan of merger or share exchange either will be listed on a national securities
exchange registered under the federal "Securities Exchange Act of 1934", as
amended, or on the national market system of the National Association of
Securities Dealers Automated Quotation System, or will be held of record by more
than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu
of fractional shares.
2.
2.5. A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of a reverse split that reduces the number of shares owned by the
shareholder to a fraction of a share or to scrip if the fractional share or
scrip so created is to be acquired for cash or the scrip is to be voided under
section 7-106-104.
B-2
<PAGE>
3. A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
4. A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
7-113-103 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--1. A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in the record shareholder's name only if the record shareholder
dissents with respect to all shares beneficially owned by any one person and
causes the corporation to receive written notice which states such dissent and
the name, address, and federal taxpayer identification number, if any, of each
person on whose behalf the record shareholder asserts dissenters' rights. The
rights of a record shareholder under this subsection (1) are determined as if
the shares as to which the record shareholder dissents and the other shares of
the record shareholder were registered in the names of different shareholders.
2. A beneficial shareholder may assert dissenters' rights as to the
shares held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
3. The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
such beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
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).
B-3
<PAGE>
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
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;
B-4
<PAGE>
(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.
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
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<PAGE>
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 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
B-6
<PAGE>
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.
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
B-7
<PAGE>
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:
(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.
B-8
<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.
II-1
<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.
II-2
<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
II-3
<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.
II-4
<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 20th day of April, 1998.
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.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ Harris H. Simmons President, Chief Executive April 20 , 1998
- ----------------------- Officer and Director
Harris H. Simmons
/s/ Dale M. Gibbons Executive Vice President April 20 , 1998
- ----------------------- and Chief Financial Officer
Dale M. Gibbons
/s/ Walter E. Kelly Controller April 20 , 1998
- -----------------------
Walter E. Kelly
/s/ Roy W. Simmons Chairman and Director April 20 , 1998
- -----------------------
Roy W. Simmons
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
- ----------------------- Director , 1998
Jerry C. Atkin
/s/ R.D. Cash Director April 20 , 1998
- ------------------------
R. D. Cash
/s/ L.E. Simmons Director April 20 , 1998
- ------------------------
L. E. Simmons
/s/ Grant R. Caldwell Director April 20 , 1998
- ------------------------
Grant R. Caldwell
/s/ I.J. Wagner Director April 20 , 1998
- ------------------------
I. J. Wagner
/s/ Roger B. Porter Director April 20 , 1998
- ------------------------
Roger B. Porter
/s/ Richard H. Madsen Director April 20 , 1998
- ------------------------
Richard H. Madsen
/s/ Robert G. Sarver Director April 20 , 1998
- ------------------------
Robert G. Sarver
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
Page Number
in Sequential
Exhibit Numbering
No. Description and Method of Filing System
--- -------------------------------- -------------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization dated as of January 21,
1998 among Zions Bancorporation, Val Cor Bancorporation, Inc.,
Bank Colorado, National Association, Routt County National Bank
Corporation and First National Bank of Colorado (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 Novem ber 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 Registra tion 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)
4 Shareholder Protection Rights Agreement, dated as of September *
27, 1996, between Zions Bancorporation and Zions First National
Bank as Rights Agent (incorporated by reference to Exhibit 1 to
the Registrant's Form 8-K, filed October 12, 1996)
5 Opinion of Duane, Morris & Heckscher LLP regarding the legality
of the shares of Common Stock being registered (filed herewith)
8 Form of opinion of Slivka Robinson Waters & O'Dorisio, P.C.
regarding tax matters (filed herewith as Appendix A to the
Proxy Statement/Prospectus)
</TABLE>
II-7
<PAGE>
<TABLE>
<S> <C> <C>
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 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)
10.9 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)
</TABLE>
II-8
<PAGE>
<TABLE>
<S> <C> <C>
10.10 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)
10.11 Zions Bancorporation Senior Management Value Sharing Plan Award *
Period 1996-1999 (incorporated by reference to Exhibit 10.16 of
Zions Bancorporation's Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 0-2610)
10.12 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)
10.13 Employment Agreement between Zions Bancorporation and Mr. John *
Gisi (incorporated by reference to Exhibit 10.13 of Zions
Bancorporation's Annual Report on Form 10-K for the year ended
December 31, 1995, 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
Exhibits 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 (incorporated by reference to
Exhibit 10.17 to the Registrant's Form S-4 Registration
Statement, File No. 333-41821, filed on December 10, 1997)
10.18 Form of Advisory Agreement between The First National Bank in *
Alamosa and Ralph H. Outcalt (incorporated by reference to
Exhibit 10.18 to the Registrant's Form S-4 Registration
Statement, File No. 333-41821, filed on December 10, 1997)
</TABLE>
II-9
<PAGE>
<TABLE>
<S> <C> <C>
10.19 Form of Advisory Agreement between The First National Bank in *
Alamosa and Donald J. Wuckert (incorporated by reference to
Exhibit 10.19 to the Registrant's Form S-4 Registration
Statement, File No. 333-41821, filed on December 10, 1997)
10.20 Form of Employment Agreement between Valley National Bank of *
Cortez and Richard C. Tucker (incorporated by reference to
Exhibit 10.21 to the Registrant's Form S-4 Registration
Statement, File No. 333-43405, filed on December 29, 1997)
10.21 Form of Employment Agreement between Bank Colorado, National
Association and James A. Simon (filed as Exhibit VI to the
Agreement and Plan of Reorganization, incorporated by reference
as Exhibit 2.1 above)
10.22 Form of Trademark Assignment and Non-Competition Agreement
between Bank Colorado, National Association and Timothy S.
Borden (filed as Exhibit VII to the Agreement and Plan of
Reorganization, incorporated by reference as Exhibit 2.1 above)
10.23 Form of Non-Competition Agreement between Bank Colorado,
National Association and John R. Adams (filed as Exhibit VIII
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, 1997, 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 Fortner, Bayens, Levkulich & Co., independent
certified public accountants for Routt County National Bank
Corporation (filed herewith)
23.3 Consent of Arthur Andersen LLP, independent certified public
accountants for Sumitomo Bank of California (filed herewith)
23.4 Consent of Duane, Morris & Heckscher LLP (contained in their
opinion filed as Exhibit 5)
</TABLE>
II-10
<PAGE>
<TABLE>
<S> <C> <C>
23.5 Consent of Slivka Robinson Waters & O'Dorisio, P.C. (contained
in their opinion filed as 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 Routt County
National Bank Corporation (filed herewith)
99.2 Preliminary copy of Notice of Special Meeting of Shareholders
of Routt County National Bank Corporation (filed herewith)
99.3 Preliminary copy of form of proxy for use by shareholders of
Routt County National Bank Corporation (filed herewith)
99.4 Form of Voting Agreement between Zions Bancorporation and
various shareholders of Routt County National Bank Corporation
(filed herewith as part of Agreement and Plan of
Reorganization, filed as Exhibit 2.1)
</TABLE>
* incorporated by reference
II-11
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made as of the twenty-first
day of January, 1998, 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,
ROUTT COUNTY NATIONAL BANK CORPORATION (the "Company"), a Colorado corporation
having its principal office in Steamboat Springs, Colorado, and FIRST NATIONAL
BANK OF COLORADO (the "Bank"), a banking corporation organized under the laws of
the State of Colorado
W I T N E S S E T H T H A T :
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 in excess of 99
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 the Bank with and into Valley, with Valley 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);
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<PAGE>
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; and
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");
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, $0.01 par value, 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) 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, the Bank will be merged
with and into Valley in the Bank Merger and Valley shall be the surviving
national banking association. The shares of common stock of the Bank 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(b) hereof.
1.2. Consideration for Mergers.
(a) 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 the Consideration Number by the total number of shares of
Company Common Stock that shall be issued and outstanding at the Effective Date;
and
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<PAGE>
(ii) each holder of shares of Bank Common Stock shall be
entitled to receive, in exchange for each share of Bank Common Stock held of
record by such stockholders as of the Effective Date, that number of shares of
the common stock of Valley, $5.00 par value (the "Valley Common Stock")
calculated by, first, dividing the tangible book value of Valley by the number
of shares of Valley Common Stock that shall be issued and outstanding at the
Effective Date, and second, dividing the tangible book value of the Bank by the
number so reached, and third, dividing the number so reached by the total number
of shares of Bank Common Stock that shall be issued and outstanding at the
Effective Date.
(b) As used in paragraph (a) of this section 1.2, the term
"Consideration Number" means 650,000, except that if the Transaction Expenses
(as hereinafter defined), determined on a pre-tax basis in accordance with
generally accepted accounting principles, exceed $100,000, then the
"Consideration Number" shall be the difference between 650,000 and the number
calculated by dividing such excess, net of any associated tax benefit, by
$43.9375. As used in the preceding sentence, "Transaction Expenses" are (i) all
expenses incurred through the Effective Date with respect to attorneys,
accountants, investment bankers, consultants, brokers and finders who will have
rendered services to the Company or the Bank in connection with the transactions
contemplated by this Agreement, and (ii) all of the other expenses incurred
through the Effective Date outside of the ordinary course of business of the
Company and the Bank. Anything in this section 1.2(b) to the contrary
notwithstanding, it is agreed that expenses of the annual audit of the Company
and the Bank for the year ended December 31, 1997 are not Transaction Expenses.
1.3. No Fractional Shares.
(a) 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 $43.9375.
Such fractional share interest shall not include the right to vote or to receive
dividends or any interest thereon.
(b) Valley will not issue fractional shares of its stock. In lieu
of fractional shares of Valley Common Stock, if any, each shareholder of the
Bank who is entitled to a fractional share of Valley Common Stock shall receive
an amount of cash equal to the product of such fraction times the tangible book
value per share of Valley Common Stock immediately preceding the Effective Date.
Such fractional share interest shall not include the right to vote or to receive
dividends or any interest thereon.
1.4. Dividends; Interest.
(a) 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
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<PAGE>
stock is to be delivered pursuant to this Agreement) to holders of record on or
after the Effective Date shall be paid to the Exchange Agent (as designated in
Section 1.5 of this Agreement) and, upon receipt of the certificates
representing shares of Company Common Stock, the Exchange Agent shall forward to
the former shareholders entitled to receive Zions Bancorp Stock (i) certificates
representing their shares of Zions Bancorp Stock, (ii) dividends declared
thereon subsequent to the Effective Date (without interest) and (iii) the cash
value of any fractional shares determined in accordance with Section 1.3(a)
hereof.
(b) No shareholder of the Bank will be entitled to receive
dividends on his or her Valley Common Stock until he or she exchanges his or her
certificates representing Bank Common Stock for Valley Common Stock. Any
dividends declared on Valley Common 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 Bank
Common Stock, the Exchange Agent shall forward to the former shareholders
entitled to receive Valley Common Stock (i) certificates representing their
shares of Valley Common 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(b) 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, on the Effective Date or as soon
thereafter as is practicable, 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) Valley will, promptly after the Effective Date, issue and
deliver to Zions Bank the share certificates representing shares of Valley
Common Stock and the cash to be paid to holders of Bank Common Stock in
accordance with this Agreement.
1.6. Notice of Exchange. Promptly after the Effective Date, Zions Bank
shall mail to each holder of one or more certificates formerly representing
Company Common Stock or Bank 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 the Bank, as the case may be.
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<PAGE>
1.7. 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.
1.8. Voting Agreements. Simultaneously herewith, each 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.
(a) 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.
(b) All persons who are employees of the Bank immediately prior
to the Effective Date (except persons who are terminated for cause subsequent to
the Effective Date) shall be given credit under the severance pay plan of Zions
Bancorp for all service with the Bank prior to 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
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
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<PAGE>
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 State
Banking Board (the "Banking Board") 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 Banking Board
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
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<PAGE>
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.
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. 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 availability 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.
3.4. Federal Income Taxation. Zions Bancorp and the Company shall have
received a written opinion of Slivka, Robinson, Waters & O'Dorisio, P.C., or 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.
3.5. 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
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<PAGE>
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:
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 Company, in its capacity as sole shareholder of the Bank,
shall have authorized, ratified, and confirmed the Bank Merger.
4.2. Representations and Warranties; Performance of Obligations. All
representations and warranties of the Company and the Bank 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 or the Bank 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 or the Bank on or prior to the Effective Date shall have been so
performed or met. On the Effective Date, the president and chief executive
officer and the chief financial officer of 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 and the Bank made in this Agreement.
4.3. Opinion of Company Counsel. Zions Bancorp shall have received a
favorable opinion from Slivka, Robinson, Waters & O'Dorisio, P.C., dated the
Effective Date, substantially in form and substance as that set forth as Exhibit
IV attached hereto.
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<PAGE>
4.4. Opinion of Company Litigation Counsel. Zions Bancorp 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 October 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.
(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.
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<PAGE>
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) $6,570,000
and (b) the aggregate contributions to capital caused by the payments
accompanying the exercise of any stock options on or after October 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 $441,000.
4.9. CRA Rating. The CRA rating of the Bank shall be no lower than
"satisfactory."
4.10. Employment Agreements. James A. Simon shall have entered into an
employment agreement with Valley substantially in form and substance as that set
forth as Exhibit VI attached hereto.
4.11. Bank Premises. Valley and the lessor of the bank premises located
at 2155 Resort Drive, Steamboat Springs, Colorado (the "Lessor") shall have
executed and delivered such consents, lease agreements, lease amendments,
assignments, assumptions, estoppel certificates, and other documents, in form
and substance reasonably acceptable to Valley, as are necessary to secure to
Valley a leasehold interest in such premises pursuant to the following terms:
(a) an initial lease term of five years commencing on the Effective Date, (b) a
weighted rental rate during such initial lease term not exceeding fair market
value for such term in the Steamboat Springs, Colorado real estate market
generally, and (c) four five-year renewals, at the option of the tenant, at a
weighted rental rate during each of such option periods whose increase over the
weighted rental rate of the prior five-year period shall not exceed the lesser
of (i) rental-rate increases prevailing in the Steamboat Springs, Colorado real
estate market generally for a similar period or (ii) 75 percent of the change in
the Colorado Consumer Price Index (or in the absence thereof such other price
inflation index upon which Zions Bancorp and the Lessor shall mutually agree)
for a similar period.
4.12 Competition; Bank Name.
(a) Timothy S. Borden shall have entered into a non-competition
agreement with Valley, which agreement shall also govern the assignment and
subsequent use of the name "First National Bank of Colorado," substantially in
form and substance as that set forth as Exhibit VII attached hereto.
(b) John R. Adams shall have entered into a non-competition
agreement with Valley, substantially in form and substance as that set forth as
Exhibit VIII attached hereto.
4.13. Accounting Treatment. Unless repurchases by Zions Bancorp of
shares of its common stock shall have made the receipt of such letters
impracticable,
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(a) Zions Bancorp shall have received letters from KPMG Peat
Marwick LLP, its independent auditing firm, dated the date of or shortly prior
to each of the mailing date of the proxy materials to the shareholders of the
Company, and the Effective Date, stating its opinion that the reorganization
contemplated by this Agreement shall qualify for pooling-of-interest accounting
treatment; and
(b) the Company shall have received letters from Fortner, Bayens,
Levkulich and Co., its independent auditing firm, dated the date of or shortly
prior to each of the mailing date of the proxy materials to the shareholders of
the Company, and the Effective Date, stating its opinion that the reorganization
contemplated by this Agreement shall qualify for pooling-of-interest accounting
treatment.
4.14. Consolidated Audit. The audit of the consolidated accounts of the
Company and the Bank by Fortner, Bayens, Levkulich and Co. as of December 31,
1997 and for the year then ended shall have been completed, and no material
adverse change to the financial condition of the Company shall have been
revealed, nor shall any material adjustments to the financial accounts of the
Company or the Bank have been recorded, as a result thereof.
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 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, representations,
covenants, and obligations of Zions Bancorp, Val Cor, and Valley made in this
Agreement.
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5.3. Opinion of Zions Bancorp Counsel. The Company 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 IX attached
hereto.
5.4. No Adverse Developments. During the period from September 30, 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 and its
subsidiaries, taken as a whole, nor shall Zions Bancorp and its subsidiaries,
taken as a whole, have sustained any material loss or damage to their
properties, whether or not insured, which materially affects their ability to
conduct their 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 Nasdaq National Market (or else shall become listed on another national
securities exchange).
6. Representations and Warranties of the Company and the Bank.
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. The Company is a
corporation, and the Bank is a national banking association, each of 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 in any material respect 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,
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 Federal Reserve Bank of Kansas City, 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, to the
knowledge of the Company and the Bank, 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 each of the Company and the Bank has established policies
and practices with respect to all such laws and regulations to 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 objectives 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; 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.
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6.5. Binding Obligations; Due Authorization. Subject to the approval of
its shareholders and all necessary bank regulatory authorities, 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 and all
necessary bank regulatory authorities, 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 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
Bank Merger is approved by the OCC, the Commissioner, and the Banking Board,
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 Banking Board.
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
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<PAGE>
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).
6.9. Capital Structure.
(a) The authorized capital stock of the Company consists of (i)
500,000 shares of Company Common Stock, of which, as of the date of this
Agreement, 318,664.47 shares have been duly issued and are validly outstanding,
fully paid, and held by approximately eighteen shareholders of record. The
aforementioned 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 subscriptions, warrants, options, rights,
convertible securities, or similar arrangements or commitments in respect of
securities of the Company are authorized, issued, or outstanding which would
enable the holder thereof to purchase or otherwise acquire shares of any class
of capital stock of the Company. No shares of Company Common Stock are held by
the Company as treasury shares. None of the Company Common Stock is subject to
any restrictions upon the transfer thereof under the terms of the corporate
charter or bylaws of the Company.
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<PAGE>
(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 400,000
shares of common stock, $5.00 par value (the "Bank Common Stock"), of which, as
of the date of this Agreement, 318,664.47 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 knowledge of the Company and
the Bank, and except as set forth on Schedule 6.9 hereof 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 thereof. Except as reflected in such minute books, there are
no minutes of meetings or consents in
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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
(except to the extent that different accounting principles are mandated by a
bank regulatory agency with jurisdiction over it) 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, 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
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<PAGE>
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;
(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. Each of the Company and the Bank has
furnished to Zions Bancorp its statement of condition as of each of December 31,
1994, December 31, 1995, December 31, 1996, September 30, 1997, and October 31,
1997, and its related statement of income, statement of changes in financial
position, and 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 or the Bank, as the case may be, which have
been maintained in accordance with generally accepted accounting principles or
the requirements of financial institution regulatory authorities, as the case
may be, and (c) fairly reflect the financial position of the Company or the
Bank, as the case may be, as of such dates, and its results of operations 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
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applied in all material respects, adequate provision for, or reserves against,
possible loan losses 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 semiannual report on Form FR Y-9SP as filed with the Board of
Governors as of June 30, 1997.
6.15. Absence of Undisclosed Liabilities. At October 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 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 October 31, 1997. Since October 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 October 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)
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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 October 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 at a level not materially lower than the level of quality that existed
at October 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 nine 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 reserve for possible
credit losses of the Bank is adequate to absorb reasonably anticipated losses in
the loan and lease portfolios of the Bank. Management periodically reevaluates
the adequacy of such reserve based on portfolio performance, current economic
conditions, and such other factors as in its judgment are necessary to determine
the adequacy of the reserve.
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 properly reflect its Taxes for the periods covered
thereby. Except as set forth on Schedule 6.18 hereof, 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
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<PAGE>
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 made for the payment of such taxes by
establishment of appropriate tax liability accounts on the monthly financial
statements of the Company.
(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 by operation of law 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
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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 $6,570,000.
6.20. Examinations. To the extent consistent with law, the Company has
heretofore disclosed to Zions Bancorp relevant information contained in the most
recent 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 OCC, (b) the Board of Governors, (c) the
Federal Reserve Bank of Kansas City, (d) the FDIC, (e) the United States
Department of the Treasury, (f) the Colorado Division of Banking, (g) the
Banking Board, and (h) 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; and (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. All other extensions of credit by the Company or the Bank to
any Insider are set forth on Schedule 6.22 hereof.
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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 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 knowledge of the Company and the Bank, no such
proceeding is threatened.
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 pays 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 knowledge of the Company and the Bank
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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, retirement, stock purchase, stock bonus, stock ownership, stock
option, performance share, stock appreciation right, phantom stock, savings, or
profit-sharing plans, any employment, deferred compensation, consultant, bonus,
or collective bargaining agreement, or group insurance contract or any other
incentive, welfare, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
or vacation plans, contracts, and arrangements or employee benefit plans or
agreements sponsored, maintained, or contributed to by the Company or 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.
(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 October 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
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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 exempt from qualification or
registration under the laws of all jurisdictions in connection with the conduct
of fiduciary or custodial activities. The Bank is exempt from registration under
and compliance with the requirements of the federal Investment Advisers Act of
1940 as amended.
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 knowledge of either of them, any borrower of the
Company or of the Bank has received notice that it has been identified by the
United States Environmental Protection Agency as a potentially responsible party
under CERCLA with respect to a site listed on the National Priorities
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List, 40 C.F.R. Part 300 Appendix B, nor has the Company or the Bank or, to 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) 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 knowledge of the Company and the Bank, no underground tank or
other underground storage receptacle for Hazardous Substances is located on any
of the Company Real Estate. In the course of its activities, neither the Company
nor 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. 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
knowledge of the Company and the Bank, 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,
neither the Company nor the Bank has since January 1, 1988 received notice from
any borrower thereof or third party, and has no knowledge, that such borrower
has generated or is generating any hazardous waste on any of the Collateral Real
Estate in a manner which violates any Environmental Laws or that there has been
any Release of Hazardous Substances by such borrower on, upon, or into any of
the Collateral Real Estate, or that there has been any Release on, upon, or into
any real property in the vicinity of any of the Collateral Real Estate that,
through soil or groundwater contamination, may be located on any of such
Collateral Real Estate.
(e) As used in this Section 6.32, each of the terms "Company" and
"Bank" includes the applicable entity and any partnership or joint venture in
which it has an interest.
6.33. Intangible Property. To 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 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
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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 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 October 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 knowledge of the Company and the Bank, each loan,
lease, and discount reflected as an asset of the Bank in the Company Financial
Statements as of October 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, to the knowledge of the Company and the Bank, 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.
(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
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(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 accelerated
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 material 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, commitment, arrangement, lease, insurance policy, or other
instrument to which it is a party or by which its assets, business, or
operations may be bound or affected or under which it or its assets, business,
or operations receive benefits; and there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute such a
default.
6.39. Capital Expenditures. Except as set forth on Schedule 6.39
hereof, neither the Company nor the Bank has any outstanding commitments in the
nature of capital expenditures which in the aggregate exceed $25,000.
6.40. Repurchase Agreements. With respect to all agreements pursuant to
which the Company or 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 statements 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 Board of Governors,
the OCC, or the FDIC. Except as set forth on Schedule 6.41, the controls contain
self-monitoring mechanisms, and appropriate actions are taken on significant
deficiencies as they are identified.
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<PAGE>
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 transactions 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; and to 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
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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, neither the Company nor the Bank is 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, neither the Company nor the
Bank is 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 a copy of each
contract or agreement to which the Company or the Bank is a party and which
requires one or more payments by the Company or the Bank in excess of $25,000 in
the aggregate to which the Company or the Bank is a party, including but not
limited to data processing contracts, service contracts, contracts
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to purchase or lease real property or equipment, guaranties, employment
contracts, and insurance contracts pertaining to fire, accident, indemnity,
fidelity, health, life, hospitalization, or other employee benefits.
(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 $25,000 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 November 1, 1997
and the Effective Date which it customarily prepared during the period between
January 1, 1995 and October 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 to the extent that different accounting principles are mandated
by a bank regulatory agency with jurisdiction over the Company or the Bank, as
the case may be).
(b) 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 (i) cash
dividends paid by the Company to holders of its common stock in amounts not to
exceed $0.48 per share with respect to the fourth quarter of 1997 and $0.49 per
share with respect to subsequent quarters or (ii) cash dividends paid by the
Bank to the Company to fund any cash dividend paid pursuant to the foregoing
clause (i); (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
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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
transaction or agree to effect any other transaction not in the ordinary course
of its business except as explicitly contemplated herein, or engage in any
discussions concerning such a possible transaction except as explicitly
contemplated herein; (d) convert the charter or form of entity of 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, pay or
become obligated to pay any legal, accounting, or miscellaneous other expense,
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
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
November 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)
except as otherwise required by law, 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 October 31,
1997, 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.
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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
Fortner, Bayens, Levkulich and Co., 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.
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
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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 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 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.
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. Subject to the approval of
the shareholders of Valley and all necessary bank regulatory authorities, 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,
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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. Subject to the approval of the shareholders of
Valley and all necessary bank regulatory authorities, 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. 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 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; (b) if the Holding Company Merger is approved by the Board of
Governors under the BHC, 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 Banking Board,
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, the Banking Board, and the shareholders of Valley.
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.
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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 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 September 30, 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, each as filed with the SEC
(collectively, the "Zions Bancorp Financial Statements"). Each of the
consolidated balance sheets included in the Zions Bancorp Financial Statements
complied as to form in all material respects with applicable accounting
requirements (including accounting requirements of financial institution
regulatory authorities) and the published rules and regulations of the SEC with
respect thereto, fairly presented the consolidated financial position of Zions
Bancorp and its subsidiaries as of its date, and each of the consolidated
statements of income, of stockholders' equity, and of cash flows included in the
Zions Bancorp Financial Statements fairly presented the results of operations,
stockholders' equity, and cash flows of Zions Bancorp and its subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments), in each case in accordance with generally
accepted accounting principles, consistently applied, and the accounting
requirements of financial institution regulatory authorities, during the periods
involved, except as may be noted therein.
8.8. Absence of Certain Developments. Since September 30, 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 Zions Bancorp, Val Cor,
or Valley 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
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herein, in light of the circumstances under which they were made, not
misleading. There is no fact known to Zions Bancorp, Val Cor, or Valley 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 Zions
Bancorp 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.
8.10. Regulatory and Other Approvals. As of the date hereof, except as
set forth on Schedule 8.10 hereof, none of Zions Bancorp, Val Cor, nor Valley is
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 consummation of the
transactions contemplated by this Agreement. As of the date hereof, none of
Zions Bancorp, Val Cor, nor Valley is 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 consummation of the
transactions contemplated by this Agreement.
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 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.
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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, by instrument duly authorized and executed and
delivered to the other parties, unless the Effective Date shall have occurred on
or before such date:
(a) on or after August 31, 1998, or
(b) if, within thirty days after the filing of the Registration
Statement, the SEC shall have advised Zions Bancorp that no review of the
Registration Statement has been or will be made, after May 31, 1998.
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 or the
Bank contained in Section 6 hereof was materially incorrect when made, or (ii)
in the event of a material breach or material failure by the Company 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
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have no force or effect, without any liability on the part of Zions Bancorp, Val
Cor, Valley, the Company, the Bank, or their respective directors or officers or
shareholders, in respect of this Agreement. Notwithstanding the foregoing, (a)
as provided in Section 11.4 of this Agreement, the confidentiality agreement
contained in that section shall survive such termination, and (b) if such
termination is a result of any of the representations and warranties of a party
being materially incorrect when made, or subsequent thereto, or a result of the
material breach or material failure by a party of a covenant or agreement
hereunder, including without limitation any of the agreements contained in
section 11.2 of this Agreement, 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 $500,000 to the other
party or parties hereto that are not affiliated with it. The $500,000 referred
to in the previous sentence represents full liquidated damages the payment of
which shall terminate all of the rights and remedies of the receiving party or
parties, at law or in equity, against the paying party or parties in respect of
the material incorrectness of its or their representations and warranties or its
or their material breach or failure to perform.
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 transaction
as described especially in Sections 1.1 and 9.2 of this Agreement by written
instrument in amendment of this Agreement.
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(c) The parties to this Agreement acknowledge that Valley is a
party to an unrelated agreement and plan of reorganization pursuant to which
Valley is scheduled to be merged with and into The First National Bank in
Alamosa, a national banking association with its head office located in Alamosa,
County of Alamosa, State of Colorado (the "Alamosa Merger"). The parties hereto
agree that nothing in this Agreement shall preclude or condition the right of
Valley to participate in the Alamosa Merger. The parties hereto further agree
that, if the Alamosa Merger shall have occurred prior to the Effective Date,
then the parties hereto agree to effect such change in the form of transaction,
by written instrument in amendment of this Agreement and of such other
agreements between or among the parties hereto or any of them as shall be
implicated herein, as shall be necessary or advisable to cause the Bank to merge
into the resulting bank in the Alamosa Merger (or into such other bank into
which the resulting bank in the Alamosa Merger shall have subsequently been
merged or consolidated).
11. General Provisions.
11.1. Allocation of Costs and Expenses. Except as provided in this
Section and in Section 11.8(c), 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.
11.2. Mutual Cooperation. Subject to the terms and conditions herein
provided, each party shall use its best efforts, and shall cooperate fully with
the other party, in expeditiously carrying out the provisions of this Agreement
and in expeditiously making all filings and obtaining all necessary governmental
approvals, and as soon as practicable 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 on
the earliest practicable date the transactions contemplated hereby.
11.3. Form of Public Disclosures. Zions Bancorp and the Company shall
mutually agree in advance upon the form and substance of all public disclosures
concerning this Agreement and the transactions contemplated hereby.
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11.4. Confidentiality. Zions Bancorp, Val Cor, Valley, the Company, the
Bank, and their respective subsidiaries shall use all information that each
obtains from the other pursuant to this Agreement solely for the effectuation of
the transactions contemplated by this Agreement or for other purposes consistent
with the intent of this Agreement. Neither Zions Bancorp, Val Cor, Valley, the
Company, the Bank, nor their respective subsidiaries 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 and the Bank, on the other hand, shall maintain as
strictly confidential 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 and the Bank 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.
(b) Each of Zions Bancorp, Val Cor, and Valley shall indemnify,
defend, and hold the Company and the Bank 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,
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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 3 percent of the shareholders' equity of the Company
as of October 31, 1997, as determined in accordance with generally accepted
accounting principles.
(b) For purposes of Sections 5 and 8 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of Zions
Bancorp as of September 30, 1997, as determined in accordance with generally
accepted accounting principles.
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(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.
(c) Zions Bancorp in cooperation with the Company and the Bank
will arrange for directors and officers insurance coverage for the directors and
officers of the Company and the Bank, not in excess of the coverage enjoyed by
the directors and officers of the Company and the Bank on October 31, 1997,
against claims made after the Effective Date with respect to acts that occurred
prior to the Effective Date until the fourth anniversary of the Effective Date.
The cost of such coverage will be borne by Zions Bancorp.
11.9. Adjustments for Certain Events. Anything in this agreement to the
contrary notwithstanding, all prices per share, share amounts, and per-share
amounts referred to in this Agreement shall be appropriately adjusted to account
for stock dividends, split-ups, mergers, recapitalizations, combinations,
conversions, exchanges of shares or the like, but not for normal and recurring
cash dividends declared or paid in a manner consistent with the established
practice of the payer.
- 43 -
<PAGE>
11.10. Stock Repurchases. The Company and the Bank 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 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, 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 for one year following the Effective 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, then the representation, warranty, or
covenant so breached shall be deemed to have survived for six years following
the Effective Date. Each party shall be deemed to have relied upon each and
every representation and warranty of the other parties regardless of any
investigation heretofore or hereafter made by or on behalf of such party.
11.14. 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:
- 44 -
<PAGE>
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:
Routt County National Bank Corporation
2155 Resort Drive
Steamboat Springs, Colorado 80477-4747
Attention: Mr. Timothy S. Borden
Chairman of the Board
With a required copy to:
Ernest J. Panasci, Esq.
Slivka, Robinson, Waters & O'Dorisio, P.C.
1099 Eighteenth Street, Suite 2600
Denver, Colorado 80202
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 and Routt County, Colorado to be proper
jurisdictions and venues for any suit or action arising out of this Agreement.
Each of the parties consents to personal jurisdiction in each of such venues for
such a proceeding and agrees that it may be served with process in any action
with respect to this Agreement or the
- 45 -
<PAGE>
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of Utah or Colorado. Each of the parties irrevocably and unconditionally
waives and agrees, to the fullest extent permitted by law, not to plead any
objection that it may now or hereafter have to the laying of venue or the
convenience of the forum of any action or claim with respect to this Agreement
or the transactions contemplated thereby brought in the courts aforesaid.
11.17. Knowledge of a Party. References in this Agreement to the
knowledge of a party shall mean the knowledge possessed by 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
Executive Vice President President and
and Secretary Chief Executive Officer
VAL COR BANCORPORATION, INC.
Attest:________________________________ By:______________________________
Wayne D. Glazner
President and
Chief Executive Officer
- 46 -
<PAGE>
VALLEY NATIONAL BANK OF CORTEZ
Attest:______________________ By:_______________________________________
R. Lance Michaels
Executive Vice President and
Chief Executive Officer
ROUTT COUNTY NATIONAL BANK
CORPORATION
Attest_______________________ By:______________________________________
Timothy S. Borden
Chairman of the Board
FIRST NATIONAL BANK OF COLORADO
Attest:_______________________ By:______________________________________
James A. Simon
President and Chief Executive Officer
- 47 -
<PAGE>
- -----------------------------
)
State of Utah )
) ss.
County of Salt Lake )
)
- -----------------------------
On this twenty-first day of January, 1998, 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
- 48 -
<PAGE>
- -----------------------------
)
State of Colorado )
) ss.
County of Montezuma )
)
- -----------------------------
On this twenty-first day of January, 1998, before me personally
appeared Wayne D. Glazner, to me known to be the President and Chief Executive
Officer of Val Cor Bancorporation, Inc., and R. Lance Michaels, to me known to
be the Executive Vice 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 each of said corporations, for the uses and purposes therein
mentioned, and on oath each 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
- 49 -
<PAGE>
- -----------------------------
)
State of Colorado )
) ss.
County of Routt )
)
- -----------------------------
On this twenty-first day of January, 1998, before me personally
appeared Timothy S. Borden, to me known to be the Chairman of the Board of Routt
County National Bank Corporation, and James A. Simon, to me known to be the
President and Chief Executive Officer of First National Bank of Colorado, and
each 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
- 50 -
<PAGE>
The undersigned members of the Board of Directors of Routt County
National Bank Corporation (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 termina tion 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 First
National Bank of Colorado.
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
- 51 -
<PAGE>
SCHEDULE 1.8
John R. Adams
Timothy S. Borden
Steven A. Dawes
Daniel Furphy
J. Edwin Hill
Peter L. Kurtz
Mark A. McElhinney
James A. Simon
Donald D. Valentine
<PAGE>
EXHIBIT I
HOLDING COMPANY MERGER AGREEMENT
<PAGE>
AGREEMENT OF MERGER
This Agreement of Merger is made and entered into as of [___________],
1998, between VAL COR BANCORPORATION, INC. ("Val Cor"), a corporation organized
under the laws of the State of Colorado, and ROUTT COUNTY NATIONAL BANK
CORPORATION (the "Company"), a corporation 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 [___________], 1998, the
authorized capital stock of Val Cor consisted of [_______________] shares of
Common Stock, [____________] par value, of which [______________] 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 [________________]
1998, the authorized capital stock of the Company consisted of [_____________]
shares of Company Common Stock, [______________] par value (the "Company Common
Stock"), of which [_____________] shares were issued and outstanding; no shares
of capital stock were held in its treasury on such date.
Val Cor and the Company have entered into an Agreement and Plan of
Reorganization, dated January 21, 1998 (the "Plan of Reorganization"), setting
forth certain representations, warranties, and agreements in connection with the
transactions therein and herein contemplated, which contemplates the merger of
the Company with and into 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 contemplated hereby, be submitted to stockholders of Val Cor and
the Company respectively for approval.
<PAGE>
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 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
- 2 -
<PAGE>
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.
(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 [__________] shares of Common Stock,
[___________] par value.
- 3 -
<PAGE>
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.
(a) Subject to the terms, conditions, and limitations set
forth herein, upon surrender of his or her certificate or certificates, each
holder of shares of Company Common Stock shall be entitled to receive, in
exchange for each share of Company Common Stock held of record by such
stockholder as of the Effective Date, that number of shares of Zions Bancorp
Stock calculated by dividing the Consideration Number by the total number of
shares of Company Common Stock that shall be issued and outstanding at the
Effective Date.
(b) As used in paragraph (a) of this section 3.1, the term
"Consideration Number" means 650,000, except that if the Transaction Expenses
(as hereinafter defined), determined on a pre-tax basis in accordance with
generally accepted accounting principles, exceed $100,000, then the
"Consideration Number" shall be the difference between 650,000 and the number
calculated by dividing such excess, net of any associated tax benefit, by
$43.9375. As used in the preceding sentence, "Transaction Expenses" are (i) all
expenses incurred through the Effective Date with respect to attorneys,
accountants, investment bankers, consultants, brokers and finders who will have
rendered services to the Company or First National Bank of Colorado (the "Bank")
in connection with the transactions contemplated by this Agreement, and (ii) all
of the other expenses incurred through the Effective Date outside of the
ordinary course of business of the Company and the Bank. Anything in this
section 3.1(b) to the contrary notwithstanding, it is agreed that expenses of
the annual audit of the Company and the Bank for the year ended December 31,
1997 are not Transaction Expenses.
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 $43.9375. 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
- 4 -
<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 3.2 hereof.
3.4. Designation of Exchange Agent.
(a) The parties to 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 exchange
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 counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
4.2. Section Headings. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
4.3. Choice of Law and Venue. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Utah,
without giving effect to the principles of
- 5 -
<PAGE>
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.
4.4. Binding Agreement. This Agreement shall be binding upon the
parties and their respective successors and assigns.
4.5. Amendment. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law, this Agreement may be amended,
supplemented, or interpreted at any time prior to the Effective Date by written
instrument duly authorized and executed by each of the parties hereto, provided
that this Agreement may not be amended after the action by shareholders of the
Company in any respect that would prejudice the economic interests of such
Company shareholders, or any of them, except as specifically provided herein or
by like action of such shareholders.
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.
- 6 -
<PAGE>
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
ROUTT COUNTY NATIONAL BANK CORPORATION
Attest:_______________________ By:____________________________
Timothy S. Borden
Chairman of the Board
- 7 -
<PAGE>
- ----------------------------
)
State of Colorado )
) ss.
County of Montezuma )
)
- ----------------------------
On this [__________] day of [____________], 1998, before me personally
appeared Wayne D. Glazner, to me known to be the President and Chief Executive
Officer of Val Cor Bancorporation, 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
- 8 -
<PAGE>
- -----------------------------
)
State of Colorado )
) ss.
County of Routt )
)
- -----------------------------
On this [__________] day of [__________] 1998, before me personally
appeared Timothy S. Borden, to me known to be the Chairman of the Board of Routt
County National Bank Corporation, 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
- 9 -
<PAGE>
EXHIBIT II
BANK MERGER AGREEMENT
<PAGE>
AGREEMENT OF MERGER
This Agreement of Merger is made and entered into as of [______], 1998,
between VALLEY NATIONAL BANK OF CORTEZ ("Valley"), a national banking
association organized under the laws of the United States, and FIRST NATIONAL
BANK OF COLORADO (the "Bank"), a banking corporation organized under the laws of
the State of Colorado. 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
[__________], 1998, 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 State of Colorado. As of [__________], 1998, the
authorized capital stock of the Bank consisted of [____________] shares of Bank
Common Stock, [___________] par value (the "Bank Common Stock"), of which
[__________] 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 January 21, 1998 (the "Plan of Reorganization"), setting
forth certain representations, warranties, and agreements in connection with the
transactions therein and herein contemplated, which contemplates the merger of
the Bank with and into Valley (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 Bank
Common Stock shall be converted into the right to receive shares of the common
stock of Valley, $5.00 par value (the "Valley Common Stock"), as provided
herein.
<PAGE>
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 Bank into Valley. The Bank shall be merged with and
into Valley on the date and at the time to be specified in the Articles of
Merger to be filed with the Comptroller of the Currency pursuant to the National
Bank 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 Bank and Valley shall be a single association, which
shall be Valley. Valley is hereby designated as the surviving association in the
Merger and is hereinafter sometimes called the "Surviving Association."
(b) The separate existence of the Bank shall cease.
(c) The currently outstanding [_________] shares of common
stock of Valley, each of $5.00 par value, will remain outstanding as shares of
the $5.00 par value common stock of Valley, and the holders of such stock shall
retain their present rights.
(d) Each holder of shares of Bank Common Stock shall be
entitled to receive, in exchange for each share of Bank Common Stock held of
record by such stockholders as of the Effective Date, that number of shares of
Valley Common Stock calculated by, first, dividing the tangible book value of
Valley by the number of shares of Valley Common Stock that shall be issued and
outstanding at the Effective Date, and second, dividing the tangible book value
of the Bank by the number so reached, and third, dividing the number so reached
by the total number of shares of Bank Common Stock that shall be issued and
outstanding at the Effective Date.
(e) Valley will not issue fractional shares of its stock. In
lieu of fractional shares of Valley Common Stock, if any, each shareholder of
the Bank who is entitled to a fractional share of Valley Common Stock shall
receive an amount of cash equal to the product of such fraction times the
tangible book value per share of Valley Common Stock immediately preceding the
Effective Date. Such fractional share interest shall not include the right to
vote or to receive dividends or any interest thereon.
(f) The Surviving Association shall have all the rights,
privileges, immunities, and powers and shall assume and be subject to all the
duties and liabilities of a national banking association organized under the
National Bank Act.
- 2 -
<PAGE>
(g) The Surviving Association 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 Associations; 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
Associations shall be taken and deemed to be transferred to and vested in the
Surviving Association without further act or deed; and the title to any real
estate, or any interest therein, vested in either of the Constituent
Associations shall not revert or be in any way impaired by reason of the Merger.
(h) The Surviving Association shall thenceforth be responsible
and liable for all the liabilities and obligations of each of the Constituent
Associations; and any claim existing or action or proceeding pending by or
against either of the Constituent Associations may be prosecuted as if the
Merger had not taken place, or the Surviving Association may be substituted in
its place. The Surviving Association expressly assumes and agrees to perform all
of the liabilities and obligations of the Bank. Neither the rights of creditors
nor any liens upon the property of either Constituent Association shall be
impaired by the Merger.
(i) The name of the Surviving Association shall be "Bank
Colorado, National Association."
(j) 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, except that Article FIFTH of the articles of association of the
Surviving Association shall read as follows:
FIFTH. The authorized amount of capital stock of this
Association shall be [__________] shares of common stock of
the par value of five dollars ($5.00) each; but said capital
stock may be increased or decreased from time to time, in
accordance with the provisions of the laws of the United
States.
No holder of shares of the capital stock of any class
of the Association shall have any pre-emptive or preferential
right of subscription to any shares of any class of stock of
the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association,
issued or sold, nor any right of subscription to any thereof
other than such, if any, as the Board of Directors, in its
discretion, may from time to time determine and at such price
as the Board of Directors may from time to time fix.
- 3 -
<PAGE>
The Association, at any time and from time to time,
may authorize an issue debt obligations, whether or not
subordinated, without the approval of the shareholders.
(k) The By-Laws of Valley as they exist immediately prior to
the Effective Date shall be the By-Laws of Valley until later amended pursuant
to the laws of the United States.
1.3. Acts to Carry Out This Merger Plan.
(a) The Bank 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 Valley and otherwise to carry out
the purposes of this Agreement.
(b) If, at any time after the Effective Date, Valley 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 Valley its right, title, or interest in or under any of
the rights, properties, or assets of the Bank acquired or to be acquired by
Valley as a result of, or in connection with, the Merger, or (ii) otherwise
carry out the purposes of this Agreement, the Bank and its proper officers and
directors shall be deemed to have granted to Valley 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 Valley
and otherwise to carry out the purposes of this Agreement; and the proper
officers and directors of Valley are fully authorized in the name of the Bank or
otherwise to take any and all such action.
ARTICLE II
2.1. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
2.2. 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 -
<PAGE>
2.3. 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 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.
2.4. Binding Agreement. This Agreement shall be binding upon the
parties and their respective successors and assigns.
2.5. 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.
2.6. 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.
- 5 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VALLEY NATIONAL BANK OF CORTEZ
Attest:______________________ By:________________________________________
R. Lance Michaels
Executive Vice President and
Chief Executive Officer
FIRST NATIONAL BANK OF COLORADO
Attest:______________________ By:________________________________________
James A. Simon
President and Chief Executive Officer
- 6 -
<PAGE>
- -----------------------------
)
State of Colorado )
) ss.
County of Montezuma )
)
- -----------------------------
On this [_____________] day of [_____________], 1998, before me
personally appeared R. Lance Michaels, to me known to be the Executive Vice
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
- 7 -
<PAGE>
- -----------------------------
)
State of Colorado )
) ss.
County of Routt )
)
- -----------------------------
On this [ ] day of [ ], 1998, before me personally appeared James A.
Simon, to me known to be the President and Chief Executive Officer of First
National Bank of Colorado, 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
- 8 -
<PAGE>
EXHIBIT III
VOTING AGREEMENT
<PAGE>
January 21, 1998
Zions Bancorporation
January 21, 1998
Page 1
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 Routt County
National Bank Corporation (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 undersigned
will, in person or by proxy, vote or cause to be voted in favor of the Agreement
and the Merger the shares of Company Common Stock beneficially owned by the
undersigned individually or, to the extent of the undersigned's proportionate
voting interest, jointly with other persons, as well as, to the extent of the
undersigned's proportionate voting interest, any other shares of Company Common
Stock over which the undersigned may hereafter acquire beneficial ownership in
such capacities (collectively, the "Shares"). Subject to the final paragraph of
this agreement, the undersigned further agrees that he will use his best efforts
to cause any other shares of Company Common Stock over which he has or shares
voting power to be voted in favor of the Agreement and the Merger.
The undersigned further represents, warrants, and agrees that beginning
upon the authorization and execution of the Agreement by the Company until the
earlier of (i) the consummation of the Merger or (ii) the termination of the
Agreement in accordance with its terms, the undersigned will not, directly or
indirectly:
(a) vote any of the Shares, or cause or permit any of the Shares to be
voted, in favor of any other sale of control, merger, consolidation, plan of
liquidation, sale of assets, reclassification,
<PAGE>
Zions Bancorporation
January 21, 1998
Page 2
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 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 First National
Bank of Colorado, 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,
___________________________
<PAGE>
Zions Bancorporation
January 21, 1998
Page 3
Accepted and Agreed to:
ZIONS BANCORPORATION
By:____________________________
Title:_________________________
<PAGE>
Zions Bancorporation
January 21, 1998
Page 4
Name of Shareholder:
Shares of Common Stock of Routt County National Bank Corporation
Beneficially Owned
As of January 21, 1998
Name(s) of Number of
Record Owner(s) Beneficial Ownership 1/ Shares
- --------------- ----------------------- ---------
- --------
1/ For purposes of this Agreement, shares are beneficially owned by the
shareholder named above if held in any capacity other than a fiduciary capacity
(other than a revocable living trust and 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 SLIVKA, ROBINSON, WATERS & O'DORISIO, P.C.
<PAGE>
[ ], 1998
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 Routt County National Bank Corporation With Val Cor
Bancorporation, Inc., In Exchange for Stock of Zions
Bancorporation; Merger of First National Bank of Colorado With
Valley National Bank of Cortez
Mesdames and Gentlemen:
We are special counsel to Routt County National Bank Corporation, a
Colorado corporation (the "Company"), and its subsidiary, First National Bank of
Colorado, a banking corporation organized under the laws of the State of
Colorado with its head office located at Steamboat Springs, County of Routt,
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
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[ ], 1998
Page 2
Valley National Bank of Cortez ("Valley"), pursuant to an Agreement and Plan of
Reorganization dated January 21, 1998 (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 Registration Statement filed with the Securities and Exchange
Commission on Form S-4 covering the shares of Zions Bancorp stock to be issued
in connection with the 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 relied upon certificates
executed by officers of the Company and the Bank, and 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 and the Bank had the corporate power and
authority to enter into and perform all obligations thereunder and, as to such
parties other than the Company and the Bank, 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
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[ ], 1998
Page 3
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 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, to the best of our knowledge, 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
articles of association, as the case may be, 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
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[ ], 1998
Page 4
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 articles of
association, as the case may be, 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 are
required on behalf of the Company and the Bank and 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 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.
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[ ], 1998
Page 5
(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.
Where we render an opinion "to the best of our knowledge" or concerning
an item "known to us" or our opinion otherwise refers to our knowledge, it is
based solely upon (a) an inquiry of attorneys currently within this firm and (b)
receipt of certificates executed by one or more of the officers of the Company
or the Bank covering such matters and copies of which are attached hereto.
We have made no further investigation.
Our opinions expressed above are expressed with respect only to the
laws of the State of Colorado and the federal laws of the United States, and we
have assumed, for purposes of our opinions expressed herein, that the relevant
agreements and other documents are governed by the laws of the State of Colorado
notwithstanding any provision therein choosing the law of another jurisdiction
to govern such agreements or other documents. Our opinions expressed above are
expressed only as to the outcome that would pertain where Colorado law or the
federal laws of the United States (excluding choice of law principles and
excluding the effect of any law other than Colorado law and the federal laws of
the United States) are the sole law applicable to the subject matter hereof.
Our opinions set forth above are limited to the matters expressly set
forth in this opinion letter, and no opinion may be implied or may be inferred
beyond the matters expressly stated. This
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[ ], 1998
Page 6
opinion letter speaks only as to law and facts in effect or existing as of the
date hereof and we undertake no obligation or responsibility to update or
supplement this opinion to reflect any facts or circumstances that may hereafter
come to our attention or any changes in the law that may hereafter occur.
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>
[ ], 1998
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 Routt County National Bank Corporation With Val Cor
Bancorporation, Inc., In Exchange for Stock of Zions
Bancorporation
Mesdames and Gentlemen:
We are special counsel to Routt County National Bank Corporation, a
Colorado corporation (the "Company"), and its subsidiary, First National Bank of
Colorado, a banking corporation organized under the laws of the State of
Colorado with its head office located at Steamboat Springs, County of Routt,
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
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[ ], 1998
Page 2
Valley National Bank of Cortez ("Valley"), pursuant to an Agreement and Plan of
Reorganization dated January 21, 1998 (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 the 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 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.
<PAGE>
Zions Bancorporation
Val Cor Bancorporation, Inc.
Valley National Bank of Cortez
[ ], 1998
Page 3
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, circulat ed, 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 [_________], 1998, by and between JAMES A. SIMON ("Executive") and
BANK COLORADO, NATIONAL ASSOCIATION, a national banking association organized
under the laws of the United States ("Resulting 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 January 21, 1998 by and among Zions Bancorporation, a Utah corporation having
its principal office in Salt Lake City, Utah, Val Cor Bancorporation, Inc., a
Colorado corporation having its principal office in Cortez, Colorado, Resulting
Bank, Routt County National Bank Corporation, a Colorado corporation having its
principal office in Steamboat Springs, Colorado, and First National Bank of
Colorado, a banking corporation organized under the laws of the State of
Colorado (the "Bank"), provides that the Bank will be merged with and into
Resulting Bank;
WHEREAS, Executive is President and Chief Executive Officer of the
Bank;
WHEREAS, Resulting 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) Resulting Bank hereby agrees to employ Executive, and Executive
hereby agrees to serve as [ ] of Resulting Bank and of any depository
institution which is successor-in-interest thereto ("Resulting Bank" hereafter
to include any depository institution which is successor-in-interest thereto)
during the Term of Employment. Executive shall have such duties,
responsibilities, and authority as shall be set forth in the bylaws of Resulting
Bank on the date of this Agreement or as may otherwise be determined by
Resulting Bank.
<PAGE>
(b) Executive shall devote his full working time and best efforts to
the performance of his responsibilities and duties hereunder and to the
retention of the customer relationships to which the Bank has been a party prior
to the date of this Agreement. During the Term of Employment, Executive shall
not, without the prior written consent of the Board of Directors of Resulting
Bank, render services as an employee, independent contractor, or otherwise,
whether or not compensated, to any person or entity other than Resulting 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 Resulting 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.
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 Resulting 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 Resulting 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 Resulting Bank, or with respect to any of
its 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 Resulting Bank;
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<PAGE>
(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 Resulting 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
Resulting Bank; or
(vi) the termination of Executive's employment by Resulting
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 section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(e)
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(c) 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, in a manner consistent with the normal
payroll practices of Resulting Bank with respect to executive personnel as
presently in effect or as they may be modified by Resulting 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 section 3(b) hereof, any right to reimbursement for
expenses accrued as of the Termination Date payable pursuant to section 3(e)
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(c) hereof.
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<PAGE>
3. Compensation. For the services to be performed by Executive for
Resulting Bank under this Agreement, Executive shall be compensated in the
following manner:
(a) Salary.
(i) During the Term of Employment Resulting Bank shall pay
Executive a salary which shall not be less than the aggregate salary paid to
Executive by the Bank as of September 30, 1997. Salary shall be payable in
accordance with the normal payroll practices of Resulting Bank with respect to
executive personnel as presently in effect or as they may be modified by
Resulting Bank from time to time.
(ii) During the Term of Employment Executive shall be eligible
to be considered for salary increases, upon review, in accordance with the
compensation policies of Zions Bancorp with respect to executive personnel as
presently in effect or as they may be modified by Zions Bancorp from time to
time.
(b) Employee Benefit Plans or Arrangements. During the Term of
Employment, 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.
(c) Vacation and Sick Leave. During the Term of Employment, Executive
shall be entitled to paid annual vacation periods and sick leave in accordance
with the policies of Zions Bancorp as in effect as of the Commencement Date or
as may be modified by Zions Bancorp from time to time as may be applicable to
officers of Executive's rank employed by Zions Bancorp or its subsidiaries, but
in no event less than that provided to Executive by the Bank at September 30,
1997.
(d) Withholding. All compensation to be paid to Executive hereunder
shall be subject to required withholding and other taxes.
(e) 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.
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<PAGE>
(f) Vehicle. During the Term of Employment, (i) Executive shall have
exclusive use of the Ford Explorer vehicle which the Bank purchased for his use
in 1997, and (ii) Resulting Bank shall pay the reasonable expenses of
maintaining, insuring, and garaging that vehicle.
4. Confidential Business Information; Non-Competition.
(a) Executive acknowledges that certain business methods, creative
techniques, and technical data of Zions Bancorp and Resulting Bank and their
affiliates and the like are deemed by Resulting Bank to be and are in fact
confidential business information either of Zions Bancorp or Resulting 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 Resulting Bank or its
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 Resulting Bank or their affiliates, and compositions, ideas, plans,
and methods belonging to or related to the affairs of Zions Bancorp or Resulting
Bank or their affiliates. In this regard, Resulting 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 Resulting Bank, nor shall he use to the detriment
of Resulting Bank or its affiliates or use in any business or on behalf of any
business competitive with or substantially similar to any business of Zions
Bancorp or Resulting Bank or their affiliates, any confidential business
information obtained during the course of his employment by Resulting Bank. The
foregoing shall not be construed as restricting Executive from disclosing such
information to the employees of Zions Bancorp or Resulting Bank or their
affiliates.
(b) Executive hereby agrees that from the Commencement Date until the
second anniversary of the Termination Date, Executive will not (i) engage in the
banking business other than on behalf of Zions Bancorp or Resulting Bank or
their affiliates within the Market Area (as hereinafter defined), (ii) directly
or indirectly own, manage, operate, control, be employed by, or provide
management or consulting services in any capacity to any firm, corporation, or
other entity (other than Zions Bancorp or Resulting Bank or their affiliates)
engaged in the banking business in the Market Area, or (iii) directly or
indirectly solicit or otherwise intentionally cause any employee, officer, or
member of the respective Boards of Directors of Resulting Bank or any of its
affiliates to engage in any action prohibited under (i) or (ii) of this section
4(b); provided that the ownership by Executive as an investor of not more than
five percent of the outstanding shares of stock of any corporation whose stock
is listed for trading on any securities exchange or is quoted on the automated
quotation system of the National Association of Securities Dealers, Inc., or the
shares of
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<PAGE>
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 Resulting Bank in the event of a breach of any of the provisions of
this section 4 (the "Designated Provisions") and that Resulting Bank 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 Resulting Bank may have, Resulting Bank 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, Denver County, Colorado, or elsewhere, to restrain the
violation or breach thereof by Executive or any affiliates, agents, or any other
persons acting for or with Executive in any capacity whatsoever, and Executive
submits to the jurisdiction of such court in any such action.
(d) It is the desire and intent of the parties that the provisions of
this section 4 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this section 4 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to Resulting Bank, to the fullest
extent permitted by applicable law, the benefits intended by this section 4.
(e) As used herein, "Market Area" shall mean Routt County, Colorado and
the town of Craig, Colorado.
5. Life Insurance. In light of the unusual abilities and experience of
Executive, Resulting Bank in its discretion may apply for and procure as owner
and for its own benefit insurance on the life of Executive, in such amount and
in such form as Resulting Bank may choose. Resulting Bank 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 Resulting Bank, 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 Resulting Bank has applied for
insurance.
6. Representations and Warranties.
(a) Executive represents and warrants to Resulting Bank that his
execution, delivery, and performance of this Agreement will not result in or
constitute a breach of or conflict with any term,
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<PAGE>
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 Resulting Bank
for, from, and against any and all losses, claims, suits, damages, expenses, or
liabilities, including court costs and counsel fees, which Resulting Bank has
incurred or to which Resulting Bank may become subject, insofar as such losses,
claims, suits, damages, expenses, liabilities, costs, or fees arise out of or
are based upon any failure of any representation or warranty of Executive in
section 6(a) hereof to be true and correct when made.
7. Notices. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to Resulting Bank:
[________________________________]
[________________________________]
[________________________________]
[________________________________]
Attention: 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 Executive:
Mr. James A. Simon
31510 Aspen Ridge Road
Steamboat Springs, Colorado 80488
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
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<PAGE>
8. Assignment. Neither party may assign this Agreement or any rights or
obligations hereunder without the consent of the other party.
9. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Utah, without giving effect
to the principles of conflict of law thereof. The parties hereby designate Salt
Lake County, Utah and Denver County, Colorado to be proper jurisdictions and
venues for any suit or action arising out of this Agreement. Each of the parties
consents to personal jurisdiction in each of such venues for such a proceeding
and agrees that he or it may be served with process in any action with respect
to this Agreement or the transactions contemplated thereby by certified or
registered mail, return receipt requested, or to its registered agent for
service of process in the state of Utah or Colorado. Each of the parties
irrevocably and unconditionally waives and agrees, to the fullest extent
permitted by law, not to plead any objection that it may now or hereafter have
to the laying of venue or the convenience of the forum of any action or claim
with respect to this Agreement or the transactions contemplated thereby brought
in the courts aforesaid.
10. Entire Agreement. This Agreement constitutes the entire
understanding between Resulting Bank and Executive relating to the subject
matter hereof. Any previous agreements or understandings between the parties
hereto or between Executive and the Bank or any of its affiliates or Resulting
Bank or any of its affiliates regarding the subject matter hereof, including
without limitation the terms and conditions of employment, compensation,
benefits, retirement, competition following employment, and the like, are merged
into and superseded by this Agreement. Neither this Agreement nor any provisions
hereof can be modified, changed, discharged, or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge, or termination is sought.
11. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable for any reason
whatsoever:
(a) the validity, legality, and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement 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
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<PAGE>
Arbitration Rules of the American Arbitration Association ("AAA"). A dispute
subject to the provisions of this section will exist if either party notifies
the other party in writing that a dispute subject to arbitration exists and
states, with reasonable specificity, the issue subject to arbitration (the
"Arbitration Notice"). The parties agree that, after the issuance of the
Arbitration Notice, the parties will try in good faith to resolve the dispute by
mediation in accordance with the Commercial Rules of Arbitration of AAA between
the date of the issuance of the Arbitration Notice and the date the dispute is
set for arbitration. If the dispute is not settled by the date set for
arbitration, then any controversy or claim arising out of this Agreement or the
breach hereof shall be resolved by binding arbitration and judgment upon any
award rendered by arbitrator(s) may be entered in a court having jurisdiction.
Any person serving as a mediator or arbitrator must have at least ten years'
experience in resolving commercial disputes through arbitration. In the event
any claim or dispute involves an amount in excess of $100,000, either party may
request that the matter be heard by a panel of three arbitrators; otherwise all
matters subject to arbitration shall be heard and resolved by a single
arbitrator. The arbitrator shall have the same power to compel the attendance of
witnesses and to order the production of documents or other materials and to
enforce discovery as could be exercised by a United States District Court judge
sitting in the District of Colorado. In the event of any arbitration, each party
shall have a reasonable right to conduct discovery to the same extent permitted
by the Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
Any provision in this Agreement to the contrary notwithstanding, this section
shall be governed by the Federal Arbitration Act and the parties have entered
into this Agreement pursuant to such Act.
13. Costs of Litigation. In the event litigation is commenced to
enforce any of the provisions hereof, or to obtain declaratory relief in
connection with any of the provisions hereof, the prevailing party shall be
entitled to recover reasonable attorney's fees. In the event this Agreement is
asserted in any litigation as a defense to any liability, claim, demand, action,
cause of action, or right asserted in such litigation, the party prevailing on
the issue of that defense shall be entitled to recovery of reasonable attorney's
fees.
14. Affiliation. A company will be deemed to be "affiliated" with Zions
Bancorp, Resulting Bank, or the Bank 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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto executed or caused this
Agreement to be executed as of the day and year first above written.
BANK COLORADO, NATIONAL
ASSOCIATION
Attest:______________________ By:___________________________
JAMES A. SIMON
Witness:_____________________ ______________________________
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<PAGE>
EXHIBIT VII
TRADEMARK ASSIGNMENT AND NON-COMPETITION AGREEMENT
(Timothy S. Borden)
<PAGE>
TRADEMARK ASSIGNMENT AND NON-COMPETITION AGREEMENT
This TRADEMARK ASSIGNMENT AND NON-COMPETITION AGREEMENT (the
"Agreement") made and entered into this [ ] day of [ ], 1998, by and between
TIMOTHY S. BORDEN ("Borden") and BANK COLORADO, NATIONAL ASSOCIATION, a national
banking association organized under the laws of the United States ("Resulting
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 January 21, 1998 by and among Zions Bancorporation, a Utah corporation having
its principal office in Salt Lake City, Utah, Val Cor Bancorporation, Inc., a
Colorado corporation having its principal office in Cortez, Colorado, Resulting
Bank, Routt County National Bank Corporation, a Colorado corporation having its
principal office in Steamboat Springs, Colorado (the "Company"), and First
National Bank of Colorado, a banking corporation organized under the laws of the
State of Colorado (the "Bank"), provides that the Bank will be merged with and
into Resulting Bank;
WHEREAS, Borden is Chairman of the Board of the Bank and a significant
shareholder of the Company and, therefore, indirectly, a significant shareholder
of the Bank;
WHEREAS, Borden desires to transfer his shares to Zions Bancorporation
and, therefore, indirectly to Resulting Bank;
WHEREAS, the transfer of such shares will provide to Borden a
significant economic benefit which is of value to Borden;
WHEREAS, the personal involvement of Borden with the Bank has added
value to the Bank, for which Zions Bancorporation is compensating the
shareholders of the Bank, including Borden, pursuant to the Plan;
WHEREAS, Resulting Bank is the owner of the trademark "First National
Bank of Colorado" and the associated logo (collectively, the "Mark"), and the
goodwill of the business associated with the Mark, as a result of the
effectuation of the transactions contemplated by the Plan;
WHEREAS, Borden wishes to acquire all of Resulting Bank's right, title,
and interest in and to the Mark, together with the goodwill of the business
associated with the Mark;
WHEREAS, Resulting Bank desires to provide such rights to Borden in
return for such consideration, and Zions Bancorporation and Resulting Bank
desire that such shares be transferred, provided that Borden agrees to refrain
from use of the name "First National Bank of Colorado" for
<PAGE>
the period prescribed herein and, further, that he agrees to refrain from
competition with Resulting Bank for the period prescribed herein;
WHEREAS, Borden and Resulting Bank are desirous of entering into the
Agreement for such periods and upon the terms and conditions set forth herein;
and
WHEREAS, this Agreement is an essential component of the Plan and
necessary to achieve the objectives of the transactions described in the Plan,
and section 4.12(a) of the Plan contemplates that Borden will enter into such an
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. Assignment. Under the conditions of non-competition set forth in
this Agreement, for $1,000 and other good and valuable consideration paid by
Borden, the receipt and sufficiency of which are hereby acknowledged, Resulting
Bank hereby assigns to Borden all right, title, and interest in and to the Mark,
together with the goodwill of the business in connection with which the mark is
used, and all state and Federal registrations and trademark applications
therefor, in the United States, its territories and possessions, and throughout
the world, as well as renewals and extensions of the registration that are or
may be secured under the laws of the United States, its territories and
possessions, and throughout the world, now or hereafter in effect, for Borden's
own use and enjoyment, and for the use and enjoyment of Borden's successors,
assigns, or other legal representatives, as fully and entirely as the same would
have been held and enjoyed by Resulting Bank if this Assignment had not been
made, together with all income, royalties, damages, or payments due or payable
as of the Effective Date or thereafter, including, without limitation, all
claims for damages by reason of past, present, or future infringement or other
unauthorized use of the Mark, with the right to sue for damages, and collect the
same for Borden's own use and enjoyment and for the use and enjoyment of its
successors, assigns, or other legal representatives.
2. Definition of "Market Area". As used in this Agreement, "Market
Area" shall mean Routt County, Colorado and the town of Craig, Colorado.
3. Agreement Regarding Use. Borden agrees to not use the Mark in the
Market Area for any purpose for three years after the date of this Agreement.
4. Non-Competition.
(a) Borden hereby agrees that from the date of this Agreement until the
date sixteen months after the date as of which the Plan was executed, Borden
will not (i) engage in the banking business other than on behalf of Zions
Bancorp or Resulting Bank or their affiliates within the Market Area, (ii)
directly or indirectly own, manage, operate, control, be employed by, or provide
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<PAGE>
management or consulting services in any capacity to any firm, corporation, or
other entity (other than Zions Bancorp or Resulting Bank or their affiliates)
engaged in the banking business in the Market Area, or (iii) directly or
indirectly solicit or otherwise intentionally cause any employee, officer, or
member of the respective Boards of Directors of Resulting Bank or any of its
affiliates to engage in any action prohibited under (i) or (ii) of this section
4(a); provided that the ownership by Borden 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
Borden's obligations under this section 4(a); and provided further that acts of
either The Rawlins National Bank ("Rawlins") or First National Bank of Wyoming
("FNBW") to engage in the banking business within the Market Area shall not in
themselves constitute a violation of Borden's obligations under this section
4(a) provided that Borden does not, in his individual capacity or as officer,
director, shareholder, agent, or representative of Rawlins or FNBW, take any
action to induce, encourage, support, or assist any efforts on the part of
Rawlins or FNBW to engage in the banking business within the Market Area.
(b) Borden acknowledges and agrees that irreparable injury will result
to Resulting Bank in the event of a breach of any of the provisions of this
section 4 (the "Designated Provisions") and that Resulting Bank 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 Resulting Bank may have, Resulting Bank shall be entitled to
the entry of a preliminary and permanent injunction (including, without
limitation, specific performance) by a court of competent jurisdiction in Denver
County, Colorado, or elsewhere, to restrain the violation or breach thereof by
Borden or any affiliates, agents, or any other persons acting for or with Borden
in any capacity whatsoever, and Borden submits to the jurisdiction of such court
in any such action.
(c) It is the desire and intent of the parties that the provisions of
this section 4 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this section 4 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 4 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to Resulting Bank, to the fullest
extent permitted by applicable law, the benefits intended by this section 4.
5. 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
- 3 -
<PAGE>
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 Resulting Bank:
[________________________________]
[________________________________]
[________________________________]
[________________________________]
Attention: 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 Borden:
Mr. Timothy S. Borden
Post Office Box 3457
Steamboat Springs, Colorado 80477
With a required copy to:
Ernest J. Panasci, Esq.
Slivka, Robinson, Waters & O'Dorisio, P.C.
1099 Eighteenth Street, Suite 2600
Denver, Colorado 80202
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
6. Assignment. Neither party may assign this Agreement or any rights or
obligations hereunder without the consent of the other party.
7. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Colorado, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate Denver County, Colorado to be proper jurisdiction and
- 4 -
<PAGE>
venue for any suit or action arising out of this Agreement. Each of the parties
consents to personal jurisdiction in such venue for such a proceeding and agrees
that he or it may be served with process in any action with respect to this
Agreement or the transactions contemplated thereby by certified or registered
mail, return receipt requested, or to its registered agent for service of
process in the state of Colorado. Each of the parties irrevocably and
unconditionally waives and agrees, to the fullest extent permitted by law, not
to plead any objection that it may now or hereafter have to the laying of venue
or the convenience of the forum of any action or claim with respect to this
Agreement or the transactions contemplated thereby brought in the courts
aforesaid.
8. Entire Agreement. This Agreement constitutes the entire
understanding between Resulting Bank and Borden relating to the subject matter
hereof. Any previous agreements or understandings between the parties hereto or
between Borden and the Bank or any of its affiliates or Resulting Bank or any of
its affiliates regarding the subject matter hereof, including without limitation
the terms and conditions of employment, compensation, benefits, retirement,
competition following employment, and the like, are merged into and superseded
by this Agreement. Neither this Agreement nor any provisions hereof can be
modified, changed, discharged, or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge, or termination
is sought.
9. 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.
10. 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
- 5 -
<PAGE>
controversy or claim arising out of this Agreement or the breach hereof shall be
resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
District of Colorado. In the event of any arbitration, each party shall have a
reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
Any provision in this Agreement to the contrary notwithstanding, this section
shall be governed by the Federal Arbitration Act and the parties have entered
into this Agreement pursuant to such Act.
11. 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.
12. Affiliation. A company will be deemed to be "affiliated" with Zions
Bancorp, Resulting Bank, or the Bank 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.
13. 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.
BANK COLORADO, NATIONAL
ASSOCIATION
Attest: ______________________ By:_______________________
TIMOTHY S. BORDEN
Witness:______________________ ___________________________
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<PAGE>
- -----------------------------
)
State of Colorado )
) ss.
County of Denver )
)
- ------------------------------
On this [______] day of [__________], 1998, before me personally
appeared [_________________], to me known to be the [_______________________] of
Bank Colorado, National Association, 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>
- -----------------------------
)
State of Colorado )
) ss.
County of Denver )
)
- ------------------------------
On this [ ] day of [ ], 1998, before me personally
appeared Timothy S. Borden, to me known, and 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
- 8 -
<PAGE>
EXHIBIT VIII
NON-COMPETITION AGREEMENT
(John R. Adams)
<PAGE>
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") made and entered into
this [________] day of [_______________], 1998, by and between JOHN R. ADAMS
("Adams") and BANK COLORADO, NATIONAL ASSOCIATION, a national banking
association organized under the laws of the United States ("Resulting 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 January 21, 1998 by and among Zions Bancorporation, a Utah corporation having
its principal office in Salt Lake City, Utah, Val Cor Bancorporation, Inc., a
Colorado corporation having its principal office in Cortez, Colorado, Resulting
Bank, Routt County National Bank Corporation, a Colorado corporation having its
principal office in Steamboat Springs, Colorado (the "Company"), and First
National Bank of Colorado, a banking corporation organized under the laws of the
State of Colorado (the "Bank"), provides that the Bank will be merged with and
into Resulting Bank;
WHEREAS, Adams is a Director and a significant shareholder of the
Company and, therefore, indirectly, a significant shareholder of the Bank;
WHEREAS, Adams desires to transfer his shares to Zions Bancorporation
and, therefore, indirectly to Resulting Bank;
WHEREAS, the transfer of such shares will provide to Adams a
significant economic benefit which is of value to Adams;
WHEREAS, the personal involvement of Adams with the Bank has added
value to the Bank, for which Zions Bancorporation is compensating the
shareholders of the Bank, including Adams, pursuant to the Plan;
WHEREAS, Zions Bancorporation and Resulting Bank desire that such
shares be transferred, provided that Adams agrees to refrain from competition
with Resulting Bank for the period prescribed herein;
WHEREAS, Adams and Resulting Bank are desirous of entering into the
Agreement for such periods and upon the terms and conditions set forth herein;
and
WHEREAS, this Agreement is an essential component of the Plan and
necessary to achieve the objectives of the transactions described in the Plan,
and section 4.12(a) of the Plan contemplates that Borden will enter into such an
agreement as a condition to the consummation of the transactions described
therein.
<PAGE>
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties agree as follows:
1. Non-Competition.
(a) Adams hereby agrees that from the date of this Agreement until the
date sixteen months after the date as of which the Plan was executed, Adams will
not (i) engage in the banking business other than on behalf of Zions Bancorp or
Resulting Bank or their affiliates within the Market Area (as hereinafter
defined), (ii) directly or indirectly own, manage, operate, control, be employed
by, or provide management or consulting services in any capacity to any firm,
corporation, or other entity (other than Zions Bancorp or Resulting Bank or
their affiliates) engaged in the banking business in the Market Area, or (iii)
directly or indirectly solicit or otherwise intentionally cause any employee,
officer, or member of the respective Boards of Directors of Resulting Bank or
any of its affiliates to engage in any action prohibited under (i) or (ii) of
this section 1(a); provided that the ownership by Adams 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 Adams's obligations under this section 1(a).
(b) Adams acknowledges and agrees that irreparable injury will result
to Resulting Bank in the event of a breach of any of the provisions of this
section 1 (the "Designated Provisions") and that Resulting Bank 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 Resulting Bank may have, Resulting Bank shall be entitled to
the entry of a preliminary and permanent injunction (including, without
limitation, specific performance) by a court of competent jurisdiction in Denver
County, Colorado, or elsewhere, to restrain the violation or breach thereof by
Adams or any affiliates, agents, or any other persons acting for or with Adams
in any capacity whatsoever, and Adams submits to the jurisdiction of such court
in any such action.
(c) It is the desire and intent of the parties that the provisions of
this section 1 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 1 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this section 1 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 Resulting Bank, to the fullest
extent permitted by applicable law, the benefits intended by this section 1.
- 2 -
<PAGE>
(d) As used herein, "Market Area" shall mean Routt County, Colorado and
the town of Craig, Colorado.
2. 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 Resulting Bank:
[______________________________]
[______________________________]
[______________________________]
[______________________________]
Attention: 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 Adams:
Mr. John R. Adams
[______________________________]
[______________________________]
[______________________________]
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
3. Assignment. Neither party may assign this Agreement or any rights or
obligations hereunder without the consent of the other party.
4. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Colorado, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate Denver County, Colorado to be proper jurisdiction and venue for any
suit or action arising out of this Agreement. Each of the parties consents to
personal
- 3 -
<PAGE>
jurisdiction in such venue for such a proceeding and agrees that he or it may be
served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of Colorado. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
5. Entire Agreement. This Agreement constitutes the entire
understanding between Resulting Bank and Adams relating to the subject matter
hereof. Any previous agreements or understandings between the parties hereto or
between Adams and the Bank or any of its affiliates or Resulting Bank or any of
its affiliates regarding the subject matter hereof, including without limitation
the terms and conditions of employment, compensation, benefits, retirement,
competition following employment, and the like, are merged into and superseded
by this Agreement. Neither this Agreement nor any provisions hereof can be
modified, changed, discharged, or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge, or termination
is sought.
6. 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.
7. 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
- 4 -
<PAGE>
arbitration and judgment upon any award rendered by arbitrator(s) may be entered
in a court having jurisdiction. Any person serving as a mediator or arbitrator
must have at least ten years' experience in resolving commercial disputes
through arbitration. In the event any claim or dispute involves an amount in
excess of $100,000, either party may request that the matter be heard by a panel
of three arbitrators; otherwise all matters subject to arbitration shall be
heard and resolved by a single arbitrator. The arbitrator shall have the same
power to compel the attendance of witnesses and to order the production of
documents or other materials and to enforce discovery as could be exercised by a
United States District Court judge sitting in the District of Colorado. In the
event of any arbitration, each party shall have a reasonable right to conduct
discovery to the same extent permitted by the Federal Rules of Civil Procedure,
provided that such discovery shall be concluded within ninety days after the
date the matter is set for arbitration. Any provision in this Agreement to the
contrary notwithstanding, this section shall be governed by the Federal
Arbitration Act and the parties have entered into this Agreement pursuant to
such Act.
8. 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.
9. Affiliation. A company will be deemed to be "affiliated" with Zions
Bancorp, Resulting Bank, or the Bank 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.
10. 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.
BANK COLORADO, NATIONAL
ASSOCIATION
Attest:_______________________ By:_________________________
JOHN R. ADAMS
Witness:______________________ ____________________________
- 5 -
<PAGE>
EXHIBIT IX
OPINION OF DUANE, MORRIS & HECKSCHER LLP
<PAGE>
[_______________], 1998
Routt County National Bank Corporation
2155 Resort Drive
Steamboat Springs, Colorado 80477-4747
First National Bank of Colorado
2155 Resort Drive
Steamboat Springs, Colorado 80477-4747
Re: Merger of Routt County National Bank Corporation 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 Routt County National Bank Corporation, a corporation organized
under the laws of the State of Colorado with its head office located at
Steamboat Springs, County of Routt, 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
<PAGE>
Routt County National Bank Corporation
First National Bank of Colorado
[ ], 1998
Page 2
pursuant to an Agreement and Plan of Reorganization dated January 21, 1998 (the
"Agreement") and an Agreement of Merger dated as of [______________], 1998 (the
"Merger Agreement"), and in connection with the merger (the "Bank Merger") of
First National Bank of Colorado, a banking corporation organized under the laws
of the State of Colorado, with its head office located at Steamboat Springs,
County of Routt, 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 [_____________], 1998 (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.
In our capacity as special counsel, we have participated in the
preparation of a Registration Statement filed with the Securities and Exchange
Commission on Form S-4 covering the shares of Zions Bancorp stock to be issued
in connection with the 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 and the Bank 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
<PAGE>
Routt County National Bank Corporation
First National Bank of Colorado
[ ], 1998
Page 3
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.
(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
<PAGE>
Routt County National Bank Corporation
First National Bank of Colorado
[ ], 1998
Page 4
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
State Banking Board, 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 with respect thereto have been instituted
or are pending or threatened under the Act with respect to the Registration
Statement.
<PAGE>
Routt County National Bank Corporation
First National Bank of Colorado
[ ], 1998
Page 5
(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.
Whenever our opinion herein with respect to the existence or absence of
facts is indicated to be based on our knowledge, it is intended to signify that,
in the course of our representation of Zions Bancorp, Val Cor, and Valley in
connection with the transactions contemplated by the Agreements, we have not
acquired actual knowledge of the existence or absence of such facts. Other than
as specifically set forth herein, we have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inference as to our knowledge of the existence or absence of such facts should
be drawn from the fact of our representation of Zions Bancorp, Val Cor, and
Valley.
Our opinions set forth above are limited to the matters expressly set
forth in this opinion letter, and no opinion is to be implied or inferred beyond
the matters expressly so stated.
The statements of fact, opinions of law and other matters set forth in
this opinion letter apply solely as of the date hereof. We disclaim any
responsibility to alert you to any events or circumstances, including (but not
limited to) changes in facts stated herein and changes in law, occurring in the
future.
The foregoing opinions relate solely to the laws of the State of New
York and the federal laws of the United States, and we have assumed, for
purposes of our opinions expressed herein, that
<PAGE>
Routt County National Bank Corporation
First National Bank of Colorado
[ ], 1998
Page 6
the relevant agreements and other documents are governed by the laws of the
State of New York notwithstanding any provision therein choosing the law of
another jurisdiction to govern such agreements or other documents. Our opinions
expressed above are expressed only as to the outcome that would pertain where
New York law or the federal laws of the United States (excluding choice of law
principles and excluding the effect of any law other than New York law and the
federal laws of the United States) are the sole law applicable to the subject
matter hereof.
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 5
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006-1608
(202) 776-7800
April 22, 1998
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 January 21, 1998,
among Routt County National Bank Corporation (the "Company"), First National
Bank of Colorado (the "Bank"), Zions, Val Cor Bancorporation, Inc. ("Val Cor"),
and Bank Colorado, National Association (successor-in-interest to Valley
National Bank of Cortez) ("Bank Colorado"), a related Agreement of Merger
between the Company and Val Cor, and a related Agreement of Merger between the
Bank and Bank Colorado (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 the Bank will be merged into Bank
Colorado, with Bank Colorado being the surviving entity (the "Bank Merger"; the
Holding Company Merger and the Bank Merger being referred to herein collectively
as the "Reorganization"). Upon consummation of the Reorganization, the holders
of the outstanding shares of Company Common Stock will receive in the aggregate
up to 650,000 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 of 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
Consideration Number (as defined in the Plan of Reorganization) 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 650,000 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, including the
related Agreements of Merger;
(2) a copy certified to our satisfaction of the Restated Articles
of Incorporation of Zions as in effect on the date hereof;
(3) copies certified to our satisfaction of resolutions adopted by
the Board of Directors of Zions on December 19, 1997,
including resolutions approving the Plan of Reorganization;
and
<PAGE>
Zions Bancorporation
April 22, 1998
Page 2
(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 and the related Agreements of
Merger have been duly and validly authorized, executed, and
delivered by the Company and the Bank to the extent they are
parties thereto 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; and
(3) all documents which must be submitted and filed with
government authorities to effectuate the Reorganization will
be so submitted and filed and all government approvals
required by ss. 3.1 of the Plan of Reorganization shall have
been obtained.
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 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 the Proxy Statement/Prospectus forming a part of the Registration
Statement.
Very truly yours,
/s/ DUANE, MORRIS & HECKSCHER LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Zions Bancorporation:
We consent to the use of our report dated January 26, 1998 with respect to the
consolidated financial statements of Zions Bancorporation as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997 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
April 22, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Zions Bancorporation:
We consent to the use in this Registration Statement on Form S-4 of our report
dated February 5, 1998 with respect to the consolidated financial statements of
Routt County National Bank Corporation as of December 31, 1997 and 1996, and for
each of the years in the three-year period ended December 31, 1997, and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ FORTNER, BAYENS, LEVKULICH & CO.
FORTNER, BAYENS, LEVKULICH & CO.
Denver, Colorado
April 22, 1998
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this S-4 Registration Statement of Zions Bancorporation of our
report dated January 16, 1998 on Sumitomo Bank of California's 1997 financial
statements included in Zions Bancorporation's previously filed Form 8-K (filed
April 15, 1998) and to all references to our firm included in this Registration
Statement.
/s/ Arthur Andersen LLP
San Francisco, California
April 20, 1998
EXHIBIT 99.1
[Letterhead of Routt County National Bank Corporation]
___________________, 1998
Shareholders of Routt County National Bank Corporation
Dear Shareholder:
A Special Meeting of the shareholders of Routt County National Bank
Corporation ("the Company") has been called for ____ a.m., Colorado time, on
________________, 1998, at the Company's offices at 2155 Resort Drive, Steamboat
Springs, Colorado. The accompanying proxy statement/prospectus is being
furnished to all holders of the Company's Common Stock.
The purpose of the Special Meeting is to consider and vote upon an
Agreement and Plan of Reorganization dated January 21, 1998 among the Company,
its wholly-owned subsidiary First National Bank of Colorado (the "Bank"), Zions
Bancorporation ("Zions"), Val Cor Bancorporation, Inc. ("Val Cor"), a
wholly-owned subsidiary of Zions, and Bank Colorado, National Association ("Bank
Colorado"), Val Cor's wholly-owned subsidiary, an Agreement of Merger between
the Company and Val Cor and an Agreement of Merger between the Bank and Bank
Colorado (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 the Bank into Bank
Colorado, with Bank Colorado being the surviving national banking association.
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 650,000 shares of Zions Common Stock, which may be
adjusted downward if Transaction Expenses (as defined) exceed $100,000, 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
the product of such fraction times $43.9375. Such fractional share interest will
not include the right to vote or to receive dividends or any interest thereon.
On ______________, 1998, the closing price of Zions Common Stock was
$_________ per share. On that date there were 318,664.47 shares of Company
Common Stock issued and outstanding. Assuming that the Reorganization had been
consummated as of ________________, 1998, that the closing price of Zions Common
Stock had been $__________ on that date, and that Transaction Expenses had not
exceeded $100,000, shareholders of the Company under such circumstances would
have received approximately 2.04
<PAGE>
Shareholders of Routt County National Bank Corporation
, 1998
Page 2
shares of Zions Common Stock for each share of Company Common Stock, or an
equivalent value of approximately $__________ 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, Zions, Val Cor and Bank Colorado 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 the Company's 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, all of which approvals have [not
yet] been received, and to certain other conditions, including maintenance of
the Company's financial condition. If approved, the Plan of Reorganization will
most likely be consummated sometime in the second 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 Routt County National Bank Corporation stock
certificate for the Reorganization consideration.
Please do not send your certificates to the Company prior to receiving
these instructions.
Sincerely,
_________________________
Timothy S. Borden
Chairman of the Board
EXHIBIT 99.2
ROUTT COUNTY NATIONAL BANK CORPORATION
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
A Special Meeting of shareholders of Routt County National Bank
Corporation (the "Company") will be held at ____ a.m., Colorado time, on
__________, 1998, at the Company's offices at 2155 Resort Drive, Steamboat
Springs, Colorado, to consider and vote upon an Agreement and Plan of
Reorganization dated as of January 21, 1998 among the Company, its wholly-owned
subsidiary First National Bank of Colorado (the "Bank"), Zions Bancorporation
("Zions"), Val Cor Bancorporation, Inc. ("Val Cor"), a wholly-owned subsidiary
of Zions, and Bank Colorado, National Association ("Bank Colorado"), Val Cor's
wholly-owned subsidiary, an Agreement of Merger between the Company and Val Cor
and an Agreement of Merger between Bank Colorado and the Bank (collectively, the
"Plan of Reorganization"), and the transactions contemplated thereby. 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 the Bank into Bank
Colorado, with Bank Colorado being the surviving national banking association
(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
(as defined) 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 _________, 1998, 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: __________________, 1998.
______________________________
Timothy S. Borden
Chairman of the Board
Please mark, sign and return the enclosed proxy in the envelope
provided.
EXHIBIT 99.3
PROXY
SPECIAL MEETING OF SHAREHOLDERS
OF ROUTT COUNTY NATIONAL BANK CORPORATION
_________________, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Timothy S. Borden and _______________,
and either 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 Routt County
National Bank Corporation ("Company Common Stock") and to vote as designated
below all shares of Company Common Stock that the undersigned held of record on
_______________, 1998, which the undersigned is entitled to vote, at the special
meeting of shareholders of Routt County National Bank Corporation (the
"Company") to be held on __________________, 1998, 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 January 21, 1998,
among the Company, its wholly-owned subsidiary First National Bank of Colorado
(the "Bank"), Zions Bancorporation ("Zions"), Val Cor Bancorporation, Inc. ("Val
Cor"), a wholly-owned subsidiary of Zions, and Bank Colorado, National
Association ("Bank Colorado"), Val Cor's wholly-owned subsidiary, an Agreement
of Merger between the Company and Val Cor and an Agreement of Merger between
Bank Colorado and the Bank (collectively, the "Plan of Reorganization"), whereby
the Company will merge into Val Cor, with Val Cor being the surviving
corporation, and the Bank will merge into Bank Colorado, with Bank Colorado
being the surviving national banking association (the aforementioned mergers
being referred to collectively as the "Reorganization"). Pursuant to the Plan of
Reorganization, if the Transaction Expenses (as defined) do not exceed $100,000,
the holders of shares of Company Common Stock will receive approximately 2.04
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 the Company Common Stock.
The Directors recommend a vote FOR Proposal 1.
1. Approval of the Plan of Reorganization and the Reorganization.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The Proxy, in his discretion, is authorized to vote on such other
business as may properly come before the meeting.
<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
