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AGREEMENT AND PLAN OF MERGER
dated as of September 23, 1997
by and between
Zions Bancorporation
and
Vectra Banking Corp.
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TABLE OF CONTENTS
PAGE
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RECITALS 1
ARTICLE I Certain Definitions
1.01 Certain Definitions 1
ARTICLE II The Merger
2.01 The Merger 7
2.02 Effective Date and Effective Time 8
2.03 Plan of Merger 8
ARTICLE III Consideration; Exchange Procedures
3.01 Merger Consideration 9
3.02 Rights as Stockholders; Stock Transfers 9
3.03 Fractional Shares 9
3.04 Exchange Procedures 10
3.05 Anti-Dilution Provisions 11
3.06 Options 12
3.07 Warrant 12
3.08 Dissenters' Rights 12
ARTICLE IV Actions Pending Acquisition
4.01 Forebearances of Company. 13
4.02 Forebearances of Zions 15
ARTICLE V Representations and Warranties
5.01 Disclosure Schedules 16
5.02 Standard 16
5.03 Representations and Warranties of Company 16
5.04 Representations and Warranties of Zions 26
ARTICLE VI Covenants
6.01 Reasonable Best Efforts 28
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6.02 Stockholder Approval 28
6.03 Registration Statement 28
6.04 Press Releases 29
6.05 Access; Information 30
6.06 Acquisition Proposals 30
6.07 Affiliate Agreements 31
6.08 Takeover Laws 31
6.10 NASDAQ Listing 31
6.11 Regulatory Applications 31
6.12 Indemnification; Director and Officers' Insurance 32
6.13 Benefit Plans 33
6.14 Accountants' Letters 34
6.15 Notification of Certain Matters 34
6.16 Conversion of Company Convertible Stock and Exercise of Warrant 34
6.17 Shareholder Agreements 34
ARTICLE VII Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger 34
7.02 Conditions to Obligation of Company 35
7.03 Conditions to Obligation of Zions 36
ARTICLE VIII Termination
8.01 Termination 37
8.02 Effect of Termination and Abandonment 39
ARTICLE IX Miscellaneous
9.01 Survival 39
9.02 Waiver; Amendment 39
9.03 Counterparts 40
9.04 Governing Law; Waiver of Jury Trial 40
9.05 Expenses 40
9.06 Notices 40
9.07 Entire Understanding; No Third Party Beneficiaries 41
9.08 Interpretation; Effect 41
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PAGE
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EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Shareholder's Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of September 23, 1997
(this "Agreement"), by and between Vectra Banking Corp. ("Company") and Zions
Bancorporation ("Zions").
RECITALS
A. Vectra Banking Corp. Vectra Banking Corp. is a Colorado
corporation, having its principal place of business in Denver, Colorado.
▇. ▇▇▇▇▇ Bancorporation. Zions Bancorporation is a Utah
corporation, having its principal place of business in Salt Lake City, Utah.
C. Stock Option Agreement. Concurrently herewith, Company and
Zions are entering into a stock option agreement (the "Stock Option
Agreement"), to be dated the date hereof, whereby Company will grant to Zions
the option to purchase up to 19.9% of the outstanding shares of the Company
Common Stock upon the occurrence of certain events.
D. Intentions of the Parties. It is the intention of the
parties to this Agreement that the business combination contemplated hereby be
accounted for under the "pooling-of-interests" accounting method and be
treated as a "reorganization" under Section 368 of the Internal Revenue Code
of 1986 as amended (the "Code").
E. Board Action. The respective Boards of Directors of each of
Zions and Company have determined that it is in the best interests of their
respective companies and their stockholders to consummate the strategic
business combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements contained herein,
the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving
Company or any of its Subsidiaries or any proposal or offer to acquire in any
manner a substantial
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equity interest in, or a substantial portion of the assets or deposits of,
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
"Agreement" means this Agreement, as amended or modified from time
to time in accordance with Section 9.02.
"Average Closing Price" means the average of the daily closing
prices of Zions Common Stock on NASDAQ (as reported in The Wall Street Journal
or, if not reported therein, in another mutually agreed upon authoritative
source) for the fifteen consecutive full trading days in which such shares are
traded on NASDAQ ending at the close of trading on the Determination Date.
"Benefit Plans" has the meaning set forth in Section 5.03(m).
"Business Combination" has the meaning set forth in Section 3.05.
"CBCA" means the Colorado Business Corporation Act.
"Code" has the meaning set forth in the recitals.
"Colorado Secretary" means the Colorado Secretary of State.
"Common Exchange Ratio" has the meaning set forth in Section 3.01.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Affiliate" has the meaning set forth in Section 6.07(a).
"Company Board" means the Board of Directors of Company.
"Company Bank" means Vectra Bank, a Colorado banking corporation
and a wholly owned subsidiary of Company.
"Company By-Laws" means the By-laws of Company.
"Company Certificate" means the Amended and Restated Articles of
Incorporation of Company.
"Company Common Stock" means the common stock, par value $.01 per
share, of Company.
"Company Convertible Preferred Stock" means the Convertible
Preferred Stock, par value $0.10 per share, of Company.
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"Company Meeting" has the meaning set forth in Section 6.02.
"Company Stock" means, collectively, Company Common Stock and
Company Convertible Preferred Stock.
"Company Stock Option" has the meaning set forth in Section 3.06.
"Company Stock Plans" means the Employees' Equity Incentive Plan,
the Nonemployee Directors' Stock Option Plan, the 1989 Non-Statutory Stock
Option Plan and the Incentive Stock Purchase Plan.
"Corporation Division" has the meaning set forth in Section 2.01(b).
"Costs" has the meaning set forth in Section 6.12(a).
"Covered Transactions" has the meaning set forth in Section 5.03(o).
"Determination Date" means the date that is five NASDAQ trading
days prior to the Effective Date.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenters' Preferred Shares" has the meaning set forth in
Section 3.01(b).
"Dissenting Preferred Shareholder" has the meaning set forth in
Section 3.01(b).
"DOL" has the meaning set forth in Section 5.03(m).
"Effective Date" means the date on which the Effective Time
occurs.
"Effective Time" means the effective time of the Merger, as
provided for in Section 2.02.
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Law" has the meaning set forth in Section 5.03(p).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" has the meaning set forth in Section 5.03(p).
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Index Ratio" has the meaning set forth in Section 8.01(f).
"Insurance Policy" has the meaning set forth in Section 5.03(t).
"KBW Average Index" means the average of the KBW Index for the ten
consecutive full New York Stock Exchange trading days ending on the
Determination Date.
"KBW Index" means the KBW 50 Index of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
Inc. (as provided by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. upon request).
"KBW Starting Index" means the average of the KBW Index for the
ten consecutive full New York Stock Exchange trading days commencing on the
day five full New York Stock Exchange trading days before the first public
announcement of the Merger.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Material Adverse Effect" means, with respect to Zions or Company,
any effect that (i) is material and adverse to the financial position, results
of operations or business of Zions and its Subsidiaries taken as a whole or
Company and its Subsidiaries taken as a whole, respectively, or (ii) would
materially
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impair the ability of either Zions or Company to perform its obligations under
this Agreement or otherwise materially threaten or materially impede the
consummation of the Merger and the other transactions contemplated by this
Agreement; provided, however, that Material Adverse Effect shall not be deemed
to include the impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles or regulatory accounting
requirements applicable to banks and their holding companies generally and (c)
any modifications or changes to valuation policies and practices in connection
with the Merger or restructuring charges taken in connection with the Merger, in
each case in accordance with generally accepted accounting principles.
"Maximum Amount" has the meaning set forth in Section 6.12(c).
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 2.01.
"Multiemployer Plans" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"New Certificate" has the meaning set forth in Section 3.04.
"Old Certificate" has the meaning set forth in Section 3.04.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plans" has the meaning set forth in Section 5.03(m).
"Preferred Exchange Ratio" has the meaning set forth in Section 3.01.
"Previously Disclosed" by a party shall mean information set forth
in its Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
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"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
"Replacement Option" has the meaning set forth in Section 3.06.
"Replacement Warrant" has the meaning specified in Section 3.07.
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or
obligations convertible into or exercisable or exchangeable for, or giving any
person any right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock appreciation right or other instrument
the value of which is determined in whole or in part by reference to the
market price or value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Shareholder Agreements" has the meaning set forth in Section 6.17.
"Starting Price" means the average of the closing price for Zions
Common Stock as reported on NASDAQ (as reported in The Wall Street Journal or,
if not reported therein, in another mutually agreed upon authoritative source)
for the ten consecutive full trading days on which such shares are traded on
NASDAQ commencing on the day five full NASDAQ trading days before the first
public announcement of the Merger.
"Stock Option Agreement" has the meaning set forth in the Recitals.
"Subsidiary" and "Significant Subsidiary" have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03(o).
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"Tax" and "Taxes" means all federal, state, local or foreign
taxes, charges, fees, levies or other assessments, however denominated,
including, without limitation, all net income, gross income, gains, gross
receipts, sales, use, ad valorem, goods and services, capital, production,
transfer, franchise, windfall profits, license, withholding, payroll,
employment, disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority whether arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Company Stock held by
Company or any of its Subsidiaries or by Zions or any of its Subsidiaries, in
each case other than in a fiduciary (including custodial or agency) capacity
or as a result of debts previously contracted in good faith.
"UBCA" means the Utah Business Corporation Act.
"Warrant" means the warrant issued to the underwriter in Company's
initial public offering in 1994.
"Zions" has the meaning set forth in the preamble to this
Agreement.
"Zions Board" means the Board of Directors of Zions.
"Zions Common Stock" means the common stock, no par value per
share, of Zions together with any rights attached thereto under or by virtue
of the Shareholder Protection Rights Agreement, dated September 27, 1996,
between Zions and Zions First National Bank, as rights agent.
"Zions Preferred Stock" means the preferred stock, no par value
per share, of Zions.
"Zions Ratio" has the meaning set forth in Section 8.01(f).
ARTICLE II
THE MERGER
2.01 The Merger. (a) At the Effective Time, Company shall
merge with and into Zions (the "Merger"), the separate corporate existence of
Company shall cease and Zions shall survive and continue to exist as a Utah
corporation (Zions, as the surviving corporation in the Merger, sometimes
being referred to herein as the "Surviving Corporation"). Zions may at any
time prior to the Effective Time change the method of effecting the
combination with Company (including, without limitation, the provisions of
this Article II) if and to the extent it deems such change to be necessary,
appropriate or desirable; provided, however, that no such change shall (i)
alter or change the amount or kind of consideration to be issued to holders of
Company Stock as provided for in this Agreement (the "Merger Consideration"),
(ii) adversely affect the tax treatment of Company's stockholders as a result
of receiving the Merger Consideration or (iii) materially impede or delay
consummation of the transactions contemplated by this Agreement.
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(b) Subject to the satisfaction or waiver of the conditions
set forth in Article VII, the Merger shall become effective upon the
occurrence of the filing in the office of the Utah Division of Corporation and
Commercial Code (the "Corporation Division") of articles of merger in
accordance with Section 16-10a-1105 of the UBCA and the filing in the office
of the Colorado Secretary of articles of merger in accordance with Section
▇-▇▇▇-▇▇▇ of the CBCA or such later date and time as may be set forth in such
articles and the issuance of certificates of merger by the Corporation
Division and the Colorado Secretary under the UBCA and the CBCA, respectively.
The Merger shall have the effects prescribed in the UBCA and the CBCA.
(c) Articles of Incorporation and By-Laws. The articles of
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incorporation and by-laws of Zions immediately after the Merger shall be
those of Zions as in effect immediately prior to the Effective Time.
(d) Directors and Officers of the Surviving Corporation. The
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directors and officers of Zions immediately after the Merger shall be the
directors and officers of Zions immediately prior to the Effective Time, until
such time as their successors shall be duly elected and qualified.
2.02 Effective Date and Effective Time. On such date as Zions
selects (and promptly provides notice thereof to the Company), which shall be
within ten days after the last to occur of the expiration of all applicable
waiting periods in connection with approvals of governmental authorities and
the receipt of all approvals of governmental authorities and all conditions to
the consummation of the Merger are satisfied or waived, or on such earlier or
later date as may be agreed in writing by the parties, articles of merger
shall be executed in accordance with all appropriate legal requirements and
shall be filed as required by law, and the Merger provided for herein shall
become effective upon such filing or on such date as may be specified in such
articles of merger. The date of such filing or such later effective date is
herein called the "Effective Date". The "Effective Time" of the Merger shall
be the time of such filing or as set forth in such articles of merger.
2.03 Plan of Merger. At the request of Zions, Zions and Company
shall enter into a separate plan of merger or articles of merger reflecting
the terms hereof for purposes of any filing requirement of the CBCA or UBCA.
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ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) Outstanding Company Common Stock. Each share, excluding
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Treasury Stock, of Company Common Stock issued and outstanding immediately
prior to the Effective Time shall become and be converted into 0.685 of a
share of Zions Common Stock (the "Common Exchange Ratio"). The Common
Exchange Ratio shall be subject to adjustment as set forth in Sections 3.05
and 8.01(f).
(b) Outstanding Company Convertible Preferred Stock. Each
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share, excluding (i) Treasury Stock and (ii) shares held by holders (each,
a "Dissenting Preferred Shareholder") who perfect their rights to dissent
under the CBCA (the "Dissenters' Preferred Shares"), of Company Convertible
Preferred Stock issued and outstanding immediately prior to the Effective
Time shall become and be converted into 7.755 shares of Zions Common Stock
(the "Preferred Exchange Ratio"). The Preferred Exchange Ratio shall be
subject to adjustment as set forth in Sections 3.05 and 8.01(f).
(c) Outstanding Zions Stock. Each share of Zions Common
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Stock issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and unaffected by the Merger.
(d) Treasury Shares. Each share of Company Stock held as
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Treasury Stock immediately prior to the Effective Time shall be canceled
and retired at the Effective Time and no consideration shall be issued in
exchange therefor.
3.02 Rights as Stockholders; Stock Transfers. At the
Effective Time, holders of Company Stock shall cease to be, and shall have no
rights as, stockholders of Company, other than to receive any dividend or
other distribution with respect to such Company Stock with a record date
occurring prior to the Effective Time and the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on
the stock transfer books of Company or the Surviving Corporation of shares of
Company Stock.
3.03 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of Zions Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, Zions shall pay to each holder of Company Stock who would
otherwise be entitled to a fractional share of Zions Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount
in cash (without interest) determined by multiplying such fraction by the
average of the closing prices of Zions Common Stock, as reported on NASDAQ (as
reported in The Wall Street Journal or, if not reported therein, in another
authoritative source), for the five NASDAQ trading days immediately preceding
the Effective Date.
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3.04 Exchange Procedures. (a) At or prior to the Effective
Time, Zions shall deposit, or shall cause to be deposited, with such bank or
trust company as Zions shall elect (in such capacity, the "Exchange Agent"),
for the benefit of the holders of certificates formerly representing shares of
Company Stock ("Old Certificates"), for exchange in accordance with this
Article III, certificates representing the shares of Zions Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record date
occurring after the Effective Date with respect thereto (without any interest
on any such cash, dividends or distributions), being hereinafter referred to
as the "Exchange Fund") to be paid pursuant to this Article III in exchange
for outstanding shares of Company Stock.
(b) As soon as practicable after the Effective Date but not
more than five business days thereafter, Zions shall send or cause to be sent
to each former holder of record of shares of Company Stock immediately prior
to the Effective Time transmittal materials for use in exchanging such
stockholder's Old Certificates for the consideration set forth in this Article
III. Zions shall cause the New Certificates into which shares of a
stockholder's Company Stock are converted on the Effective Date and/or any
check in respect of any fractional share interests or dividends or
distributions which such person shall be entitled to receive to be delivered
to such stockholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Company Stock (or an affidavit of lost certificate
and, if required by the Exchange Agent, indemnity reasonably satisfactory to
Zions and the Exchange Agent, if any of such certificates are lost, stolen or
destroyed) owned by such stockholder. No interest will be paid on any such
cash to be paid in lieu of fractional share interests or in respect of
dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery. In the event of a transfer
of ownership of any shares of Company Stock not registered in the transfer
records of Company, the exchange described in this Section 3.04(b) may
nonetheless be effected and a check for the cash to be paid in lieu of
fractional shares may be issued to the transferee if the Old Certificate
representing such Company Stock is presented to the Exchange Agent,
accompanied by documents sufficient, in the discretion of Zions and the
Exchange Agent, (i) to evidence and effect such transfer but for the
provisions of Section 3.02 hereof and (ii) to evidence that all applicable
stock transfer taxes have been paid.
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(c) If Old Certificates are not surrendered or the
consideration therefor is not claimed prior to the date on which such
consideration would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed consideration shall, to the extent
permitted by abandoned property and any other applicable law, become the
property of the Surviving Corporation (and to the extent not in its possession
shall be paid over to the Surviving Corporation), free and clear of all claims
or interest of any person previously entitled to such claims. Notwithstanding
the foregoing, neither the Exchange Agent nor any party hereto shall be liable
to any former holder of Company Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(d) At the election of Zions, no dividends or other
distributions with respect to Zions Common Stock with a record date occurring
after the Effective Time shall be paid to the holder of any unsurrendered Old
Certificate representing shares of Company Stock converted in the Merger into
the right to receive shares of such Zions Stock until the holder thereof shall
be entitled to receive New Certificates in exchange therefor in accordance
with the procedures set forth in this Section 3.04, and no such shares of
Company Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares
of Zions Common Stock such holder had the right to receive upon surrender of
the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Company for six months after the Effective Time shall
be returned by the Exchange Agent to Zions. Any stockholders of Company who
have not theretofore complied with this Article III shall thereafter look only
to Zions for payment of the shares of Zions Common Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on Zions Common Stock
deliverable in respect of each share of Company Stock such stockholder holds
as determined pursuant to this Agreement, in each case, without any interest
thereon.
3.05 Anti-Dilution Provisions. In the event Zions changes (or
establishes a record date for changing) the number of shares of Zions Common
Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend, recapitalization or similar transaction with
respect to the outstanding Zions Common Stock and the record date therefor
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted. If, between the date hereof and the Effective Time,
Zions shall consolidate with or into any other corporation (a "Business
Combination") and the terms thereof shall provide that Zions Common Stock
shall be converted into or exchanged for the shares of any other corporation
or entity, then provision shall be made as part of the terms of such Business
Combination so that (i) shareholders of Company who would be entitled to
receive shares of Zions Common Stock pursuant to this Agreement shall be
entitled to receive, in lieu of each share of Zions Common Stock issuable to
such shareholders as provided herein, the same kind and amount of securities
or assets as shall be distributable upon such Business Combination with
respect to one share of Zions Common Stock.
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3.06 Options. At the Effective Time, each outstanding option
to purchase shares of Company Common Stock under the Company Stock Plans
(each, a "Company Stock Option"), whether vested or unvested, shall be
converted into an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, the number of shares of Zions
Common Stock equal to (a) the number of shares of Company Common Stock subject
to the Company Stock Option, multiplied by (b) the Common Exchange Ratio (such
product rounded down to the nearest whole number) (a "Replacement Option"), at
an exercise price per share (rounded down to the nearest whole cent) equal to
(y) the aggregate exercise price for the shares of Company Common Stock which
were purchasable pursuant to such Company Stock Option divided by (z) the
number of full shares of Zions Common Stock subject to such Replacement Option
in accordance with the foregoing. Notwithstanding the foregoing, each
Company Stock Option which is intended to be an "incentive stock option" (as
defined in Section 422 of the Code) shall be adjusted in accordance with the
requirements of Section 424 of the Code. At or prior to the Effective Time,
Company shall take all action, if any, necessary with respect to the Company
Stock Plans to permit the replacement of the outstanding Company Stock Options
by Zions pursuant to this Section. At the Effective Time, Zions shall assume
the Company Stock Plans; provided, that such assumption shall be only in
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respect of the Replacement Options and that Zions shall have no obligation
with respect to any awards under the Company Stock Plans other than the
Replacement Options and shall have no obligation to make any additional grants
or awards under such assumed Company Stock Plans.
3.07 Warrant. At the Effective Time, the unexercised portion
of the Warrant, if any, shall be converted into a warrant (the "Replacement
Warrant") to acquire, on the same terms and conditions as were applicable
under the Warrant, the number of shares of Zions Common Stock equal to (a) the
number of shares of Company Common Stock subject to the Warrant, multiplied by
(b) the Common Exchange Ratio (such product rounded down to the nearest whole
number), at an exercise price per share (rounded down to the nearest whole
cent) equal to (y) the aggregate exercise price for the shares of Company
Common Stock that were purchasable pursuant to the Warrant divided by (z) the
full number of shares of Zions Common Stock subject to the Replacement Warrant
in accordance with the foregoing.
3.08 Dissenters' Rights. Any Dissenting Preferred Shareholder
who shall be entitled to be paid the "fair value" of his or her Dissenters'
Preferred Shares, as provided in Section ▇-▇▇▇-▇▇▇ of the CBCA, shall not be
entitled to the merger consideration in respect thereof provided for under
Section 3.01(b) unless and until such Dissenting Preferred Shareholder shall
have failed to perfect or shall have effectively withdrawn or lost such
Dissenting Preferred Shareholder's right to dissent from the Merger under the
CBCA, and shall be entitled to receive only the payment provided for by
Section ▇-▇▇▇-▇▇▇ of the CBCA with respect to such Dissenters' Preferred
Shares. If any Dissenting Preferred Shareholder shall fail to perfect or
shall have effectively withdrawn or lost such right to dissent, the
Dissenters' Preferred Shares held by such Dissenting Preferred Shareholder
shall thereupon be treated as though such Dissenters' Preferred Shares had
been converted into the right to receive the merger consideration pursuant to
Section 3.01(b) hereof.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forebearances of Company. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without
the prior written consent of Zions, Company will not, and will cause each of
its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Company and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable best efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, take any action
that would adversely affect or delay the ability of Company, Zions or any
of their Subsidiaries to perform any of their obligations on a timely basis
under this Agreement, or take any action that is reasonably likely to have
a Material Adverse Effect on the Company or its Subsidiaries, taken as a
whole.
(b) Capital Stock. Other than pursuant to Rights Previously
Disclosed, (i) issue, sell or otherwise permit to become outstanding, or
authorize the creation of, any additional shares of Company Stock or any
Rights, (ii) enter into any agreement with respect to the foregoing or
(iii) permit any additional shares of Company Stock to become subject to
new grants of employee or director stock options, other Rights or similar
stock-based employee rights.
(c) Dividends, Etc. (a) Make, declare, pay or set aside for
payment any dividend (other than (A) quarterly cash dividends on Company
Convertible Preferred Stock in an amount not to exceed $1.75 per share with
record and payment dates consistent with past practice, (B) dividends from
wholly owned Subsidiaries to Company or another wholly owned Subsidiary of
Company and (C) dividends required to be paid by VBC Capital I pursuant to
the terms of its 9.5% Cumulative Capital Securities issued in April 1997)
on or in respect of, or declare or make any distribution on any shares of
Company Stock or (b) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or
amend or renew any employment, consulting, severance or similar agreements
or arrangements with any director, officer or employee of Company or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof or (iv) for grants
of awards to newly hired employees consistent with past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend
(except (i) as may be required by applicable law or (ii) to satisfy
Previously Disclosed contractual
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obligations existing as of the date hereof) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer or employee of
Company or its Subsidiaries, or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder.
(f) Dispositions. Except as Previously Disclosed, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of
its assets, deposits, business or properties except in the ordinary course
of business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire
(other than by way of foreclosures or acquisitions of control in a bona
fide fiduciary capacity or in satisfaction of debts previously contracted
in good faith, in each case in the ordinary and usual course of business
consistent with past practice) all or any portion of, the assets, business,
deposits or properties of any other entity except in the ordinary course of
business consistent with past practice and in a transaction that is not
material to the Company and its Subsidiaries, taken as a whole.
(h) Capital Expenditures. Except as Previously Disclosed,
make any capital expenditures other than capital expenditures in the
ordinary course of business consistent with past practice in amounts not
exceeding $50,000 individually or $250,000 in the aggregate.
(i) Governing Documents. Amend the Company Certificate,
Company By-Laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of Company's Subsidiaries.
(j) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(k) Contracts. Except in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract (as defined in Section 5.03(k)) or amend or modify in any material
respect any of its existing material contracts.
(l) Claims. Except in the ordinary course of business
consistent with past practice, settle any claim, action or proceeding,
except for any claim, action or proceeding involving solely money damages
in an amount, individually or in the aggregate for all such settlements,
that is not material to Company and its Subsidiaries, taken as a whole.
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(m) Adverse Actions. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii)
as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
(n) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means recommended by Zions, to avoid any material increase in
its aggregate exposure to interest rate risk.
(o) Indebtedness. Incur any indebtedness for borrowed money
other than in the ordinary course of business consistent with past
practice.
(p) Commitments. Agree or commit to do any of the foregoing.
4.02 Forebearances of Zions. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without
the prior written consent of the Company, Zions will not, and will cause
each of its Subsidiaries not to:
(a) Ordinary Course. Take any action that would adversely
affect or delay the ability of Company or Zions to perform any of their
obligations on a timely basis under this Agreement, or take any action that
is reasonably likely to have a Material Adverse Effect on Zions or its
Subsidiaries, taken as a whole.
(b) Adverse Actions. (a) Take any action while knowing that
such action would, or is reasonably likely to, prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii)
as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof,
Zions has delivered to Company a schedule and Company has delivered to Zions a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof
or as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04; provided, that (a) no such item is required to be set
forth in a Disclosure Schedule as an exception to a representation or warranty
if its absence would not be reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 5.02, and (b) the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not
be deemed an admission by a party that such item represents a material
exception or fact, event or circumstance or that such item is reasonably
likely to result in a Material Adverse Effect.
5.02 Standard. No representation or warranty of Company or
Zions contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect,
and no party hereto shall be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, event or circumstance
unless such fact, circumstance or event, individually or taken together with
all other facts, events or circumstances inconsistent with any representation
or warranty contained in Section 5.03 or 5.04 has had or is reasonably likely
to have a Material Adverse Effect on the party making such representation or
warranty.
5.03 Representations and Warranties of Company. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of
its Disclosure Schedule corresponding to the relevant paragraph below, Company
hereby represents and warrants to Zions:
(a) Organization, Standing and Authority. Company is a
------------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado. Company is duly qualified to do business
and is in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
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(b) Company Stock. As of the date hereof, the authorized
-------------
capital stock of Company consists solely of (i) 25,000,000 shares of
Company Common Stock, of which no more than 4,821,418 shares were
outstanding as of the date hereof, and (ii) 5,000,000 shares of preferred
stock, of which 109,709 shares have been designated as Company Convertible
Preferred Stock, of which no more than 109,709 shares are outstanding as of
the date hereof. As of the date hereof, no shares of Company Common Stock
and no shares of Company Convertible Preferred Stock were held in treasury
by Company or otherwise owned by Company or its Subsidiaries. The
outstanding shares of Company Stock have been duly authorized and are
validly issued and outstanding, fully paid and nonassessable, and subject
to no preemptive rights (and were not issued in violation of any preemptive
rights). As of the date hereof, there are no shares of Company Stock
authorized and reserved for issuance, Company does not have any Rights
issued or outstanding with respect to Company Stock, and Company does not
have any commitment to authorize, issue or sell any Company Stock or
Rights, except pursuant to this Agreement, the Stock Option Agreement, the
Company Stock Plans, the Company Convertible Preferred Stock and the
Warrant. The number of shares of Company Common Stock which are issuable
and reserved for issuance upon exercise of Company Stock Options as of the
date hereof are Previously Disclosed in Company's Disclosure Schedule.
(c) Subsidiaries. (i)(A) Company has Previously Disclosed
------------
a list of all of its Subsidiaries together with the jurisdiction of
organization of each such Subsidiary, (B) Company owns, directly or
indirectly, all the issued and outstanding equity securities of each of its
Subsidiaries, (C) no equity securities of any of its Subsidiaries are or
may become required to be issued (other than to it or its wholly owned
Subsidiaries) by reason of any Right or otherwise, (D) there are no
contracts, commitments, understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer any equity
securities of any such Subsidiaries (other than to it or its wholly-owned
Subsidiaries), (E) there are no contracts, commitments, understandings, or
arrangements relating to its rights to vote or to dispose of such
securities and (F) all the equity securities of each Subsidiary held by
Company or its Subsidiaries are fully paid and nonassessable (except
pursuant to applicable Colorado law) and are owned by Company or its
Subsidiaries free and clear of any Liens.
(ii) Company does not own beneficially, directly or
indirectly, any equity securities or similar interests of any Person, or
any interest in a partnership or joint venture of any kind, other than its
Subsidiaries.
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(iii) Each of Company's Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the jurisdiction
of its organization, and is duly qualified to do business and in good
standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified.
(d) Corporate Power. Company and each of its Subsidiaries
---------------
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Company has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this
-------------------
Agreement to receipt of the requisite approval of the agreement of merger
set forth in this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock entitled to vote thereon and a majority of
the outstanding shares of Company Convertible Preferred Stock entitled to
vote thereon each voting as a separate voting group (which are the only
stockholder votes required thereon), this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of Company and the Company
Board on or prior to the date hereof. This Agreement is a valid and
legally binding obligation of Company, enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles). The Company Board of Directors has received
the written opinion of The ▇▇▇▇▇▇▇ Company to the effect that as of the
date hereof the consideration to be received by the holders of Company
Stock in the Merger is fair to the holders of Company Stock from a
financial point of view.
(f) Regulatory Approvals; No Defaults. (i) No consents or
---------------------------------
approvals of, or filings or registrations with, any Governmental Authority
or with any third party are required to be made or obtained by Company or
any of its Subsidiaries in connection with the execution, delivery or
performance by Company of this Agreement or the Stock Option Agreement or
to consummate the Merger except for (A) filings of applications or notices
with federal and Colorado banking authorities, (B) filings with the SEC and
state securities authorities and the approval of this Agreement by the
stockholders of Company, and (C) the filing of articles of merger with the
Corporation Division pursuant to the UBCA and the Colorado Secretary
pursuant to the CBCA and the issuance of related certificates of merger.
As of the date hereof, Company is not aware of any reason why the approvals
set forth in Section 7.01(b) will not be received without the imposition of
a condition, restriction or requirement of the type described in Section
7.01(b).
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(ii) Subject to receipt of the regulatory approvals referred
to in the preceding paragraph, and the expiration of related waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby do not and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of remedies or
any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of Company or of any of its Subsidiaries or to
which Company or any of its Subsidiaries or properties is subject or bound,
(B) constitute a breach or violation of, or a default under, the Company
Certificate or the Company By-Laws, or (C) require any consent or approval
under any such law, rule, regulation, judgment, decree, order, governmental
permit or license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents. (i) Company's
-----------------------------------
Annual Reports on Form 10-K for the fiscal years ended December 31, 1994,
1995 and 1996, and all other reports, registration statements, definitive
proxy statements or information statements filed or to be filed by it or
any of its Subsidiaries subsequent to December 31, 1994 under the
Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the Company's "SEC
Documents") with the SEC, as of the date filed, (A) complied or will comply
in all material respects as to form with the applicable requirements under
the Securities Act or the Exchange Act, as the case may be, and (B) did not
and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly present, the
financial position of Company and its Subsidiaries as of its date, and each
of the statements of income and changes in stockholders' equity and cash
flows or equivalent statements in such SEC Documents (including any related
notes and schedules thereto) fairly presents, or will fairly present, the
results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of Company and its Subsidiaries for the periods
to which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
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(ii) Since December 31, 1996, Company and its Subsidiaries
have not incurred any liability other than in the ordinary course of
business consistent with past practice.
(iii) Since December 31, 1996, (A) Company and its Subsidiaries
have conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Company.
(h) Litigation. No litigation, claim or other proceeding
----------
before any court or governmental agency is pending against Company or any of
its Subsidiaries and, to Company's knowledge, no such litigation, claim or
other proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Company nor any of its
------------------
Subsidiaries or any of their properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or authority
charged with the supervision or regulation of financial institutions or
issuers of securities or engaged in the insurance of deposits (including,
without limitation, the Colorado Division of Banking, the Federal Reserve and
the FDIC) or the supervision or regulation of it or any of its Subsidiaries
(collectively, the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised
by any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) Compliance with Laws. Company and each of its
--------------------
Subsidiaries:
(i) is in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure
Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices;
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(ii) has all permits, licenses, authorizations, orders
and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required
in order to permit them to own or lease their properties and to
conduct their businesses as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in
full force and effect and, to Company's knowledge, no suspension
or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1995, no
notification or communication from any Governmental Authority (A)
asserting that Company or any of its Subsidiaries is not in
compliance with any of the statutes, regulations or ordinances
which such Governmental Authority enforces or (B) threatening to
revoke any license, franchise, permit or governmental
authorization (nor, to Company's knowledge, do any grounds for any
of the foregoing exist).
(k) Material Contracts; Defaults. Except for those
----------------------------
agreements and other documents filed as exhibits to its SEC Documents, neither
it nor any of its Subsidiaries is a party to, bound by or subject to any
agreement, contract, arrangement, commitment or understanding (whether written
or oral) (i) that is a "material contract" within the meaning of Item
601(b)(10) of the SEC's Regulation S-K or (ii) that materially restricts the
conduct of business by it or any of its Subsidiaries. Neither it nor any of
its Subsidiaries is in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a
party, by which its respective assets, business, or operations may be bound or
affected, or under which it or its respective assets, business, or operations
receives 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.
(l) No Brokers. No action has been taken by Company that
----------
would give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a Previously Disclosed
fee to be paid to The ▇▇▇▇▇▇▇ Company.
(m) Employee Benefit Plans.
----------------------
(i) All benefit and compensation plans, contracts,
policies or arrangements covering current employees or former
employees of Company and its subsidiaries (the "Employees") and
current or former directors of Company, including, but not limited
to, "employee benefit plans" within the meaning of Section 3(3) of
ERISA, and deferred compensation, stock option, stock purchase,
stock appreciation rights, stock based, incentive and bonus plans
(the "Benefit Plans"), are Previously Disclosed in the Disclosure
Letter. True and complete copies of all Benefit Plans, including,
but not limited to, any trust instruments and insurance contracts
forming a part of any Benefit Plans, and all amendments thereto
have been provided or made available to Zions.
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(ii) All employee benefit plans, other than
"multiemployer plans" within the meaning of Section 3(37) of
ERISA, covering Employees (the "Plans"), to the extent subject to
ERISA, are in substantial compliance with ERISA. The Company is
not a party to any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Code. There
is no material pending or threatened litigation relating to the
Plans. Neither Company nor any of its Subsidiaries has engaged in
a transaction with respect to any Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could
subject Company or any Subsidiary to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(iii) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by Company or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one
employer with Company under Section 4001 of ERISA or Section 414
of the Code (an "ERISA Affiliate"). Neither Company, any of its
Subsidiaries nor an ERISA Affiliate has contributed to a
"multiemployer plan", within the meaning of Section 3(37) of
ERISA, at any time on or after September 26, 1980. No notice of a
"reportable event", within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived,
has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or
will be required to be filed in connection with the transactions
contemplated by this Plan.
(iv) All contributions required to be made under the
terms of any Plan have been timely made or have been reflected on
the consolidated financial statements of Company included in the
SEC Documents. Neither any Pension Plan nor any single-employer
plan of an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. Neither Company nor any of its
Subsidiaries has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
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(v) Under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior
to the date hereof, the actuarially determined present value of
all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of
such Plan, and there has been no material change in the financial
condition of such Plan since the last day of the most recent plan
year.
(vi) Neither Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit
Plan. Company or its Subsidiaries may amend or terminate any such
Benefit Plan at any time without incurring any liability
thereunder.
(vii) The consummation of the transactions contemplated by
this Agreement will not (x) entitle any employees of Company or
any of its Subsidiaries to severance pay, (y) accelerate the time
of payment or vesting or trigger any payment of compensation or
benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Benefit Plans or (z)
result in any breach or violation of, or a default under, any of
the Benefit Plans. Without limiting the foregoing, as a result of
the consummation of the transactions contemplated by this
Agreement, none of Zions, Company, or any of its Subsidiaries will
be obligated to make a payment to an individual that would be a
"parachute payment" to a disqualified individual as those terms
are defined in Section 280G of the Code, without regard to whether
such payment is reasonable compensation for personal services
performed or to be performed in the future.
(n) Labor Matters. Neither Company nor any of its Subsidiaries
-------------
is a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is Company or any of its Subsidiaries the subject of a proceeding asserting
that it or any such Subsidiary has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel Company
or any such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to Company's knowledge,
threatened, nor is Company aware of any activity involving its or any of its
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
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(o) Takeover Laws; Dissenters Rights. Company has taken all
---------------------------------
action required to be taken by it in order to exempt this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby from,
and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby (the "Covered Transactions") are exempt from,
the requirements of any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws and
regulations of the state of Colorado (collectively, "Takeover Laws"). Holders
of Company Common Stock do not have dissenters' rights in connection with the
Merger. Holders of Company Convertible Preferred Stock do have dissenters'
rights in connection with the Merger.
(p) Environmental Matters.
---------------------
(i) Company and each of its Subsidiaries has complied at
all times with applicable Environmental Laws; (ii) no real property
(including buildings or other structures) currently or formerly owned or
operated by Company or any of its Subsidiaries, or any property in which
Company or any of its Subsidiaries has held a security interest, lien or
a fiduciary or management role ("Loan Property"), has been contaminated
with, or has had any release of, any Hazardous Substance; (iii) neither
Company nor any of its Subsidiaries could be deemed the owner or
operator of any Loan Property under any Environmental Law which such
Loan Property has been contaminated with, or has had any release of, any
Hazardous Substance; (iv) neither Company nor any of its Subsidiaries is
subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither Company nor any
of its Subsidiaries has received any notice, demand letter, claim or
request for information alleging any violation of, or liability under,
any Environmental Law; (vi) neither Company nor any of its Subsidiaries
is subject to any order, decree, injunction or other agreement with any
Governmental Authority or any third party relating to any Environmental
Law; (vii) to the best of Company's knowledge, there are no
circumstances or conditions (including the presence of asbestos,
underground storage tanks, lead products, polychlorinated biphenyls,
prior manufacturing operations, dry-cleaning, or automotive services)
involving Company or any of its Subsidiaries, any currently or formerly
owned or operated property, or any Loan Property, that could reasonably
be expected to result in any claims, liability or investigations against
Company or any of its Subsidiaries or result in any restrictions on the
ownership, use, or transfer of any property pursuant to any
Environmental Law; and (viii) Company has delivered to Zions copies of
all environmental reports, studies, sampling data, correspondence,
filings and other environmental information in its possession or
reasonably available to it relating to Company, any Subsidiary of
Company, any currently or formerly owned or operated property or any
Loan Property.
As used herein, the term "Environmental Law" means any
federal, state or local law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to:
(A) the protection or restoration of the environment, health, safety, or
natural resources, (B) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (C) noise, odor,
wetlands, indoor air, pollution, contamination or any injury or threat
of injury to persons or property in connection with any Hazardous
Substance and the term "Hazardous Substance" means any substance in any
concentration that is: (A) listed, classified or regulated pursuant to
any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any
other substance which is or may be the subject of regulatory action by
any Governmental Authority in connection with any Environmental Law.
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(q) Tax Matters. (i) (A) All Tax Returns that are required
-----------
to be filed (taking into account any extensions of time within which to file)
by or with respect to Company and its Subsidiaries have been duly filed, (B)
all Taxes shown to be due on the Tax Returns referred to in clause (A) have
been paid in full, (C) the Tax Returns referred to in clause (A) have been
examined by the Internal Revenue Service or the appropriate Tax authority or
the period for assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired, (D) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (E)
no issues that have been raised by the relevant taxing authority in connection
with the examination of any of the Tax Returns referred to in clause (A) are
currently pending, and (F) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of Company or its
Subsidiaries. Company has made available to Zions true and correct copies of
the United States federal income Tax Returns filed by Company and its
Subsidiaries for each of the three most recent fiscal years ended on or before
December 31, 1996. Neither Company nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that accrued on
or before the end of the most recent period covered by Company's SEC Documents
filed prior to the date hereof in excess of the amounts accrued with respect
thereto that are reflected in the financial statements included in Company's
SEC Documents filed on or prior to the date hereof. Neither Company nor any
of its Subsidiaries is a party to any Tax allocation or sharing agreement, is
or has been a member of an affiliated group filing consolidated or combined
Tax returns (other than a group the common parent of which is or was Company)
or otherwise has any liability for the Taxes of any person (other than Company
and its Subsidiaries). As of the date hereof, neither Company nor any of its
Subsidiaries has any reason to believe that any conditions exist that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to Section
1445 of the Code as a result of the transfer contemplated by this Agreement.
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(r) Risk Management Instruments. All interest
---------------------------
rate swaps, caps, floors, option agreements, futures and forward
contracts and other similar risk management arrangements, whether
entered into for Company's own account, or for the account of one or
more of Company's Subsidiaries or their customers (all of which are
listed on Company's Disclosure Schedule), if any, were entered into
(i) in accordance with prudent business practices and all applicable
laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time;
and each of them constitutes the valid and legally binding obligation
of Company or one of its Subsidiaries, enforceable in accordance with
its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and are
in full force and effect. Neither Company nor its Subsidiaries, nor
to Company's knowledge, any other party thereto, is in breach of any
of its obligations under any such agreement or arrangement.
(s) Books and Records. The books and records of
-----------------
Company and its Subsidiaries have been fully, properly and accurately
maintained in all material respects, and there are no material
inaccuracies or discrepancies of any kind contained or reflected
therein, and they fairly present the financial position of Company
and its Subsidiaries.
(t) Insurance. Company has Previously Disclosed
---------
all of the insurance policies, binders, or bonds maintained by
Company or its Subsidiaries ("Insurance Policies"). Company and its
Subsidiaries are insured with reputable insurers against such risks
and in such amounts as the management of Company reasonably has
determined to be prudent in accordance with industry practices. All
the Insurance Policies are in full force and effect; Company and its
Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(u) Accounting Treatment. As of the date hereof,
--------------------
Company is not aware of any reason why the Merger will fail to
qualify for "pooling of interests" accounting treatment.
5.04 Representations and Warranties of Zions. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of
its Disclosure Schedule corresponding to the relevant paragraph below, Zions
hereby represents and warrants to Company as follows:
(a) Organization, Standing and Authority. Zions is duly
------------------------------------
organized, validly existing and in good standing under the laws of the
State of Utah. Zions is duly qualified to do business and is in good
standing in the states of the United States and foreign jurisdictions where
its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified. Zions has in effect all federal,
state, local, and foreign governmental authorizations necessary for it to
own or lease its properties and assets and to carry on its business as it
is now conducted.
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(b) Zions Stock. As of the date hereof, the authorized
-----------
capital stock of Zions consists solely of 100,000,000 shares of Zions
Common Stock, of which no more than 59,395,411 shares were outstanding as
of the date hereof and 3,000,000 shares of Zions Preferred Stock, of which
no shares were outstanding as of the date hereof.
(c) Corporate Power. Zions and each of its Significant
---------------
Subsidiaries has the corporate power and authority to carry on its business
as it is now being conducted and to own all its properties and assets; and
Zions has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
(d) Corporate Authority. This Agreement and the transactions
-------------------
contemplated hereby have been authorized by all necessary corporate action
of Zions and its Board of Directors. This Agreement is a valid and legally
binding agreement of Zions enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(e) Regulatory Approvals; No Defaults. (i) No consents or
---------------------------------
approvals of, or filings or registrations with, any court, administrative
agency or commission or other governmental authority or instrumentality or
with any third party are required to be made or obtained by Zions or any of
its Subsidiaries in connection with the execution, delivery or performance
by Zions of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) approval of the listing on the NASDAQ of
Zions Common Stock to be issued in the Merger; (C) the filing and
declaration of effectiveness of the Registration Statement; (D) the filing
of articles of merger with the Corporation Division pursuant to the UBCA
and the Colorado Secretary pursuant to the CBCA and the issuance of related
certificates of merger; (E) such filings as are required to be made or
approvals as are required to be obtained under the securities or "Blue Sky"
laws of various states in connection with the issuance of Zions Stock in
the Merger; and (F) receipt of the approvals set forth in Section 7.01(b).
As of the date hereof, Zions is not aware of any reason why the approvals
set forth in Section 7.01(b) will not be received without the imposition of
a condition, restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt of the regulatory approvals referred
to in the preceding paragraph and expiration of the related waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (A) constitute
a breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Zions or of any of its
Subsidiaries or to which Zions or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of Zions or any of its Subsidiaries, or (C) require any consent
or approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
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(f) Financial Reports and SEC Documents; Material Adverse
-----------------------------------------------------
Effect. (i) Zions's SEC Documents, as of the date filed, (A) complied or
------
will comply in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may
be, and (B) did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and each of the balance sheets
contained in or incorporated by reference into any such SEC Document
(including the related notes and schedules thereto) fairly presents, or
will fairly present, the financial position of Zions and its Subsidiaries
as of its date, and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in such SEC
Documents (including any related notes and schedules thereto) fairly
presents, or will fairly present, the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of
Zions and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(ii) Since December 31, 1996, no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.04
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(g) No Brokers. No action has been taken by Zions that would
----------
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement.
(h) Accounting Treatment; Tax Matters. As of the date
---------------------------------
hereof, it is aware of no reason why the Merger will fail to qualify for
"pooling of interests" accounting treatment. As of the date hereof,
neither Zions nor any of its Subsidiaries has any reason to believe that
any conditions exist that might prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each of Company and Zions agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 Stockholder Approval. Company agrees to take, in accordance
with applicable law and the Company Certificate and the Company By-Laws, all
action necessary to convene an appropriate meeting of its stockholders to
consider and vote upon the approval and adoption of this Agreement and any
other matters required to be approved by Company's stockholders for
consummation of the Merger (including any adjournment or postponement, the
"Company Meeting"), in each case as promptly as practicable after the
Registration Statement is declared effective. Except to the extent legally
required for the discharge by the Company Board of its fiduciary duties as
advised by counsel to the Company Board, the Company Board shall recommend
such approval, and Company shall take all reasonable, lawful action to solicit
such approval by its stockholders.
6.03 Registration Statement. (a) Zions agrees to prepare a
registration statement on Form S-4 or other applicable form (the "Registration
Statement") to be filed by Zions with the SEC in connection with the issuance
of Zions Common Stock in the Merger (including the proxy statement and
prospectus and other proxy
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solicitation materials of Company constituting a part thereof (the "Proxy
Statement") and all related documents). Company agrees to cooperate, and to
cause its Subsidiaries to cooperate, with Zions, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement; and provided that Company and its Subsidiaries have cooperated as
required above, Zions agrees to file the Proxy Statement in preliminary form
with the SEC as soon as reasonably practicable but not later than 30 days after
the date hereof, and to file the Registration Statement with the SEC as soon as
reasonably practicable after any SEC comments with respect to the preliminary
Proxy Statement are resolved. Each of Company and Zions agrees to use all
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as reasonably practicable after filing
thereof. Zions also agrees to use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. Company agrees to
furnish to Zions all information concerning Company, its Subsidiaries, officers,
directors and stockholders as may be reasonably requested in connection with the
foregoing.
(b) Each of Company and Zions agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it
for inclusion or incorporation by reference in (i) the Registration Statement
will, at the time the Registration Statement and each amendment or supplement
thereto, if any, becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to stockholders and at the time of the
Company Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or any statement which, in the light of the
circumstances under which such statement is made, will be false or misleading
with respect to any material fact, or which will omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier statement in the Proxy
Statement or any amendment or supplement thereto. Each of Company and Zions
further agrees that if it shall become aware prior to the Effective Date of
any information furnished by it that would cause any of the statements in the
Proxy Statement to be false or misleading with respect to any material fact,
or to omit to state any material fact necessary to make the statements therein
not false or misleading, promptly to inform the other party thereof and to
take the necessary steps to correct the Proxy Statement.
(c) Zions agrees to advise Company, promptly after Zions
receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of Zions
Common Stock for offering or sale in any jurisdiction, of the initiation or
threat of any proceeding for any such purpose, or of any request by the SEC
for the amendment or supplement of the Registration Statement or for
additional information.
6.04 Press Releases. Each of Company and Zions agrees that it
will not, without the prior approval of the other party, issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by applicable
law or regulation or NASDAQ rules (provided that the issuing party shall
nevertheless provide the other party with notice of, and the opportunity to
review, any such press release or written statement).
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6.05 Access; Information. (a) Company and Zions agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, each party shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the
period prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as the requesting party may reasonably
request and, during such period, the providing party shall furnish promptly to
the requesting party (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal or state
securities or banking laws, and (ii) all other information concerning the
business, properties and personnel of it as the requesting party may
reasonably request.
(b) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement.
Subject to the requirements of law, each party will keep confidential, and
will cause its representatives to keep confidential, all information and
documents obtained pursuant to this Section 6.05 (as well as any other
information obtained prior to the date hereof in connection with the entering
into of this Agreement) unless such information (i) was already known to such
party, (ii) becomes available to such party from other sources not known by
such party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the providing party or (iv) is or becomes
readily ascertainable from published information or trade sources. In the
event that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall
promptly cause all copies of documents or extracts thereof containing
information and data as to the other party to be returned to the other party.
No investigation by either party of the business and affairs of the other
party shall affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement, or the conditions to either
party's obligation to consummate the transactions contemplated by this
Agreement.
6.06 Acquisition Proposals. Company agrees that it shall not,
and shall cause its Subsidiaries and its and its Subsidiaries' officers,
directors, agents, advisors and affiliates not to, solicit or encourage
inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential information to, or have any
discussions with, any person relating to, any Acquisition Proposal, except to
the extent legally required for the discharge by the Company Board of its
fiduciary duties as advised by counsel to the Company Board. Company shall
immediately cease and cause to be terminated any activities, discussions or
negotiations conducted prior to the date of this Agreement with any parties
other than Zions with respect to any of the foregoing and shall use its
reasonable best efforts to enforce any confidentiality or similar agreement
relating to an Acquisition Proposal. Company shall promptly (within 24 hours)
advise Zions following the receipt by Company of any Acquisition Proposal and
the substance thereof (including the identity of the person making such
Acquisition Proposal), and advise Zions of any developments with respect to
such Acquisition Proposal immediately upon the occurrence thereof.
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6.07 Affiliate Agreements. (ai Not later than the 15th day prior
to the mailing of the Proxy Statement, Company shall deliver to Zions a
schedule of each person that, to the best of its knowledge, is or is
reasonably likely to be, as of the date of the Company Meeting, deemed to be
an "affiliate" of Company (each, a "Company Affiliate") as that term is used
in Rule 145 under the Securities Act or SEC Accounting Series Releases 130 and
135.
(b) Company shall use its reasonable best efforts to cause each
person who may be deemed to be a Company Affiliate to execute and deliver to
Zions on or before the date of mailing of the Proxy Statement an agreement in
the form attached hereto as Exhibit A.
6.08 Takeover Laws. No party hereto shall take any action that
would cause the transactions contemplated by this Agreement or the Stock
Option Agreement to be subject to requirements imposed by any Takeover Law and
each of them shall take all necessary steps within its control to exempt (or
ensure the continued exemption of) the transactions contemplated by this
Agreement from, or if necessary challenge the validity or applicability of,
any applicable Takeover Law, as now or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Company
shall, consistent with generally accepted accounting principles and on a basis
mutually satisfactory to it and Zions, modify and change its loan, litigation
and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of Zions.
6.10 NASDAQ Listing. Zions agrees to use its reasonable best
efforts to list, prior to the Effective Date, on the NASDAQ, subject to
official notice of issuance, the shares of Zions Common Stock to be issued to
the holders of Company Stock in the Merger.
6.11 Regulatory Applications. (a) Zions and Company and their
respective Subsidiaries shall cooperate and use their respective reasonable
best efforts to prepare all documentation, to effect all filings and to obtain
all permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Zions and Company shall make all required bank regulatory
filings, including the appropriate filing with the Federal Reserve, within 30
days after the date hereof. Each of Zions and Company shall have the right to
review in advance, and to the extent practicable each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of
the parties hereto agrees to act reasonably and as promptly as practicable.
Each party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and
each party will keep the other party appraised of the status of material
matters relating to completion of the transactions contemplated hereby.
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(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any filing, notice or application
made by or on behalf of such other party or any of its Subsidiaries to any
third party or Governmental Authority.
6.12 Indemnification; Director and Officers' Insurance. (a)
From and after the Effective Time through the fourth anniversary of the
Effective Date, Zions agrees to indemnify and hold harmless each present and
former director and officer of Company or any Subsidiary of Company determined
as of the Effective Time (the "Indemnified Parties"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time (including with respect to this
Agreement or any of the transactions contemplated hereby), whether asserted,
claimed or arising prior to, at or after the Effective Time, to the extent to
which such Indemnified Parties were entitled under Colorado law and the
Company Certificate or the Company By-Laws in effect on the date hereof, and
Zions shall also advance expenses as incurred to the extent permitted under
Colorado law and the Company Certificate and the Company By-Laws.
(b) Any Indemnified Party wishing to claim indemnification
under Section 6.12(a), upon learning of any such claim, action, suit,
proceeding or investigation, shall as promptly as possible notify Zions
thereof, but the failure to so notify shall not relieve Zions of any liability
it may have to such Indemnified Party if such failure does not materially
prejudice Zions. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Zions
shall have the right to assume the defense thereof and Zions shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Zions elects not to assume
such defense or counsel for the Indemnified Parties advises in writing that
there are issues which raise conflicts of interest between Zions and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory
to them, and Zions shall pay the reasonable fees and expenses of one such
counsel for the Indemnified Parties in any jurisdiction promptly as statements
thereof are received, (ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) Zions shall not be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld); and provided, further, that Zions shall not have
-------- -------
any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is not permitted or is
prohibited by applicable law.
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(c) For a period of three years after the Effective Time,
Zions shall use its reasonable best efforts to cause to be maintained in
effect the current policies of directors' and officers' liability insurance
maintained by Company (provided that Zions may substitute therefor policies of
comparable coverage with respect to claims arising from facts or events which
occurred before the Effective Time); provided, however, that in no event shall
-------- -------
Zions be obligated to expend, in order to maintain or provide insurance
coverage pursuant to this Section 6.12(c), any amount per annum in excess of
125% of the amount of the annual premiums paid as of the date hereof by
Company for such insurance (the "Maximum Amount"). If the amount of the
annual premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, Zions shall use all reasonable efforts to maintain
the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount. Notwithstanding
the foregoing, prior to the Effective Time, Zions may request Company to, and
Company shall, purchase insurance coverage, on such terms and conditions as
shall be acceptable to Zions, extending for a period of three years Company's
directors' and officers' liability insurance coverage in effect as of the date
hereof (covering past or future claims with respect to periods before the
Effective Time) and such coverage shall satisfy Zions' obligations under this
Subsection (c).
(d) If Zions or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of
Zions shall assume the obligations set forth in this Section 6.12
6.13 Benefit Plans. Zions shall, from and after the Effective
Time, provide former employees of Company who remain as employees of Zions,
with employee benefit plans no less favorable in the aggregate than those
provided to similarly situated employees of Zions. If any employee of Company
or any subsidiary of Company becomes a participant in any employment benefit
plan, practice or policy of the Surviving Corporation, such employee shall be
given credit under such plan, practice or policy for all service prior to the
Effective Date with Company or such subsidiary of Company 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 Company or any subsidiary of Company that continue
in effect following the Effective Time. In addition, Zions shall roll
Company's existing 401(k) plan into Zion's 401(k) plan.
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6.14 Accountants' Letters. Each of Company and Zions shall use
its reasonable best efforts to cause to be delivered to the other party, and
to Zions's directors and officers who sign the Registration Statement, a
letter of KPMG Peat Marwick LLP, independent auditors for each, dated (i) the
date on which the Registration Statement shall become effective and (ii) a
date shortly prior to the Effective Date, and addressed to such other party,
and such directors and officers, in form and substance customary for "comfort"
letters delivered by independent accountants in accordance with Statement of
Accounting Standards No. 72.
6.15 Notification of Certain Matters. Each of Company and Zions
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.16 Conversion of Company Convertible Stock and Exercise of
Warrant. Company shall use its reasonable best efforts to cause all
outstanding shares of the Company Convertible Preferred Stock to be converted
and the Warrant to be exercised prior to the Effective Date.
6.17 Shareholder Agreements. The directors and certain officers
of Company, in their capacities as shareholders, in exchange for good and
valuable consideration, have executed and delivered to Zions shareholder
agreements substantially in the form of Exhibit B hereto (the "Shareholder
Agreements"), committing such persons, among other things, (i) to vote their
shares of Company Common Stock in favor of the Agreement at the Company
Meeting and (ii) to certain representations concerning the ownership of
Company Common Stock and Zions Common Stock to be received in the Merger.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each of Zions and Company to consummate the
Merger is subject to the fulfillment or written waiver by Zions and Company
prior to the Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger
---------------------
shall have been duly adopted by the requisite vote of the stockholders of
Company.
(b) Regulatory Approvals. All regulatory approvals required
--------------------
to consummate the transactions contemplated hereby shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
in respect thereof shall have expired and no such approvals shall contain
any conditions, restrictions or requirements which the Zions Board
reasonably determines would (i) following the Effective Time, have a
Material Adverse Effect on the Surviving Corporation and its Subsidiaries
taken as a whole or (ii) reduce the benefits of the transactions
contemplated hereby to such a degree that Zions would not have entered into
this Agreement had such conditions, restrictions or requirements been known
at the date hereof.
(c) No Injunction. No Governmental Authority of competent
-------------
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall
----------------------
have become effective under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by
the SEC.
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(e) Blue Sky Approvals. All permits and other authorizations
------------------
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Zions Common Stock to be
issued in the Merger shall have been received and be in full force and
effect.
(f) Listing. The shares of Zions Common Stock to be issued
-------
in the Merger shall have been approved for listing on the NASDAQ, subject
to official notice of issuance.
7.02 Conditions to Obligation of Company. The obligation of
Company to consummate the Merger is also subject to the fulfillment or written
waiver by Company prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Zions set forth in this Agreement (subject to the standard
set forth in Section 5.02) shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their
terms speak only as of the date of this Agreement or some other date shall
be true and correct as of such date), and Company shall have received a
certificate, dated the Effective Date, signed on behalf of Zions by the
Chief Executive Officer and the Chief Financial Officer of Zions to such
effect.
(b) Performance of Obligations of Zions. Zions shall have
-----------------------------------
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Company
shall have received a certificate, dated the Effective Date, signed on
behalf of Zions by the Chief Executive Officer and the Chief Financial
Officer of Zions to such effect.
(c) Opinion of Company's Counsel. Company shall have
----------------------------
received an opinion of ▇▇▇▇▇, ▇▇▇▇ & Fingersh, special counsel to Company,
dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368 of the
Code and (ii) no gain or loss will be recognized by stockholders of Company
who receive shares of Zions Common Stock in exchange for shares of Company
Common Stock, except with respect to cash received in lieu of fractional
share interests. In rendering its opinion, ▇▇▇▇▇, Rice & Fingersh may
require and rely upon representations contained in letters from Company,
Zions and stockholders of Company.
(d) Accountants' Letters. Company shall have received the
--------------------
letters referred to in Section 6.14 from KPMG Peat Marwick LLP, Zions'
independent auditors.
(e) Rights Plan. No Stock Acquisition Date (as such term is
-----------
defined in the Shareholder Protection Rights Plan) shall have occurred
under the Shareholder Protection Rights Plan prior to the Effective Time.
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(f) Fairness Opinion. Company shall have received the
----------------
written opinion of The ▇▇▇▇▇▇▇ Company to the effect that, as of the date
of the mailing of the Proxy Statement to the shareholders of Company in
connection with the Company Meeting, the consideration to be received by
the holders of the Company Stock in the Merger is fair to the holders of
the Company Stock from a financial point of view.
(g) Accounting Treatment. Company shall have received from
--------------------
KPMG Peat Marwick LLP, Company's independent auditors, letters, dated the
date of or shortly prior to each of the mailing date of the Proxy Statement
and the Effective Date, stating its opinion that the Merger shall qualify
for pooling-of-interests accounting treatment.
7.03 Conditions to Obligation of Zions. The obligation of Zions
to consummate the Merger is also subject to the fulfillment or written waiver
by Zions prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Company set forth in this Agreement (subject to the standard
set forth in Section 5.02) shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their
terms speak only as of the date of this Agreement or some other date shall
be true and correct as of such date) and Zions shall have received a
certificate, dated the Effective Date, signed on behalf of Company by the
Chief Executive Officer and the Chief Financial Officer of Company to such
effect.
(b) Performance of Obligations of Company. Company shall
-------------------------------------
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and
Zions shall have received a certificate, dated the Effective Date, signed
on behalf of Company by the Chief Executive Officer and the Chief Financial
Officer of Company to such effect.
(c) Opinion of Zions' Counsel. Zions shall have received an
-------------------------
opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to Zions, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may require and rely upon representations contained in
letters from Company, Zions and stockholders of Company.
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(d) Accountants' Letters. Zions shall have received the
--------------------
letters referred to in Section 6.14 from KPMG Peat Marwick LLP, Company's
independent auditors.
(e) Accounting Treatment. Zions shall have received from
--------------------
KPMG Peat Marwick LLP, Zions' independent auditors, letters, dated the date
of or shortly prior to each of the mailing date of the Proxy Statement and
the Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Acquisition may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time,
--------------
by the mutual consent of Zions and Company, if the Board of Directors of
each so determines by vote of a majority of the members of its entire
Board.
(b) Breach. At any time prior to the Effective Time, by
------
Zions or Company, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either: (i) a
breach by the other party of any representation or warranty contained
herein (subject to the standard set forth in Section 5.02), which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach; or (ii) a breach by the other
party of any of the covenants or agreements contained herein, which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach, provided that such breach
(whether under (i) or (ii)) would be reasonably likely, individually or in
the aggregate with other breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the Effective Time, by Zions
-----
or Company, if its Board of Directors so determines by vote of a majority
of the members of its entire Board, in the event that the Merger is not
consummated by March 31, 1998, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this
Section 8.01(c).
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(d) No Approval. By Company or Zions, if its Board of
-----------
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental Authority
required for consummation of the Merger and the other transactions
contemplated by this Agreement shall have been denied by final
nonappealable action of such Governmental Authority or (ii) the stockholder
approval required by Section 7.01(a) herein is not obtained at the Company
Meeting.
(e) Failure to Recommend, Etc. At any time prior to the
-------------------------
Company Meeting, by Zions if the Company Board shall have failed to make
its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse in any respect to the interests of Zions.
(f) Possible Adjustment. By Company, if its Board of
-------------------
Directors so determines by a vote of a majority of the members of its
entire Board, if both of the following conditions are satisfied:
(1) The Average Closing Price on the Determination Date
of shares of Zions Common Stock shall be less than the Starting Price;
and
(2) (i) the number obtained by dividing the Average
Closing Price on such Determination Date by the Starting Price (such
number being referred to herein as the "Zions Ratio") shall be less than
(ii) the number obtained by dividing the KBW Average Index by the KBW
Starting Index and multiplying the quotient in this clause (2) (ii) by
0.82 (such number being referred to herein as the "Index Ratio"):
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subject, however, to the following two sentences. If Company elects to
exercise its termination right pursuant to the immediately preceding sentence,
it shall give written notice to Zions within 24 hours of the Determination
Date. Prior to the Effective Date, Zions shall have the option of adjusting
(x) the Common Exchange Ratio to equal the lesser of (i) a number equal to a
quotient (rounded to the nearest one-thousandth), the numerator of which is
the product of the Starting Price and the Common Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price, and (ii) a
number equal to a quotient (rounded to the nearest one-thousandth), the
numerator of which is the Index Ratio multiplied by the Common Exchange Ratio
(as then in effect) and the denominator of which is the Zions Ratio and (y)
the Preferred Exchange Ratio to equal the lesser of (i) a number equal to a
quotient (rounded to the nearest one-thousandth), the numerator of which is
the product of the Starting Price and the Preferred Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price, and (ii) a
number equal to a quotient (rounded to the nearest one-thousandth), the
numerator of which is the Index Ratio multiplied by the Preferred Exchange
Ratio (as then in effect) and the denominator of which is the Zions Ratio. If
Zions makes an election contemplated by the preceding sentence, it shall give
prompt written notice to Company of such election and the revised Common
Exchange Ratio and Preferred Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 8.01(f) and this Agreement shall remain
in effect in accordance with its terms (except as the Common Exchange Ratio
and the Preferred Exchange Ratio shall have been so modified), and any
references in this Agreement to "Common Exchange Ratio" and the "Preferred
Exchange Ratio" shall thereafter be deemed to refer to the Common Exchange
Ratio and the Preferred Exchange Ratio as adjusted pursuant to this Section
8.01(f).
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
this Article VIII, no party to this Agreement shall have any liability or
further obligation to any other party hereunder except (i) as set forth in
Section 9.01 and (ii) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement giving rise to such
termination.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Sections 6.12 and 6.13 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.05(b),
8.02, and this Article IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any
provision of this Agreement may be (i) waived by the party benefitted by the
provision, or (ii) amended or modified at any time, by an agreement in writing
between the parties hereto executed in the same manner as this Agreement,
except that after the Company Meeting, this Agreement may not be amended if it
would violate the CBCA or reduce the consideration to be received by Company
stockholders in the Merger.
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9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law; Waiver of Jury Trial. This Agreement shall
be governed by, and interpreted in accordance with, the laws of the State of
Utah applicable to contracts made and to be performed entirely within such
State (except to the extent that mandatory provisions of Federal law or of the
CBCA are applicable). Each of the parties hereto hereby irrevocably waives
any and all right to trial by jury in any legal proceeding arising out of or
related to this Agreement or the transactions contemplated hereby.
9.05 Expenses. Each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby.
9.06 Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if
personally delivered, telecopied (with confirmation) or mailed by registered
or certified mail (return receipt requested) to such party at its address set
forth below or such other address as such party may specify by notice to the
parties hereto.
If to Company, to:
Vectra Banking Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Zions, to:
Zions Bancorporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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9.07 Entire Understanding; No Third Party Beneficiaries. This
Agreement, the Confidentiality Agreement dated July 29, 1997 and any Stock
Option Agreement entered into represent the entire understanding of the
parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than any such Stock Option Agreement).
Except for Sections 6.12 and 6.13 and as set forth in Company's Disclosure
Schedule, nothing in this Agreement expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." No provision
of this Agreement shall be construed to require Company, Zions or any of their
respective Subsidiaries, affiliates or directors to take any action which
would violate applicable law (whether statutory or common law), rule or
regulation.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in counterparts by their duly authorized officers, all as of
the day and year first above written.
VECTRA BANKING CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President and
Chief Executive Officer
ZIONS BANCORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
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