-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DitKiiqkMXvd8Qr4iymDBXg0N7BE1rfMct/HKNbBM4ssdQh+x3N6QqHDxSbskvtW Eb/6/uysurA6/5xl5Fef/A== 0000890613-95-000046.txt : 19950415 0000890613-95-000046.hdr.sgml : 19950414 ACCESSION NUMBER: 0000890613-95-000046 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19950413 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZIONS BANCORPORATION /UT/ CENTRAL INDEX KEY: 0000109380 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 870227400 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 033-58583 FILM NUMBER: 95528645 BUSINESS ADDRESS: STREET 1: 1380 KENNECOTT BLDG CITY: SALT LAKE CITY STATE: UT ZIP: 84133 BUSINESS PHONE: 8015244787 MAIL ADDRESS: STREET 1: 1380 KENNECOTT BUILDING CITY: SALT LAKE CITY STATE: UT ZIP: 84133 FORMER COMPANY: FORMER CONFORMED NAME: ZIONS UTAH BANCORPORATION DATE OF NAME CHANGE: 19870615 FORMER COMPANY: FORMER CONFORMED NAME: ZIONS FIRST NATIONAL INVESTMENT CO DATE OF NAME CHANGE: 19660921 S-4 1 FORM S-4 REGISTRATION STATEMENT THIS PAPER DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 901(d) OF REGULATION S-T As filed with the Securities and Exchange Commission on __________, 1995 Registration No. 33-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM S-4 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 -------------------- ZIONS BANCORPORATION (Exact name of registrant as specified in its charter) Utah 6712 87-0227400 (State or other jurisdiction of (Primary Standard Industrial (IRS Employer incorporation or organization) Classification Code Number) Identification No.)
1380 Kennecott Building Salt Lake City, Utah 84133 (801) 524-4787 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) -------------------- Harris H. Simmons President and Chief Executive Officer Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 (801) 524-4787 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------------- Copies to: Brian D. Alprin, Esq. Bruce G. Cohne, Esq. Laurence S. Lese, Esq. Cohne, Rappaport & Segal, P.C. Metzger, Hollis, Gordon & Mortimer 525 East First South, 5th Floor Suite 1000 P.O. Box 11008 1275 K Street, N.W. Salt Lake City, Utah 84147-0008 Washington, D.C. 20005 (801) 532-2666 (202) 842-1600 Approximate date of commencement of the proposed sale of the securities to the public: The date of mailing the Proxy Statement/Prospectus contained herein. - -------------------------------------------------------------------------------- CALCULATION OF REGISTRATION FEE - --------------------------------------------------------------------------------
Proposed Proposed maximum maximum Amount offering aggregate Amount of Title of to be price per offering registration securities to be registered registered share price fee - --------------------------- ------------ --------- --------- ------------ Common Stock, no par value 325,000 shs. NA $ 5,277,120(1) $1820 (1) Estimated solely for the purpose of calculating the registration fee and calculated in accordance with Rule 457(f)(2) on the basis of the book value of the common stock, $10.00 par value, of First Western Bancorporation, on December 31, 1994 of $4,971,875 and the book value of the common stock, $10.00 par value, of First Western National Bank on December 31, 1994 of $305,245 and the maximum of 39,988 and 3,903 shares, respectively, of such stock to be converted in the Reorganization described herein into Common Stock of the registrant.
-------------------- The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ ZIONS BANCORPORATION Cross-Reference Sheet between Items of Form S-4 and Captions in Proxy Statement/Prospectus
Form S-4 Item Caption(s) or Location in Number and Caption Proxy Statement/Prospectus - ------------------- -------------------------- A. Information About the Transaction 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus......................... Outside Front Cover Page of Proxy Statement/Prospectus 2. Inside Front and Outside Back Cover Pages of Prospectus.......... Available Information; Table of Contents 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information........................ Summary; Introduction 4. Terms of the Transaction........... Plan of Reorganization; Comparison of Zions Common Stock, First Western Common Stock and Bank Common Stock; Information Concerning the Pro Forma Combined Financial Data 5. Pro Forma Financial Information.... Pro Forma Combined Financial Information 6. Material Contracts with the Company Being Acquired............. Plan of Reorganization; Plan of Reorganization--Background of and Reasons for the Reorganizations; Plan of Reorganization--Voting Agreements; Plan of Reorganization--Interests of Certain Persons in the Transactions 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters.. NA 8. Interests of Named Experts and Counsel............................ NA 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities.................... NA B. Information About the Registrant 10. Information with Respect to S-3 Registrants........................ Zions Documents Incorporated by Reference 11. Incorporation of Certain Information by Reference........... Zions Documents Incorporated by Reference 12. Information with Respect to S-2 or S-3 Registrants................. NA 13. Incorporation of Certain Information by Reference........... NA 14. Information with Respect to Registrants Other than S-3 or S-2 Registrants........................ NA C. Information About the Company Being Acquired 15. Information with Respect to S-3 Companies.......................... NA 16. Information with Respect to S-2 or S-3 Companies................... NA 17. Information with Respect to Companies Other Than S-2 or S-3 Companies.......................... Information Concerning First Western D. Voting and Management Information 18. Information if Proxies, Consents or Authorizations are to be Solicited: Item Number and Caption in Schedule 14A under the Securities Exchange Caption(s) or Location in Act of 1934 or Regulation S-K Proxy Statement/Prospectus - ----------------------------------- -------------------------- (1) Date, Time and Place Information... Outside Front Cover Page of Proxy Statement/Prospectus; Summary; Introduction (2) Revocability of Proxy.............. Introduction--Voting and Revocation of Proxies (3) Dissenters' Rights of Appraisal.... Plan of Reorganization-- Dissenters' Rights of First Western and Bank Shareholders (4) Persons Making the Solicitation.... Introduction--Solicitation of Proxies (5) Interest of Certain Persons in Matters to be Acted Upon........... Plan of Reorganization--Boards of Directors Following the Reorganization; Interests of Certain Persons in the Transactions (6) Voting Securities and Principal Holders Thereof.................... Introduction--Record Date; Voting Rights; Principal Holders of Zions Common Stock; Zions Documents Incorporated by Reference; Information Concerning First Western-- Principal Shareholders (21) Vote Required for Approval....... Plan of Reorganization-- Required Vote; Management Recommendation (401) Directors and Executive Officers......................... Zions Documents Incorporated by Reference; Plan of Reorganization--Boards of Directors Following the Reorganization; Information Concerning First Western-- First Western Management (402) Executive Compensation........... Zions Documents Incorporated by Reference (404) Certain Relationships and Related Transactions............. Zions Documents Incorporated by Reference; Information Concerning First Western-- Certain Transactions Caption(s) or Location in Form S-4 Item Number and Caption Proxy Statement/Prospectus 19. Information if Proxies, Consents or Authorizations are Not to be Solicited, or in Exchange Offer.... NA
Joint Proxy Statement/Prospectus FIRST WESTERN BANCORPORATION, FIRST WESTERN NATIONAL BANK and ZIONS BANCORPORATION This Joint Proxy Statement/Prospectus is being furnished to the shareholders of First Western Bancorporation ("First Western"), a Utah corporation, and First Western National Bank (the "Bank"), a national banking association, in connection with the solicitation of proxies by their respective Boards of Directors for use at Special Meetings of Shareholders of First Western and the Bank to be held on ________, 1995 and , 1995 (each a "Special Meeting"). The purpose of the First Western Special Meeting is to consider a proposed corporate reorganization (the "Holding Company Reorganization") whereby First Western will be merged into Zions Bancorporation ("Zions") with Zions being the surviving corporation. The purpose of the Bank Special Meeting is to consider a proposed corporate reorganization (the "Bank Reorganization") whereby the Bank will be merged into Zions First National Bank ("Zions Bank"), a wholly-owned subsidiary (except for directors' qualifying shares) of Zions, with Zions Bank being the surviving corporation. The Bank Reorganization will occur following the Holding Company Reorganization. If either the Holding Company Reorganization or the Bank Reorganization is not consummated for any reason, the other Reorganization will not be consummated. First Western owns approximately 93.5% of the issued and outstanding shares of Bank Common Stock, and I.D. Nightingale, chairman and president of First Western and the Bank, and a partnership of which he is a general partner own approximately 90.81% of the issued and outstanding shares of First Western Common Stock. Consequently, approval of the Bank Reorganization and the Holding Company Reorganization is assured. Upon consummation of the Reorganizations, all outstanding shares of First Western common stock (the "First Western Common Stock") will be cancelled and will be converted into the right to receive that number of shares of Zions common stock ("Zions Common Stock") calculated by dividing the Holding Company Purchase Price, as defined, by the average closing price, as defined, of Zions Common Stock, and by further dividing that number by the number of issued and outstanding shares of First Western Common Stock immediately prior to the effective date of the Reorganization; all outstanding shares of Bank common stock ("Bank Common Stock"), except shares owned by Zions, will be cancelled and will be converted into the right to receive that number of shares of Zions Common Stock calculated by dividing the Bank Purchase Price, as defined, by the average closing price, as defined, of Zions Common Stock, and by further dividing that number by the number of issued and outstanding shares of Bank Common Stock immediately prior to the effective date of the Reorganization. Since the Holding Company Reorganization will precede the Bank Reorganization, Zions at the time of closing of the Bank Reorganization will be the owner of all Bank Common Stock previously owned by First Western; the Plan of Reorganization provides that all Bank shareholders other than Zions will receive their pro rata share of the Bank Purchase Price. At April 3, 1995, the closing price of Zions Common Stock was $38.50 per share, First Western had issued and outstanding 39,988 shares of its Common Stock, and the Bank had issued and outstanding 60,000 shares of its Common Stock. If the Reorganizations had been consummated as of that date and assuming that the Average Closing Price of Zions Common Stock had been $39.48 and certain accretions had been $1,291,083, shareholders of First Western would have received 6.229 shares of Zions Common Stock for each share of First Western Common Stock, and shareholders of the Bank (other than Zions) would have received 4.195 shares of Zions Common Stock for each share of Bank Common Stock. The Zions Common Stock to be distributed to First Western and Bank shareholders will be registered with the Securities and Exchange Commission and for all shareholders, other than shareholders who are affiliates of First Western or the Bank or who become affiliates of Zions, will be immediately tradable. See "Plan of Reorganization--Conversion of First Western and Bank Shares." Zions has filed this Joint Proxy Statement/Prospectus with the Securities and Exchange Commission as part of a Registration Statement under the Securities Act of 1933 with respect to the shares of Zions Common Stock, which will be issued in the Reorganizations to the shareholders of First Western and the Bank. -------------------- FOR THE ACTIONS OF THE SHAREHOLDERS TO BE EFFECTIVE, HOLDERS OF TWO-THIRDS OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF FIRST WESTERN AND HOLDERS OF TWO-THIRDS OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF THE BANK MUST VOTE IN FAVOR OF THE RESPECTIVE REORGANIZATION. CONSUMMATION OF THE REORGANIZATIONS WILL REQUIRE APPROVAL OF EACH RESPECTIVE REORGANIZATION BY THE RESPECTIVE SHAREHOLDERS OF FIRST WESTERN AND THE BANK BEFORE THE REORGANIZATIONS WILL BE IMPLEMENTED. THE REORGANIZATIONS MUST ALSO BE APPROVED BY FEDERAL AND STATE BANKING REGULATORS. REGULATORY APPROVALS HAVE BEEN OBTAINED. -------------------- THE SHARES OF ZIONS COMMON STOCK TO BE ISSUED IN THE REORGANIZATIONS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SHARES OF ZIONS COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. No person has been authorized to give any information or to make any representation not contained in this Joint Proxy Statement/Prospectus, and, if given or made, any such information or representation should not be relied upon as having been authorized by Zions, First Western or the Bank. This Joint Proxy Statement/Prospectus does not constitute an offer or solicitation by any person in any state in which such offer or solicitation is not authorized by the laws thereof or in which the person making such offer or solicitation is not qualified to make the same. Neither the delivery of this Joint Proxy Statement/Prospectus at any time nor the distribution of Zions Common Stock hereunder shall imply that the information contained herein is correct as of any time subsequent to its date. The date of this Joint Proxy Statement/Prospectus is ___________, 1995. AVAILABLE INFORMATION Zions has filed with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933 (the "Securities Act") a Registration Statement on Form S-4 (the "Registration Statement") covering the shares of Zions Common Stock issuable in the Reorganizations. As permitted by the rules and regulations of the SEC, this Joint Proxy Statement/Prospectus omits certain information, exhibits and undertakings contained in the Registration Statement. The statements contained in this Joint Proxy Statement/Prospectus as to the contents of any contract or other document filed as an exhibit to the Registration Statement are of necessity brief descriptions and are not necessarily complete. Each such statement is qualified in its entirety by reference to the copy of such contract or document filed as an exhibit to the Registration Statement. The Registration Statement and the exhibits thereto can be inspected at the public reference facilities of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C., and copies of such material can be obtained at prescribed rates by mail addressed to the SEC, Public Reference Section, Washington, D.C. 20549. Zions is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.; 1801 California Street, Suite 4800, Denver, Colorado; and 500 Key Bank Tower, Suite 500, 50 S. Main Street, Salt Lake City, Utah. Copies of such material can also be obtained at prescribed rates by mail addressed to the SEC, Public Reference Section, Washington, D.C. 20549. Zions Common Stock is quoted on the NASDAQ National Market System, and such reports, proxy statements and other Zions information can also be inspected at the offices of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. First Western and the Bank are not subject to the Exchange Act and therefore make no filings with a governmental agency pursuant to that Act. This Joint Proxy Statement/Prospectus incorporates by reference certain documents relating to Zions which are not presented herein or delivered herewith. See "Zions Documents Incorporated by Reference." Copies of such documents are available upon request and without charge to any person to whom this Joint Proxy Statement/Prospectus has been delivered. Requests for Zions documents should be directed to Zions Bancorporation, 1380 Kennecott Building, Salt Lake City, Utah 84133, Attention: Gary L. Anderson, Corporate Secretary (telephone: 801-524- 4787). In order to ensure timely delivery of the documents, any request should be made not later than ________, 1995. FIRST WESTERN BANCORPORATION, FIRST WESTERN NATIONAL BANK and ZIONS BANCORPORATION --------------- JOINT PROXY STATEMENT/PROSPECTUS --------------- TABLE OF CONTENTS Page SUMMARY .................................................................... 1 INTRODUCTION................................................................. 10 Record Date; Voting Rights.......................................... 19 Purpose of the Special Meetings..................................... 20 Voting and Revocation of Proxies.................................... 22 Solicitation of Proxies............................................. 22 PLAN OF REORGANIZATION....................................................... 23 The Reorganizations................................................. 23 Purchase Price...................................................... 24 Background of and Reasons for the Reorganizations................... 27 Voting Agreements................................................... 30 Required Vote; Management Recommendation............................ 31 Conversion of First Western and Bank Shares......................... 32 Tax Consequences.................................................... 35 Interests of Certain Persons in the Transactions.................... 38 Stock Options....................................................... 39 Inconsistent Activities............................................. 39 Conduct of Business Pending the Reorganizations..................... 40 Conditions to the Reorganizations................................... 41 Representations and Warranties...................................... 43 Amendment and Waiver................................................ 44 Authorized Termination and Damages for Breach....................... 45 Dissenters' Rights of First Western and Bank Shareholders........... 46 Restrictions on Resales by First Western and Bank Affiliates........ 52 Expenses ........................................................... 53 Government Approvals................................................ 53 Effective Date of the Reorganizations............................... 54 PRO FORMA COMBINED FINANCIAL INFORMATION..................................... 55 SUPERVISION AND REGULATION................................................... 56 Zions ........................................................... 56 Regulatory Capital Requirements..................................... 59 Other Regulations................................................... 67 Deposit Insurance Assessments....................................... 72 Interstate Banking.................................................. 74 Zions Bank.......................................................... 76 MONETARY POLICY.............................................................. 77 ZIONS BANCORPORATION SELECTED FINANCIAL DATA................................. 78 STOCK PRICES OF AND DIVIDENDS ON ZIONS COMMON STOCK.......................... 81 PRINCIPAL HOLDERS OF ZIONS COMMON STOCK...................................... 82 ZIONS DOCUMENTS INCORPORATED BY REFERENCE.................................... 83 INFORMATION CONCERNING FIRST WESTERN AND THE BANK............................ 85 FIRST WESTERN BANCORPORATION SELECTED CONSOLIDATED FINANCIAL DATA................................................ 85 STOCK PRICES OF AND DIVIDENDS ON FIRST WESTERN COMMON STOCK AND BANK COMMON STOCK...................................................... 88 STOCKHOLDINGS OF PRINCIPAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF FIRST WESTERN AND THE BANK................................................. 90 FIRST WESTERN BANCORPORATION CONSOLIDATED FINANCIAL STATEMENTS............... 93 Independent Auditors' Report........................................ 96 Consolidated Financial Statements: Consolidated Balance Sheets at December 31, 1994 and 1993...... 97 Consolidated Statements of Income for the Years Ended December 31, 1994, 1993 and 1992................ 99 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1994, 1993 and 1992........101 Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1993 and 1992............................102 Notes to Consolidated Financial Statements.....................105 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THREE-YEAR PERIOD ENDED DECEMBER 31, 1994............125 STATISTICAL INFORMATION AND ANALYSIS.........................................132 COMPARISON OF ZIONS COMMON STOCK, FIRST WESTERN COMMON STOCK AND BANK COMMON STOCK........................................................141 LEGAL OPINIONS...............................................................151 EXPERTS ....................................................................151 OTHER MATTERS................................................................151 APPENDICES: A. Statutory Provisions Concerning Dissenters' Rights of First Western Shareholders B. Statutory Provisions Concerning Dissenters' Rights of Bank Shareholders C. Opinion of Cohne, Rappaport & Segal, P.C. as to Tax Matters SUMMARY The following is a brief summary of certain information which may also be contained elsewhere in this Joint Proxy Statement/Prospectus. This summary is provided for convenience and should not be considered complete. It is qualified in its entirety by the more detailed information contained in this Joint Proxy Statement/Prospectus and in the Appendices hereto. The Parties Zions Bancorporation ("Zions") is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act"), is organized under the laws of Utah, and is engaged primarily in the commercial banking business through its banking subsidiaries. Zions' principal executive offices are at 1380 Kennecott Building, Salt Lake City, Utah 84133 (telephone: 801/524-4787). Zions is the second largest bank holding company headquartered in Utah. Zions conducts its banking operations through Zions First National Bank, Salt Lake City, Utah, Nevada State Bank, Las Vegas, Nevada, and National Bank of Arizona, Tucson, Arizona ("Zions Arizona"). Nevada State Bank, with 19 offices in Nevada, is the sixth largest bank in Nevada. Zions Arizona currently has ten offices in the metropolitan Phoenix area, three offices in Tucson, and one office in Flagstaff, Arizona. At December 31, 1994, Zions had total consolidated assets of $4.93 billion, deposits of $3.71 billion, and shareholders' equity of $366 million. See "Zions Bancorporation Selected Consolidated Financial Data." Zions First National Bank ("Zions Bank") is a commercial bank organized under the laws of the United States of America, with its main office located at 1380 Kennecott Building, Salt Lake City, Utah 84133 (telephone 801/524-4787). Zions Bank, founded in 1873, is a wholly-owned (except for directors' qualifying shares) subsidiary of Zions and as of December 31, 1994 had 83 offices located throughout the state of Utah, plus one foreign office, for a total of 84 banking offices, including its main office. Zions Bank is the second largest commercial banking organization headquartered in the state of Utah. In addition to providing financial services for businesses, including commercial loans, leasing, cash management, payroll processing, lockbox, and customized draft processing, Zions Bank also makes mortgage loans within its service area and provides a wide range of personal banking services for individual customers, including bankcard, student and other installment loans, home equity credit line loans, checking and savings accounts, time certificates, trust services, and safe deposit facilities. As of December 31, 1994, Zions Bank had total assets of $3.74 billion, deposits of $2.66 billion, loans of $1.82 billion, and shareholders' equity of $271 million. First Western Bancorporation ("First Western") is a bank holding company organized under the laws of the State of Utah and registered under the Bank Holding Company Act. First Western's principal executive offices are located at Main and Third South Streets, Moab, Utah 84532 and its telephone number is 801/259-5961. First Western is primarily engaged in the commercial banking business through its majority-owned subsidiary, First Western National Bank. As of December 31, 1994, First Western had total assets of $37,210,101 (including loans, net of allowances, of $20,068,772), deposits of $30,071,839, and shareholders' equity of $4,971,875. First Western National Bank (the "Bank") is the primary subsidiary of First Western and is a national banking association. The Bank currently operates one branch in Moab, Grand County, Utah and one branch each in Monticello and Blanding, San Juan County, Utah. The Bank's main office is located at Main and Third South Streets, Moab, Utah 84532. Its telephone number is 801/259-5961. The Bank was founded in 1961. In 1977, pursuant to a plan of reorganization, the Bank became a majority-owned subsidiary of First Western and a majority of the shares of the Bank were converted into shares of First Western. First Western owns approximately 93.5% of the issued and outstanding shares of Bank Common Stock. The Bank provides a full range of commercial banking services, including consumer and commercial loans, residential real estate loans, and construction and permanent mortgage loans. The Bank offers a variety of deposit accounts, including non-interest bearing demand accounts, interest bearing checking and savings accounts, and certificates of deposit. The Special Meetings The Special Meeting of Shareholders of First Western (the "First Western Special Meeting") will be held at __ a.m. local time, on ________, 1995 at First Western's principal executive offices, Main and Third South Streets, Moab, Utah. Only holders of record of First Western Common Stock, at the close of business on ___________, 1995 will be entitled to vote at the First Western Special Meeting. At that date, 39,988 shares of First Western Common Stock were outstanding, each share being entitled to one vote. There are seven shareholders of record of First Western Common Stock. See "Introduction." The Special Meeting of Shareholders of the Bank (the "Bank Special Meeting") will be held at __a.m. local time, on ___________ 1995 at the Bank's principal executive officers, Main and Third South Streets, Moab, Utah. Only holders of record of Bank Common Stock at the close of business on ________, 1995 will be entitled to vote at the Bank Special Meeting. At that date, 60,000 shares of Bank Common Stock were outstanding, each share being entitled to one vote per share. There are 31 shareholders of record of Bank Common Stock. See "Introduction." Proposed Reorganizations At the respective Special Meetings of First Western and the Bank, the shareholders of First Western and the Bank will be asked to consider and approve an Agreement and Plan of Reorganization among Zions, Zions Bank, First Western, and the Bank, an Agreement of Merger between Zions and First Western, and an Agreement of Merger between Zions Bank and the Bank. The aforementioned agreements will be hereinafter referred to collectively as the "Plan of Reorganization." Consummation of the Plan of Reorganization is conditional upon both the approval by the First Western shareholders of the Plan of Reorganization and the Agreement of Merger between Zions and First Western and the approval by the Bank shareholders of the Plan of Reorganization and the Agreement of Merger between Zions Bank and the Bank (collectively, the "Reorganizations"). Because I. D. Nightingale and a partnership of which he is a general partner own approximately 90.81% of the issued and outstanding shares of First Western Common Stock and have agreed to vote such shares in favor of the Reorganization and because First Western owns approximately 93.5% of the issued and outstanding shares of Bank Common Stock, approval of the Plan of Reorganization is assured. The Plan of Reorganization provides for the merger of First Western into Zions (the "Holding Company Reorganization"), whereby Zions will be the surviving corporation and for the subsequent merger of the Bank into Zions Bank (the "Bank Reorganization"), whereby Zions Bank will be the surviving bank. See "Plan of Reorganization," below. As a result of the Holding Company Reorganization, each outstanding share of First Western Common Stock will be cancelled and will be converted into the right to receive shares of Common Stock, no par value per share, of Zions ("Zions Common Stock"), with cash to be paid in lieu of any fractional shares. As a result of the Bank Reorganization, each outstanding share of Bank Common Stock (except Bank Common Stock owned by Zions) will be cancelled and will be converted into the right to receive shares of Zions Common Stock, with cash to be paid in lieu of any fractional shares. Upon consummation of the Holding Company Reorganization, shareholders of First Western Common Stock will be entitled to receive, in exchange for each share of First Western Common Stock that number of shares of Zions Common Stock calculated by dividing the Holding Company Purchase Price, as defined, by the average closing price, as defined, of Zions Common Stock, and by further dividing the number so reached by the total number of shares of First Western Common Stock issued and outstanding on the Effective Date of the Holding Company Reorganization. Upon consummation of the Bank Reorganization, shareholders of Bank Common Stock (with the exception of Zions) will be entitled to receive, in exchange for each share of Bank Common Stock, that number of shares of Zions Common Stock calculated by dividing the Bank Purchase Price, as defined, by the average closing price, as defined, of Zions Common Stock, and by further dividing the number so reached by the total number of shares of Bank Common Stock issued and outstanding on the Effective Date of the Reorganization, including shares held by Zions. At April 3, 1995, the closing price of Zions Common Stock quoted on NASDAQ was $38.50 per share and there were issued and outstanding 39,988 shares of First Western Common Stock and 60,000 shares of Bank Common Stock. If the Reorganizations had been consummated on that date and the Average Closing Price had been $39.48 and had the certain accretions referred to below been $1,291,083, each shareholder of First Western Common Stock would have received 6.299 shares of Zions Common Stock for each share of First Western Common Stock and each shareholder of Bank Common Stock (other than Zions) would have received 4.195 shares of Zions Common Stock for each share of Bank Common Stock. These exchanges would equate to a value of $248.69 for each share of First Western Common Stock and $165.60 for each share of Bank Common Stock if the exchanges had been consummated as of such date. The actual ratio for exchanging First Western Common Stock and Bank Common Stock for Zions Common Stock will depend upon certain accretions of the Bank's net undistributed income, the book value of First Western's net assets, and the Average Closing Price on the Effective Date. Certain Definitions In connection with the description of the Reorganizations in this Joint Proxy Statement/Prospectus, shareholders of First Western and the Bank should be aware of the following terms: "Average Closing Price" means the average (rounded to the nearest penny) of each Daily Sales Price of Zions Common Stock for the twenty consecutive trading days ending on and including the fifth trading day preceding the Effective Date. Under certain circumstances as set forth in the Plan of Reorganization, First Western can elect the Average Closing Price to be $37.00 and Zions can elect the Average Closing Price to be $41.00. "Bank Purchase Price" means the sum of: (A) $9,300,000 and (B) the net undistributed income of the Bank between the opening of business on September 1, 1994 and the close of business on the Effective Date, less any undistributed income (but not net of any undistributed loss) derived from activities or transactions which are not normal and recurring banking operations (such as, without limitation, the sale of securities or loans, of capital assets, or of lines of business), all of which shall be determined in accordance with generally accepted accounting principles, it being understood that the amount so calculated may be a negative number and that the effect of summing such a negative number would be a reduction in the Bank Purchase Price. "Daily Sales Price" means for any trading day, the last reported sale price or, if no such reported sale takes place, the mean (unrounded) of the closing bid and asked prices of Zions Common Stock in the over-the-counter market as such prices are reported by the automated quotation system of the National Association of Securities Dealers, Inc. or, in the absence thereof, by such other source upon which Zions, First Western and the Bank shall mutually agree. "Effective Date" means the date which is the latest of (a) the date following the day upon which the First Western shareholders approve, ratify, and confirm the transactions contemplated by the Plan of Reorganization; (b) the date following the day upon which the Bank shareholders approve, ratify, and confirm the transactions contemplated by the Plan of Reorganization; (c) the first to occur of (i) the date thirty days following the date on which the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of San Francisco pursuant to delegated authority (collectively, the "Federal Reserve Board") authorizes consummation of the merger of First Western into Zions; or (ii) if, pursuant to Section 321(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (the "Riegle Act"), the Federal Reserve Board shall have prescribed a shorter period of time with the concurrence of the Attorney General of the United States (the "Attorney General"), the date on which such shorter period of time shall elapse; or (iii) the date ten days following the date on which the Federal Reserve Board indicates its waiver of jurisdiction over the merger of First Western into Zions; (d) the first to occur of (i) the date thirty days following the date on which the Comptroller of the Currency (the "Comptroller") approves the merger of the Bank into Zions Bank or (ii) if, pursuant to Section 321(b) of the Riegle Act, the Comptroller shall have prescribed a shorter period of time with the concurrence of the Attorney General, the date on which such shorter period of time shall elapse; (e) if such an order shall be required by law, the date ten days following the date upon which the Commissioner of Financial Institutions of the State of Utah (the "Commissioner") approves the transactions contemplated by the Plan of Reorganization; (f) the date upon which any other material order, approval, or consent of a federal or state regulator of financial institutions or financial institution holding companies authorizing consummation of the transactions contemplated by the Plan of Reorganization is obtained, or any waiting period mandated by such order, approval, or consent has run; (g) ten days after any stay of the approvals of the Comptroller, the Federal Reserve Board, or the Commissioner of the transactions contemplated by the Plan of Reorganization, or any injunction against closing of such transactions is lifted, discharged, or dismissed; or (h) such other date as shall be mutually agreed upon by Zions and First Western. "Holding Company Purchase Price" means the sum of: (A) the product of the Bank Purchase Price and a fraction, the numerator of which is the number of shares of Bank Common Stock held of record by First Western on the Effective Date, and the denominator of which is the total number of shares of Bank Common Stock that shall be issued and outstanding on the Effective Date; and (B) the book value of the net assets of First Western, determined in accordance with generally accepted accounting principles as of the close of business on the last day of the calendar month preceding the Effective Date, exclusive of (X) the equity of First Western in the Bank on such date, or (Y) goodwill, core intangibles, prepayments, and other similar intangible assets held by First Western, it being understood that the amount so calculated may be a negative number and that the effect of summing such a negative number would be a reduction in the Holding Company Purchase Price. Reasons for the Reorganizations Management and the directors of First Western and the Bank believe that the merger of First Western into Zions and the merger of the Bank into Zions Bank and the exchange of First Western Common Stock and Bank Common Stock for Zions Common Stock are in the best interests of the respective shareholders of First Western and the Bank, employees, customers and the community served by the Bank. In order to meet competition from other larger banks, the Bank would be required to expand the services and credit facilities beyond those presently offered to its customers. First Western's and the Bank's respective managements foresee continued strong competition among banks and other providers of financial services in Grand and San Juan Counties, Utah, and throughout Utah, generally, and particularly from well-capitalized, large banks, and from such providers as credit unions and savings associations and believe that the proposed mergers with Zions and Zions Bank offer First Western's and the Bank's respective shareholders the best possible method of realizing the value of their investment in First Western and the Bank, and not only continuing to offer to the Bank's customers and the community the deposit, lending, financing, and other banking services they will require in the future, but also offering an enhanced aray of financial products and services. The contemplated merger is expected to increase the Bank's lending limit, which will enable it to attract customers which can now be served only by larger institutions with greater lending limits. See "Plan of Reorganization--Background of and Reasons for the Reorganizations" for a description of the factors considered by First Western's and the Bank's respective boards of directors in determining to recommend the Reorganizations to shareholders for their approval. First Western's and the Bank's respective boards of directors believe that the mergers with Zions and Zions Bank will realize substantial value for First Western's and the Bank's respective shareholders and will allow them the option of realizing a significant return on their original investment and continuing to participate in the development of banking in Utah and in the West by holding the Zions Common Stock they will receive in the Reorganizations. For Zions, the Reorganizations will provide the opportunity to continue to develop its franchise in Utah markets by expanding its operations to areas not previously serviced by Zions, by extending its geographical base to those markets, thereby allowing Zions to diversify further its Utah operations, and by expanding the banking services it is able to provide. The combination of the different skills, resources and services offered by the Bank and Zions Bank, together with the additional skills and resources available in the broader Zions organization, will make the resulting bank better able to effectively compete in its markets with other financial institutions. See "Plan of Reorganization-Background of and Reasons for the Reorganizations." Votes Required for Approval Approval of the Plan of Reorganization requires the affirmative vote of the holders of at least two-thirds of the outstanding shares of First Western Common Stock voting in person or by proxy. A failure to vote, an abstention, or a failure by a broker to vote shares held in street name will have the same legal effect as a vote against the approval of the Plan of Reorganization. See "Plan of Reorganization--Required Vote; Management Recommendation." Approval of the Plan of Reorganization requires the affirmative vote of the holders of at least two-thirds of the outstanding shares of Bank Common Stock voting in person or by proxy. A failure to vote, an abstention, or a failure by a broker to vote shares held in street name will have the same legal effect as a vote against the approval of the Plan of Reorganization. See "Plan of Reorganization--Required Vote; Management Recommendation." As of December 31, 1994, the directors, executive officers, and holders of 5% or more of the stock of First Western and of the Bank beneficially owned an aggregate of approximately 98.93% of the outstanding First Western Common Stock and approximately 94.33% of the Bank Common Stock, respectively. Mr. I.D. and Frankie Nightingale and a partnership of which they are the general partners own approximately 90.81% of the issued and outstanding shares of First Western Common Stock and have agreed to vote all of such shares of First Western Common Stock in favor of the Holding Company Reorganization. Consequently, approval of the Holding Company Reorganization is assured. Additionally, First Western owned an aggregate of 93.5% of the outstanding Bank Common Stock. First Western has agreed to vote all shares of Bank Common Stock which may be voted, or whose vote may be directed, by First Western in favor of the Bank Reorganization. As a result, approval of the Bank Reorganization is assured. All of the shareholder directors of First Western and the Bank, respectively, have entered into agreements with Zions under which they have agreed, in their capacity as shareholders, to vote their shares in favor of the respective Reorganization. These agreements cover an aggregate of approximately 98.93% of the outstanding shares of First Western Common Stock and approximately 95.66% of the outstanding shares of Bank Common Stock. See "Plan of Reorganization--Voting Agreements." Boards of Directors Recommendations The Boards of Directors of First Western and the Bank believe that the respective Reorganizations are in the best interests of the respective shareholders of First Western and the Bank, and the employees and customers of the Bank. The Boards unanimously recommend that the respective shareholders of First Western and the Bank vote "FOR" approval of the Plan of Reorganization. The Boards of Directors of First Western and of the Bank have not retained any independent financial advisor to evaluate the Plan of Reorganization or to render an opinion as to the fairness of the terms of the Reorganizations from a financial point of view to the respective shareholders of First Western and the Bank. SHAREHOLDERS OF FIRST WESTERN AND THE BANK ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Interests of Certain Persons in the Transactions Mr. I.D. Nightingale, chairman and president of First Western and the Bank, is party to a severance agreement with the Bank whereby upon consummation of the Reorganizations he will receive a payment of $1250 per month for a period of ten years. Tax Consequences The Reorganizations will qualify as nontaxable reorganizations under Section 368(a) of the Internal Revenue Code of 1986. No gain or loss for federal income tax purposes will be recognized by shareholders of First Western or of the Bank on the exchange of their shares for Zions Common Stock in the Reorganizations, except with respect to cash received in lieu of fractional shares and cash paid to shareholders who elect to exercise and who perfect their dissenters' rights under Utah law and federal law. For a more complete description of the federal income tax consequences of the Reorganizations, see "Plan of Reorganization--Tax Consequences." Dissenters' Rights Record holders of First Western Common Stock and record holders of Bank Common Stock who object to the respective Reorganization and comply with the prescribed statutory procedures are entitled to have the fair value of their shares determined in accordance with the Utah Revised Business Corporation Act (Utah Revised Statutes section 16-10a-1101 et seq.) and in accordance with section 215a(b) of the National Bank Act (12 U.S.C. section 215a(b)). Upon perfection of their dissenters' rights, such dissenting shareholders are entitled to have paid to them in cash in lieu of the shares of Zions Common Stock they would otherwise be entitled to receive in the respective Reorganization. A copy of the pertinent statutory provisions is attached to this Joint Proxy Statement/Prospectus as Appendix A and Appendix B. Failure to follow such provisions precisely may result in a loss of dissenters' rights. Under the Plan of Reorganization, Zions is not obligated to consummate the Plan of Reorganization if holders of more than 3% of First Western Stock or if holders of more than 3% of Bank Common Stock exercise and perfect their respective dissenters' rights. See "Plan of Reorganization--Dissenters' Rights of First Western and Bank Shareholders." "Anti-Takeover" Provisions The Articles of Incorporation and Bylaws of Zions contain provisions which may be considered to be anti-takeover in nature, including staggered terms of office for directors, absence of cumulative voting and special shareholder vote requirements for certain types of extraordinary corporate transactions. See "Comparison of Zions Common Stock, First Western Common Stock and Bank Common Stock." Regulatory Approvals A condition to the Reorganizations is approval of the Reorganizations by the Federal Reserve Board, the Comptroller, and the Commissioner. The Federal Reserve Board has waived application and approval requirements otherwise applicable pursuant to section 3(a) of the Bank Holding Company Act. The Comptroller has approved the merger of the Bank into Zions Bank pursuant to the Bank Merger Act. The Commissioner has waived jurisdiction with respect to the transactions contemplated by the Plan of Reorganization. Conditions; Amendment; Termination In addition to shareholder and regulatory approval, consummation of the Reorganizations is contingent upon the receipt of a tax opinion and the satisfaction of a number of other conditions. See "Plan of Reorganization -- Conditions to the Reorganizations." Notwithstanding prior shareholder approval, the Plan of Reorganization may be amended at any time prior to the Effective Date of the Reorganizations in any respect that would not prejudice the economic interests of the First Western or Bank shareholders. The Plan of Reorganization may be terminated and abandoned at any time prior to the Effective Date, notwithstanding approval of the shareholders, as follows: (i) by mutual consent of the parties to the Plan or Reorganization; (ii) unilaterally, by either party if any of the representations and warranties of the other party was materially incorrect when made or in the event of a material breach or material failure by the other party of any covenant or agreement of that party contained in the Plan of Reorganization which has not been, or cannot be, cured within 30 days after written notice of such breach or failure has been given; (iii) by either party if the Reorganizations (or either of them) have become inadvisable or impracticable by reason of federal or state litigation to restrain or invalidate the Reorganizations (or either of them); or (iv) by either party on or after July 31, 1995, if the Effective Date has not occurred on or before that date. Additionally, the Board of Directors of First Western may terminate the Plan of Reorganization, upon written notice to Zions, if the Average Closing Price is greater than $41.00, unless Zions agrees to elect an Average Closing Price of $41.00; and Zions may terminate the Plan of Reorganization, upon written notice to First Western, if the Average Closing Price is less than $37.00, unless First Western agrees to elect an Average Closing Price of $37.00. See "Plan of Reorganization -- Authorized Termination and Damages for Breach." Effective Date of the Reorganizations It is presently anticipated that if the Plan of Reorganization is approved by the respective shareholders of First Western and the Bank, the Reorganizations will become effective in the second quarter of 1995. However, there can be no assurance that all conditions necessary to the consummation of the Reorganizations will be satisfied or, if satisfied, that they will be satisfied in time to permit the Reorganizations to become effective at the anticipated time. See "Plan of Reorganization--Effective Date of the Reorganizations." Exchange of Certificates Instructions on how to effect the exchange of First Western Common Stock certificates and Bank Common Stock certificates for Zions Common Stock certificates and Bank Common Stock certificates will be sent, as promptly as practicable after the Reorganizations have become effective, to each shareholder of record of First Western and of the Bank immediately prior to such Reorganization. Shareholders should not send in stock certificates until they receive written instructions to do so. Pre-Announcement Prices Zions has agreed to purchase all of the outstanding shares of First Western Common Stock and Bank Common Stock for the respective Purchase Price by delivering to the respective First Western and Bank respective shareholders shares of Zions Common Stock with a value equal to the respective Purchase Price. The closing sale price for Zions Common Stock on the NASDAQ National Market System on October 31, 1994, the last trading day prior to the first public announcement of the Reorganizations, was $37.625. An equivalent per share price for First Western Common Stock and for Bank Common Stock computed by reference to the method described above under "Proposed Reorganization" would result in an exchange ratio of 6.299 shares of Zions Common Stock for each share of First Western Common Stock and 4.195 shares of Zions Common Stock for each share of Bank Common Stock (except for shares held by Zions) assuming that the Average Closing Price was $39.48. On April 3, 1995, the closing sale price for Zions Common Stock was $38.50. If the Average Closing Price equated to this price and had the net undistributed income of the Bank as calculated under the Plan of Reorganization been $636,189, and had the book value of First Western's net assets as calculated under the Plan of Reorganization been $654,894, the equivalent per share price (as calculated above) for First Western Common Stock and for Bank Common Stock, assuming consummation of the Plan of Reorganization, would have been $248.69 and $165.60, respectively. First Western Common Stock and Bank Common Stock are not listed with a national securities exchange or quoted on any automated quotation system. The common stock of each company occasionally trades through private negotiated transactions between individuals. As a result, no established public trading market for First Western Common Stock or Bank Common Stock presently exists. Reliable information concerning the prices at which First Western's and the Bank's stock has traded in private, negotiated transactions is not publicly available or generally known to First Western and the Bank. On occassion, First Western and the Bank have become aware of the trading price of their common stock in private transactions. Information concerning those trading prices has been omitted based on First Western's and the Bank's beliefs that such prices are not necessarily representative of the market price for their common stock during any particular period. There have been no trades in First Western Common Stock or in Bank Common Stock since the Plan of Reorganization was publicly announced. See "Stock Prices of and Dividends on First Western Common Stock and Bank Common Stock," below. Selected Financial Information The following table sets forth certain historical financial information for Zions and First Western. With respect to pro forma combined financial information for Zions giving effect to the Reorganization using the purchase method of accounting, see "Pro Forma Combined Financial Data." This information is based on the historical financial statements of Zions incorporated herein by reference and the First Western financial statements appearing elsewhere herein, and should be read in conjunction with such statements and information and the related notes.
Year Ended December 31, 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- (In Thousands, Except Per Share Amounts) Zions Earnings Net interest income $ 198,606 $ 174,657 $ 157,282 $ 139,871 $ 128,121 Provision for loan losses 2,181 2,993 10,929 25,561 20,083 Net income 63,827 58,205 47,209 30,449 27,765 Per Share Net income $ 4.37 $ 4.08 $ 3.42 $ 2.23 $ 2.07 Dividends 1.16 .98 .75 .72 .72 Statement of Condition at Period End Assets $4,934,095 $4,801,054 $4,107,924 $3,883,938 $3,720,227 Deposits 3,705,976 3,432,289 3,075,110 2,877,860 2,684,826 Long-term debt 58,182 59,587 99,223 81,134 92,794 Shareholders' equity 365,770 312,592 260,070 220,753 196,706 First Western Earnings Net interest income $ 2,951 $ 3,126 $ 2,676 Provision for loan losses 417 170 370 Net income 748 1,062 983 Per Share Net income $ 18.70 $ 26.56 $ 24.58 Dividends -- -- 3.00 Statement of Condition at Period End Assets $37,210 $39,448 $36,941 Deposits 30,072 32,908 32,499 Long-term debt 1,291 1,500 -- Shareholders' equity 4,972 4,258 3,196
Comparative Per Share Data The following table sets forth for the periods indicated historical earnings, book values and dividends per share for Zions and First Western Common Stock. The following data are based on the historical financial statements of Zions incorporated herein by reference and of First Western appearing elsewhere herein and should be read in conjunction with such financial statements and such information and the related notes to each.
Year Ended December 31, 1994 1993 1992 1991 1990 --------- --------- --------- ---------- ------- Net Income Per Common Share Zions $ 4.37 $ 4.08 $ 3.42 $ 2.23 $ 2.07 First Western 18.70 26.56 24.58 N/A N/A Book Value Per Common Stock Zions $ 25.12 $ 22.01 $ 18.95 $ 16.23 $ 14.63 First Western 134.42 115.12 86.40 N/A N/A Cash dividends Declared Per Common Share Zions(1) $ 1.16 $ .98 $ .75 $ .72 $ .72 First Western -- -- 3.00 N/A N/A (1) While Zions is not obligated to pay cash dividends, the Board of Directors presently intends to continue the policy of paying quarterly cash dividends. Future dividends will depend, in part, upon the earnings and financial condition of Zions.
FIRST WESTERN BANCORPORATION, FIRST WESTERN NATIONAL BANK and ZIONS BANCORPORATION -------------------- JOINT PROXY STATEMENT/PROSPECTUS for Special Meeting of Shareholders of First Western Bancorporation to be held on _________,1995 and for Special Meeting of Shareholders of First Western National Bank to be held on _________,1995 INTRODUCTION This Joint Proxy Statement/Prospectus is furnished in connection with the solicitation by the respective Boards of Directors of First Western Bancorporation, ("First Western") and First Western National Bank (the "Bank") of proxies to be voted at the Special Meetings of Shareholders of First Western and the Bank to be held on ________, 1995 and ______, 1995, respectively, and at any adjournment or adjournments thereof. The Special Meetings will be held at __ a.m. and _____ a.m., respectively, local time, at the executive offices of First Western and the Bank, Main and Third South Streets, Moab, Utah. The approximate date on which this Joint Proxy Statement/Prospectus will first be mailed to the shareholders of First Western and the Bank is ___________, 1995. Record Date; Voting Rights The Boards of Directors of First Western and the Bank have fixed the close of business on __________, 1995 and ___________, 1995, respectively, as the record date for determining the shareholders of First Western and the Bank entitled to notice of and to vote at the Special Meetings. On those dates, 39,988 shares of Common Stock, $10.00 par value, of First Western ("First Western Common Stock") were outstanding, held by approximately seven shareholders of record and 60,000 shares of Common Stock, $10.00 par value, of the Bank ("Bank Common Stock") were outstanding, held by approximately thirty-one shareholders of record. Each such share of First Western Common Stock and each such share of Bank Common Stock entitles its respective holder of record at the close of business on the record date to one vote on each matter properly submitted to the shareholders for action at the respective Special Meeting. First Western and the Bank have no other outstanding class of capital stock. Purpose of the Special Meetings At the respective Special Meetings, the respective shareholders of First Western and the Bank will be asked to consider and vote upon a proposal to approve an Agreement and Plan of Reorganization dated as of October 24, 1994 among First Western, the Bank, Zions Bancorporation ("Zions"), and Zions First National Bank ("Zions Bank"), as amended as of January 4, 1995, a related Agreement of Merger between First Western and Zions (First Western shareholders only) and an Agreement of Merger between the Bank, First Western's majority-owned subsidiary, and Zions Bank, Zions' wholly-owned (except for directors' qualifying shares) subsidiary (Bank shareholders only). The above-referenced agreements are referred to herein collectively as the "Plan of Reorganization." As more fully described below under "Plan of Reorganization," the Plan of Reorganization provides for the merger of First Western into Zions, with Zions being the surviving corporation (the "Holding Company Reorganization"), and the subsequent merger of the Bank into Zions Bank, with Zions Bank being the surviving corporation (the "Bank Reorganization"). Hereinafter, the two mergers will sometimes be referred to collectively as the "Reorganization" or "Reorganizations". Consummation of the Reorganization is conditioned upon approval by the respective shareholders of First Western and the Bank of the Reorganization. In the Reorganization, all outstanding shares of First Western Common Stock and all shares of Bank Common Stock will be cancelled and each outstanding share of First Western Common Stock and each outstanding share of Bank Common Stock, other than shares owned by Zions (in each case other than shares subject to dissenters' rights) will be converted into the right to receive shares of Zions Common Stock, in accordance with the formula described below, with cash to be paid in lieu of any fractional shares. Upon the Effective Date, each holder of First Western Common Stock will be entitled to receive, in exchange for each share of First Western Common Stock held by him, that number of shares of Zions Common Stock calculated by dividing the Holding Company Purchase Price by the Average Closing Price, and by further dividing the number so reached by the total number of shares of First Western Common Stock issued and outstanding on the Effective Date of the Reorganization. Upon the Effective Date, each holder of Bank Common Stock (other than Zions) will be entitled to receive, in exchange for each share of Bank Common Stock held by him, that number of shares of Zions Common Stock calculated by dividing the Bank Purchase Price by the Average Closing Price, and by further dividing the number so reached by the total number of shares of Bank Common Stock (including shares owned by Zions) issued and outstanding on the Effective Date of the Reorganization. At April 3, 1995, the closing price of Zions Common Stock quoted on NASDAQ was $38.50 per share and 39,988 shares of First Western Common Stock and 60,000 shares of Bank Common Stock were issued and outstanding. If the Reorganization had been consummated on that date, holders of First Western Common Stock and holders of Bank Common Stock (other than Zions), would have received 6.299 and 4.195 shares, respectively, of Zions Common Stock for each share of First Western Common Stock and for each share of Bank Common Stock, respectively, assuming that the Average Closing Price had been $39.48. This exchange would equate to a value of $248.69 and $165.60 for each share of First Western Common Stock and Bank Common Stock, respectively, if the exchange had been consummated as of such date. The above-referenced exchange computations assume that the book value of First Western's net assets on March 31, 1995 (exclusive of equity in the Bank and certain intangible assets) equalled $654,894 and that the Bank's undistributed income between September 1, 1994 and March 31, 1995 had been $636,189. THE BOARDS OF DIRECTORS OF FIRST WESTERN AND THE BANK UNANIMOUSLY BELIEVE THAT THE REORGANIZATION IS IN THE BEST INTERESTS OF THE SHAREHOLDERS OF FIRST WESTERN AND THE BANK AND RECOMMEND THAT FIRST WESTERN AND BANK SHAREHOLDERS VOTE TO APPROVE THE PLAN OF REORGANIZATION. Voting and Revocation of Proxies All properly executed proxies not theretofore revoked will be voted at the respective Special Meeting or any adjournments thereof in accordance with the instructions thereon. First Western proxies and Bank proxies containing no voting instructions will be voted in favor of approval of the Plan of Reorganization. As to any other matter brought before the Special Meetings and submitted to a shareholder vote, proxies will be voted in accordance with the judgment of the proxyholders named thereon. A shareholder who has executed and returned a proxy may revoke it at any time before it is voted by filing with the Secretary of First Western and the Secretary of the Bank, as the case may be, written notice of such revocation or a later dated proxy or by attending the Special Meeting and voting in person. Attendance at the First Western or Bank Special Meeting will not, of itself, constitute a revocation of a proxy. Solicitation of Proxies In addition to solicitation by mail, directors, officers and employees of First Western and the Bank may solicit proxies from the shareholders of First Western and the Bank in person or by telephone or otherwise for no additional compensation. Brokerage houses, nominees, fiduciaries and other custodians will be requested to forward proxy soliciting materials to beneficial owners of shares held of record by them and will be reimbursed for their reasonable expenses. First Western and the Bank will bear their own expenses in connection with the printing and solicitation of proxies for the Special Meetings. Zions will pay for all costs attributable to registering the Zions Common Stock under applicable federal and state law. See "Plan of Reorganization--Expenses." PLAN OF REORGANIZATION This section of the Joint Proxy Statement/Prospectus describes certain of the more important aspects of the Plan of Reorganization. The following description does not purport to be complete and is qualified in its entirety by reference to the Plan of Reorganization. The Plan of Reorganization has been filed with the SEC as an exhibit to the Registration Statement. The Plan of Reorganization is incorporated in this Joint Proxy Statement/Prospectus by reference to such filing and is available upon request. See "Available Information" above. The Reorganizations The Plan of Reorganization provides for the merger of First Western into Zions, in which Zions will be the surviving corporation, and for the subsequent merger of the Bank with Zions Bank, in which Zions Bank will be the surviving corporation. Upon consummation of the latter merger, Zions Bank will continue as a direct wholly-owned (except for directors' qualifying shares) subsidiary of Zions. Zions is a bank holding company incorporated in Utah. The principal subsidiaries of Zions are Zions Bank with 83 offices located throughout the state of Utah and one foreign office; Nevada State Bank with 19 offices in Nevada; and Zions Arizona with fourteen offices in Arizona. In the Reorganizations, the shareholders of First Western and the Bank will become shareholders of Zions. The 39,988 outstanding shares of First Western Common Stock and the 60,000 outstanding shares of Bank Common Stock, other than shares owned by Zions (in each case other than shares subject to dissenters' rights) will be converted into the right to receive that number of shares of Zions Common Stock equal to the Holding Company Purchase Price and the Bank Purchase Price, respectively, as determined on the Effective Date of the Reorganizations. See "Conversion of First Western and Bank Shares" below. Purchase Price The purchase price to be paid to First Western and Bank shareholders by Zions will be in the form of newly issued shares of Zions Common Stock, with a market value equal to the Holding Company Purchase Price with respect to outstanding shares of First Western Common Stock and, with respect to outstanding shares of Bank Common Stock equal to the portion of the Bank Purchase Price allocable to shares of Bank Common Stock not acquired by Zions in the Holding Company Reorganization. The Plan of Reorganization has defined "Holding Company Purchase Price" as the sum of (A) the product of the Bank Purchase Price and a fraction, the numerator of which is the number of shares of Bank Common Stock held of record by First Western on the Effective Date, and the denominator of which is the total number of shares of Bank Common Stock that shall be issued and outstanding on the Effective Date; and (B) the book value of the net assets of First Western, determined in accordance with generally accepted accounting principals as of the close of business on the last day of the calendar month preceding the Effective Date, exclusive of (X) the equity of the First Western in the Bank on such date, or (Y) goodwill, core intangibles, prepayments, and other similar intangible assets held by First Western, it being understood that the amount so calculated may be a negative number and that the effect of summing such a negative number would be a reduction in the Holding Company Purchase Price. The Plan of Reorganization has defined "Bank Purchase Price" as the sum of (A) $9,300,000 and (B) the net undistributed income of the Bank between the opening of business on September 1, 1994 and the close of business on the Effective Date, less any undistributed income (but not net of any undistributed loss) derived from activities or transactions which are not normal and recurring banking operations (such as, without limitation, the sale of securities or loans, or capital assets, or of lines of business), all of which shall be determined in accordance with generally accepted accounting principles. If the Holding Company Reorganization had taken place as of April 3, 1995, the total Holding Company Purchase Price would have been approximately $9,944,734 or $248.69 per share of First Western Common Stock. If the Bank Reorganization had taken place as of April 3, 1995, the portion of the total Bank Purchase Price allocable to shares of Bank Common Stock not acquired by Zions in the Holding Company Reorganization would have been approximately $646,349 or $165.60 per share of Bank Common Stock. The actual Purchase Price of each Reorganization will differ from that as shown above, because the Bank Purchase Price will include net undistributed income of the Bank from September 1, 1994, through the Effective Date and because the Holding Company Purchase Price will include the book value of the net assets of First Western (exclusive of equity in the Bank and certain intangible assets) as of the Effective Date. Subject to the "election" considerations discussed below, each share of First Western Common Stock and each share of Bank Common Stock (other than shares acquired by Zions in the Holding Company Reorganization) will be converted into and exchanged for the right to receive that number of shares of Zions Common Stock calculated by dividing the respective Purchase Price to be paid by Zions by the Average Closing Price of Zions Common Stock during the twenty-trading-day period ending five trading days prior to the Effective Date of the Holding Company Reorganization, and by further dividing that number by the number of outstanding shares of First Western Common Stock or Bank Common Stock (as the case may be) as of the Effective Date of the Holding Company Reorganization. Because the number of shares of Zions Common Stock to be exchanged for each share of First Western Common Stock and Bank Common Stock will be determined by the Average Closing Price of Zions Common Stock, because the Average Closing Price is based upon daily stock prices that are incapable of prediction, and because, therefore, the number of shares issuable to First Western and Bank shareholders is incapable of prediction, the parties to the Plan of Reorganization determined that the Plan of Reorganization would provide upper and lower "breakpoints" for the Average Closing Price beyond which the particular party for whose benefit the particular breakpoint has been instituted would be entitled to terminate the Plan of Reorganization, subject to the right of the other party to elect to consummate the Reorganizations using a fixed price as the Average Closing Price. The breakpoints established by the parties occur when the Average Closing Price would exceed $41.00 or be less than $37.00. If the Average Closing Price falls below $37.00, the lower breakpoint established by the parties, the number of shares of Zions Common Stock that would be issuable by Zions to First Western and Bank shareholders would increase to a level at which Zions might conclude that consummation of the Reorganizations is not in its best interests. Therefore, the Plan of Reorganization provides that, if the Average Closing Price is below $37.00, Zions has the option of terminating the Plan of Reorganization, subject to First Western's right to elect to consummate the Reorganizations and to use $37.00 as the Average Closing Price. Conversely, if the Average Closing Price of Zions Common Stock exceeds $41.00 per share, the upper breakpoint established by the parties, the number of shares of Zions Common Stock that would be issuable by Zions to First Western and Bank shareholders would decrease to a level at which First Western might conclude that consummation of the Reorganizations is not in the best interests of the First Western and Bank shareholders. Thus, the Plan of Reorganization provides that, if the Average Closing Price of Zions Common Stock exceeds $41.00, First Western has the option of terminating the Plan of Reorganization, subject to Zions' right to elect to consummate the Reorganizations and to use $41.00 as the Average Closing Price. As soon as possible after consummation of the Reorganizations, Zions or Zions Bank will mail instructions to each of First Western's and the Bank's shareholders concerning the proper method of surrendering certificates formerly representing First Western or Bank Common Stock in exchange for certificates representing shares of Zions Common Stock. After consummation of the Reorganizations, there will be no transfers on the stock transfer books of First Western or the Bank of any shares of First Western Common Stock or Bank Common Stock, and each outstanding certificate that prior to such consummation represented outstanding shares will be deemed for all purposes solely to represent the right of the holder thereof to receive the applicable number of shares of Zions Common Stock in accordance with the terms of the Reorganization. SHAREHOLDERS SHOULD RETAIN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS. Background of and Reasons for the Reorganizations First Western. First Western has been contacted periodically by banks, bank holding companies, and others with suggestions that the possibility of a merger or purchase be explored. In general, management has considered these approaches as either premature or not in the best interests of First Western and did not pursue them. In the fall of 1992, Zions approached the Bank with a suggestion of merger. First Western's management did not pursue these discussions because the proposed terms did not appear attractive and because the Bank was engaged in efforts to increase the quality of its loan portfolio and increase profitability. Following Zions' acquisition in early 1994 of National Bancorp of Arizona Inc. and Rio Salado Bancorp, Inc., discussions of a possible merger of First Western and Zions were renewed. Both the management and Board of Directors of First Western determined to pursue the merger discussions due to the Bank's improved earnings. It is the judgment of First Western's management that a merger would allow First Western to address the increased competition from larger and better capitalized banks and financial institutions it will face in the future. In the opinion of the Board of Directors, consummation of the Plan of Reorganization is in the best interests of the shareholders and employees of First Western and the communities they serve. The Board of Directors of First Western has continued to assess the potential for the Bank's growth and the requirements of its existing and anticipated future customers, including the services the Bank must provide to remain competitive. First Western's management believes that the changing economic conditions throughout the state of Utah have generated a need to offer customers additional services that the Bank presently does not provide or provides only on a limited basis. For First Western and the Bank to serve this market and remain competitive, significant changes would be required to support the growth of deposits, loans, and personnel. First Western's management foresees continued strong competition among banks in Grand and San Juan Counties and throughout Utah, generally, particularly large, well-capitalized banks, as well as from other financial services providers such as credit unions and savings associations. First Western and the Bank face significant competition in their lending activities and in attracting deposits from the general public. Competition is primarily from other commercial banks, mortgage banking companies, diversified financial services companies, credit unions and savings associations, as well as from other investment alternatives which compete for loans and deposits. Certain of those competitors have substantially greater financial resources than First Western, which enables them to offer a broader range of services. In recommending the Plan of Reorganization to the shareholders, First Western's Board of Directors carefully considered the social and economic effects of the Reorganization on depositors, borrowers and employees of the Bank and on the communities which the Bank serves. In the opinion of the Boards of Directors and management, the merger with Zions will provide First Western and Bank shareholders (other than certain affiliates) with marketable shares, its employees with greater opportunities, and its customers with enhanced services. The community, in turn, should benefit from the merger of First Western and Bank into Zions. The Boards of Directors believe that the proposed merger with Zions offers First Western's and the Bank's shareholders the best means of realizing the value of their investment, preserving employees' jobs within the Bank, and continuing to offer to the Bank's customers and the community it serves the deposit, lending, financing, and other banking services they will require in the future. After the Reorganization, in addition to existing services, the Bank anticipates that its customers will be provided with an enhanced array of products and services, including, among others, expanded mortgage services, extensive installment lending services, lease financing services, sweep accounts, discount brokerage services, and bank-permissible insurance and annuity products available from Zions Bank or through non-bank subsidiaries of Zions. The Bank's customers will benefit from the substantial managerial and financial resources of Zions. For example, the contemplated merger will result in an institution with a higher lending limit, which will increase potential credit availability to existing Bank customers and will attract customers with larger lending needs than the Bank can presently service. Zions. The Reorganization represent a means for Zions to establish offices in Grand and San Juan Counties in eastern Utah -- markets in which Zions currently has no offices. In view of the strong earnings and capital base of the Bank, together with its seasoned customer base, the Reorganizations are also calculated to enhance the earnings and capital of Zions and Zions Bank over both the near and long terms. Expansion of Zions' and Zions Bank's business into these markets will afford Zions and Zions Bank access to areas currently enjoying economic growth and favorable demographic trends. The general acquisition strategy of Zions relative to depository institutions is to enhance its market position in Utah, Nevada, and Arizona -- where its depository institutions are located -- through in-market acquisitions of smaller depository institutions. With the consummation of the Reorganizations, Zions will continue to expand its full-service banking operations in these states, each of which has an indigenous economy and its own business traditions. By developing affiliates in these various states, Zions will enjoy greater diversification which will help shield it against downturns in specific economic sectors. Diversification will add strength and stability to the Zions system and thus to each of its parts, including Zions Bank. Zions will likely continue to seek affiliations with smaller insured depository institutions in areas where it currently has little or no presence. Voting Agreements In connection with the Plan of Reorganization, all of the shareholder-directors of First Western and of the Bank, whose common share holdings aggregate approximately 98.93% of the outstanding First Western Common Stock and approximately 95.66% of the outstanding Bank Common Stock, have entered into agreements with Zions under which they have agreed, in their capacity as shareholders, to vote their shares in favor of the Plan of Reorganization, and to use their best efforts to cause any other shares over which they have voting power to be voted in favor of the Plan of Reorganization. The shareholder-directors also agreed until the earlier of the consummation of the Reorganizations or the termination of the Plan of Reorganization, not to vote their shares in favor of any other acquisition transaction or to cause their shares to be sold pursuant to any tender offer, exchange offer or similar proposal by a person other than Zions or to any person who is seeking to gain control over First Western or the Bank or to any person who does not agree to be bound by similar restrictions. First Western, which owns approximately 93.5% of the issued and outstanding shares of Bank Common Stock, has agreed to vote its shares in favor of the Bank Reorganization. The voting agreements are applicable to the directors only in their capacities as shareholders and do not legally affect the exercise of any shareholder's responsibilities as a director of First Western or the Bank. The agreements also do not apply to any shares of First Western Common Stock or Bank Common Stock held by a director or executive officer as a trustee or other fiduciary. The form of the voting agreements has been filed with the SEC as an exhibit to the Registration Statement and is incorporated herein by reference. The foregoing summary of the agreements is qualified in its entirety by reference to such filing. Required Vote; Management Recommendation Approval of the Plan of Reorganization requires the affirmative votes of the holders of two-thirds of the outstanding shares of First Western Common Stock and two-thirds of the outstanding shares of Bank Common Stock at the respective Special Meetings by the holders of First Western Common Stock and Bank Common Stock voting in person or by proxy. Because approval of each Reorganization requires the affirmative vote of two-thirds of First Western's outstanding shares and two-thirds of the Bank's outstanding shares, a failure to vote, an abstention, or a broker's failure to vote shares held in street name will have the same legal effect as a vote against approval of the Plan of Reorganization. Although neither First Western nor the Bank has retained an independent advisor to evaluate the terms of the Reorganization or to render an opinion on the fairness of Zions' offer from a financial point of view, the respective Boards of Directors of First Western and the Bank have studied the offer from Zions and have examined the terms of Zions' offer and have concluded that the terms of Zions' offer are fair to the shareholders of First Western and the Bank from a financial point of view and further that the Reorganizations are in the best interests of First Western and the Bank and their respective shareholders. ACCORDINGLY, THE BOARDS OF DIRECTORS OF FIRST WESTERN AND THE BANK UNANIMOUSLY RECOMMEND THAT FIRST WESTERN AND BANK SHAREHOLDERS VOTE "FOR" APPROVAL OF THE PLAN OF REORGANIZATION. Conversion of First Western and Bank Shares Exchange Formula. According to the valuation formula set forth in the Plan of Reorganization, the total number of shares of Zions Common Stock to be received by each First Western shareholder and by each Bank shareholder will not be determined until the Effective Date of the Reorganizations. The number of shares of Zions Common Stock to be received by each First Western shareholder and by each Bank shareholder (other than Zions) is based upon the actual average trading prices of Zions Common Stock as reported on NASDAQ over the twenty consecutive trading days ending on the fifth trading day preceding the Effective Date. On the Effective Date of the Reorganizations, all of the outstanding shares of First Western Common Stock and all of the outstanding shares of Bank Common Stock (except shares held by Zions) will be cancelled and will be converted into the right to receive that number of shares of Zions Common Stock with a value equal to the Holding Company Purchase Price and Bank Purchase Price, respectively. Each holder of shares of First Western Common Stock and each holder of shares of Bank Common Stock (other than Zions) will be entitled to receive, in exchange for each respective share of First Western Common Stock and Bank Common Stock held of record by such shareholder as of the Effective Date, that number of shares of Zions Common Stock calculated by dividing the Holding Company Purchase Price or the Bank Purchase Price, as the case may be, by the Average Closing Price, and by further dividing the number so reached by the number of shares of First Western Common Stock and Bank Common Stock (including shares held by Zions), respectively, that shall be issued and outstanding at the Effective Date. On April 3, 1995, the closing sale price for Zions Common Stock reported on the NASDAQ National Market System was $38.50. Assuming on that date that a total of 39,988 shares of First Western Common Stock and 60,000 shares of Bank Common Stock were outstanding, that the Bank's net undistributed income, calculated in accordance with the Plan of Reorganization, equalled $636,189 as of March 31, 1995, that the book value of First Western's net assets (exclusive of equity in the Bank and certain intangible assets) equaled $654,894 as of March 31, 1995, and further assuming that the Average Closing Price was $39.48, then each share of First Western Common Stock would be exchangeable for 6.299 shares of Zions Common Stock and each share of Bank Common Stock (excluding shares held by Zions) would be exchangeable for 4.195 shares of Zions Common Stock, in each case excluding any shares for which dissenters' rights were perfected. In view of the method of calculating the Average Closing Price as well as the inability to state with certainty the Bank's net undistributed income and the book value of First Western's net assets as of the Effective Date, it is not possible at the date of this Joint Proxy Statement/Prospectus to predict the respective rates of exchange at the Effective Date. Surrender of Certificates. As promptly as practicable after the Effective Date of the Reorganizations, Zions Bank, as the exchange agent designated by First Western, the Bank, Zions Bank and Zions in the Plan of Reorganization, will send to each respective shareholder of record of First Western Common Stock and Bank Common Stock promptly after the Reorganizations a letter of transmittal containing instructions as to how to effect the exchange of First Western Common Stock and Bank Common Stock certificates for certificates representing the shares of Zions Common Stock into which their shares have been converted. First Western and Bank shareholders should not send in their certificates until they receive such written instructions. However, certificates should be surrendered promptly after instructions to do so are received. Any dividends declared on Zions Common Stock after the Effective Date of the Reorganizations will apply to all whole shares of Zions Common Stock into which shares of First Western Common Stock and Bank Common Stock have been converted in the Reorganizations. However, no former First Western or Bank shareholder will be entitled to receive any such dividend (and will receive no interest thereon) until such shareholder's First Western Common Stock certificates have been surrendered for exchange as provided in the letter of transmittal. Upon such surrender, the shareholder will be entitled to receive all such dividends payable on the whole shares of Zions Common Stock represented by the surrendered certificate or certificates (without interest thereon and less the amount of taxes, if any, which may have in fact been imposed or paid thereon). Payment for Fractional Shares. No fractional shares of Zions Common Stock will be issued in connection with the Reorganizations. Instead, each First Western or Bank shareholder who surrenders for exchange First Western Common Stock or Bank Common Stock certificates representing a fraction of a share of Zions Common Stock will be entitled to receive, in addition to a certificate for the whole shares of Zions Common Stock represented by the surrendered certificates, cash in an amount equal to such fractional part of a share multiplied by the Average Closing Price of Zions Common Stock. Unexchanged Certificates. On the Effective Date of the Reorganizations, the stock transfer books of First Western and the Bank will be closed, and no further transfers of First Western Common Stock or Bank Common Stock will be made or recognized. Certificates for First Western Common Stock or Bank Common Stock not surrendered for exchange will entitle the holder to receive, upon surrender as provided in the letter of transmittal, only a certificate for the whole shares of Zions Common Stock represented by such certificates, plus payment of any amount for a fractional share or dividends to which such holder is entitled as outlined above, and without any interest thereon. Adjustment of Exchange Formula. The Plan of Reorganization contains provisions for the proportionate adjustment of the exchange ratio in the event of a stock dividend, stock split, reclassification or similar event involving the Zions Common Stock, the First Western Common Stock or the Bank Common Stock which occurs prior to the Reorganizations. Nevertheless, the total purchase price to be paid by Zions for all of the outstanding shares of First Western Common Stock and for all of the outstanding shares of Bank Common Stock is fixed at the Holding Company Purchase Price and the Bank Purchase Price, respectively, and will not be adjusted. Neither Zions nor First Western nor the Bank anticipates declaring any stock dividend, stock split, or reclassification prior to the Effective Date. Tax Consequences The Plan of Reorganization requires as a condition to the Reorganization that an opinion of legal counsel to First Western and the Bank be received by each party to the effect that: (1) The Reorganizations will constitute a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); (2) No gain or loss will be recognized by Zions, First Western or the Bank by reason of the Reorganizations; and (3) No gain or loss will be recognized by holders of First Western Common Stock or Bank Common Stock on the exchange of their shares for whole shares of Zions Common Stock. No gain or loss for federal income tax purposes will be recognized by shareholders of First Western or the Bank on the exchange of their respective shares for whole shares of Zions Common Stock. However, gain or loss may be recognized by First Western or Bank shareholders upon the receipt of cash in payment for a fractional share. To compute the amount, if any, of such gain or loss, the cost or other basis of the First Western Common Stock or Bank Common Stock exchanged must be allocated proportionately to the total number of shares of Zions Common Stock received, including any fractional share interest. Gain or loss will be recognized measured by the difference between the cash received and the basis of the fractional share interest as so allocated. Under Section 302(a) of the Code, any such gain or loss will be entitled to capital gain or loss treatment if the First Western Common Stock or Bank Common Stock was a capital asset in the hands of the shareholder. If any shares of Zions Common Stock received in the Reorganization are subsequently sold, gain or loss on the sale should be computed by allocating the cost or other basis of the First Western Common Stock or Bank Common Stock exchanged in the respective Reorganization to the shares sold in the manner described in the preceding paragraph. The holding period for the shares of Zions Common Stock received in the Reorganizations will include the holding period for the shares of First Western Common Stock or Bank Common Stock exchanged in determining, for example, whether any such gain or loss is a long-term or short-term capital gain or loss. If a First Western or Bank shareholder exercises dissenters' rights and receives cash in exchange for his First Western Common Stock or Bank Common Stock, the cash will generally be treated as received by the shareholder as a distribution in redemption of the First Western Common Stock or Bank Common Stock subject to the provisions and limitations of Section 302 of the Code. Cash received by a dissenting First Western or Bank shareholder will be taxed as if the dissenter's shares had been sold to First Western or the Bank for the cash received and will generally be entitled to capital gain or loss treatment under Section 302 of the Code, provided the shares are a capital asset in the hands of the shareholder. Each First Western and Bank shareholder should consult with his own personal tax advisor as to the federal, state and local tax consequences of exercising dissenters' rights. The foregoing is intended only as a summary of certain federal income tax consequences of the Reorganizations under existing law and regulations, as presently interpreted by judicial decisions and administrative rulings, all of which are subject to change without notice and any such change might be retroactively applied to the Reorganizations. Among other things, the summary does not address state income tax consequences, local taxes, or the federal or state income tax considerations that may affect the treatment of a shareholder who acquired his First Western Common Stock or Bank Common Stock pursuant to an employee stock option or other special circumstances. Accordingly, it is recommended that First Western and Bank shareholders consult their own tax advisors for specific advice concerning their own tax situations, potential changes in the applicable tax law and all federal, state and local tax matters in connection with the Reorganizations. A copy of the tax opinion rendered by legal counsel to First Western and the Bank as to the material federal income tax consequences relating to the Reorganizations is set out in Appendix C hereto. Interests of Certain Persons in the Transactions In connection with the Plan of Reorganization, all of First Western's shareholder-directors, whose common shareholdings aggregate approximately 98.93% of the outstanding First Western Common Stock, and all of the Bank's shareholders-directors, whose common shareholdings aggregate approximately 95.66% of the outstanding Bank Common Stock, have entered into agreements with Zions under which they have agreed, in their capacity as shareholders, to vote their respective shares in favor of the Plan of Reorganization and to use their best efforts to cause any other shares over which they have voting power to be voted in favor of the Plan of Reorganization. The shareholder-directors also agreed until the earlier of the consummation of the Reorganization or the termination of the Plan of Reorganization, not to vote their shares in favor of any other acquisition transaction or to cause their shares to be sold pursuant to any tender offer, exchange offer or similar proposal by a person other than Zions or to any person who is seeking to gain control over First Western or the Bank or to any person who does not agree to be bound by similar restrictions. On September 11, 1974, the Bank entered into a severance agreement with I.D. Nightingale, chairman and president of the Bank. Pursuant thereto, the Bank and Mr. Nightingale agreed that, upon implementation of a merger or reorganization pursuant to which the Bank would be acquired by another company and as a result thereof Mr. Nightingale would not continue as the chairman and president of the Bank or be retained in similar capacities with the company acquiring the Bank, Mr. Nightingale would be entitled to receive $1,250 per month for ten years as severance pay. Upon consummation of the Reorganization, the provisions of the agreement will be activated. Stock Options There are no stock options outstanding to purchase any of the stock of First Western or the Bank. Inconsistent Activities First Western and the Bank have agreed in the Plan of Reorganization that unless and until the Reorganizations have been consummated or the Plan of Reorganization has been terminated in accordance with its terms, First Western and the Bank will not (i) solicit or encourage any inquiries or proposals by any third person to acquire more than 1% of the First Western Common Stock, any stock of the Bank or any significant portion of its or the Bank's assets (whether by tender offer, merger, purchase of assets or otherwise), (ii) afford any third party which may be considering any such transaction access to its or the Bank's properties, books or records except as required by law, (iii) enter into any discussions, negotiations, agreement or understanding for any such transaction or (iv) authorize or permit any of its directors, officers, employees or agents to do any of the foregoing. Notwithstanding the foregoing, First Western or the Bank may take an action referred to in clause (ii) or (iii) of the previous sentence (or permit its directors, officers, employees or agents to do so) if First Western's or the Bank's respective Board of Directors, after consulting with counsel, determines that such actions should be taken or permitted in the exercise of its fiduciary duties. If First Western or the Bank becomes aware of any offer or proposed offer to acquire any shares of First Western or the Bank or any significant portion of its assets, First Western or the Bank, as the case may be, is required to give immediate notice thereof to Zions. Conduct of Business Pending the Reorganizations The Plan of Reorganization contains covenants, representations and warranties by First Western and the Bank as to matters which are typical in transactions similar to the Reorganizations. First Western and the Bank have agreed that First Western and the Bank, respectively, will not, prior to the Effective Date, without Zions' prior written consent: (i) declare or pay cash dividends or property dividends with the exception of customary periodic cash dividends in a manner consistent with past practice; (ii) except for the issuance of First Western Common Stock upon exercise of existing stock options, declare or distribute any stock dividend, authorize any stock split, authorize, issue or make any distribution of its capital stock or other securities or grant any option to acquire such securities; (iii) except as contemplated by the Plan of Reorganization, merge into, consolidate with or sell any of its assets to any other corporation or person, or enter into any other transaction or agree to effect any other transaction not in the ordinary course of business or engage in any discussions concerning such a possible transaction; (iv) convert the charter of the Bank from that of a national banking association to any other charter or form of entity; (v) make any direct or indirect redemption or any other acquisition of any of its capital stock; (vi) incur any liability or obligation, make any commitment or disbursement, acquire or dispose of any property or asset, make any agreement or engage in any transaction, except in the ordinary course of business; (vii) subject any of its properties or assets to any lien, claim, charge, option or encumbrance, except in the ordinary course of business; (viii) institute or agree to any increase in the compensation of any employee, except for ordinary increases in accordance with past practices not to exceed 4% per annum of the aggregate payroll as of July 1, 1994; (ix) create or modify any pension or profit-sharing plan, bonus, deferred compensation, death benefit or retirement plan, or the level of benefits under any such plan, or increase or decrease any severance or any other fringe benefit; or (x) except to directly facilitate the Reorganization, enter into any employment or personal services contract with any person or firm. First Western and the Bank have also agreed to carry on their respective businesses and manage their respective assets and property diligently in the same manner as they have previously done and to use their respective best efforts to preserve their business organization. Pending completion of Reorganizations or termination of the Plan of Reorganization, First Western and the Bank have agreed to provide Zions with certain information and reports and access to other information. Conditions to the Reorganizations The obligations of First Western, the Bank and Zions to consummate the Reorganizations are subject to, among other things, the satisfaction of the following conditions: (i) the respective shareholders of First Western and the Bank shall have approved the Plan of Reorganization; (ii) First Western, the Bank and Zions shall have received all relevant orders, consents and approvals from all requisite governmental authorities for the completion of the Reorganizations; (iii) there shall be an absence of certain litigation, as specified in the Plan of Reorganization; (iv) the registration statement to be filed by Zions pursuant to the Securities Act in connection with the registration of the shares of Zions Common Stock to be used as consideration in connection with the Reorganizations shall have become effective under the Securities Act, and Zions shall have received all required state securities laws ("Blue Sky") permits and other required authorizations or confirmations of the availability of exemption from registration requirements necessary to issue Zions Common Stock in the Reorganizations, and neither the registration statement nor any such required permit, authorization or confirmation shall be subject to a stop-order or threatened stop-order by the SEC or any state securities authority; (v) First Western, the Bank and Zions shall have determined that the Reorganizations shall qualify as tax free reorganizations under the Code and the regulations and rulings promulgated thereunder; and (vi) there shall be no adverse legislation or government regulation which would make the transaction contemplated impossible or which would materially and adversely affect the economic assumptions of the transactions contemplated by the Plan of Reorganization or the business of Zions and First Western or which would otherwise materially impair the value of First Western to Zions. The obligations of Zions and Zions Bank to consummate the Reorganizations are subject to satisfaction or waiver of certain additional conditions, including: (i) the respective shareholders of First Western and the Bank shall have authorized the Plan of Reorganization, and dissenters' rights shall have been exercised and perfected by owners of not more than 3% of the respective outstanding shares of First Western Common Stock and the Bank Common Stock; (ii) all representations and warranties made by First Western and the Bank in the Plan of Reorganization shall be true in all material respects on the Effective Date and First Western and the Bank shall have performed in all material respects all its respective obligations under the Plan of Reorganization; (iii) Cohne, Rappaport & Segal, P.C., special counsel to First Western and the Bank, shall have rendered a legal opinion to Zions in form and substance satisfactory to Zions; (iv) during the period from June 30, 1994 to the Effective Date, there shall be no material adverse change in the financial position or results of operations, properties, liabilities or businesses of First Western or the Bank; (v) on the Effective Date the net worth of the Bank shall not be less than $4.5 million; (vi) prior to the Effective Date of the Reorganizations, the Bank will have conformed, to the reasonable satisfaction of Zions, its loan loss reserve methodology to that employed by Zions Bank; the Bank will have implemented such methodology by making appropriate provisions to its reserve for loan losses; and the reserve for loan losses of the Bank as determined in accordance with the foregoing shall not be less than $433,000. The obligations of First Western and the Bank to consummate the Reorganizations are subject to the satisfaction or waiver of certain additional conditions, including: (i) the truth, in all material requests, of all representations and warranties made by Zions and Zions Bank in the Plan of Reorganization on the Effective Date and the performance, in all material respects, by Zions and Zions Bank of all their obligations under the Plan of Reorganization; (ii) receipt of a legal opinion of Metzger, Hollis, Gordon & Mortimer, special counsel to Zions, satisfactory to First Western and the Bank; (iii) the absence, during the period from June 30, 1994 to the Effective Date, of any material adverse change in the financial position or results of operations, properties, liabilities or business of Zions; (iv) the absence, as of the Effective Date, of any material error, misstatement or omission in any of the representations and warranties of Zions or Zions Bank or any material failure to perform or satisfy any covenants of Zions or Zions Bank contained in the Plan of Reorganization; and (v) the quoting of Zions Common Stock on NASDAQ or the listing of Zions Common Stock on a national securities exchange. Representations and Warranties The representations and warranties of Zions, Zions Bank, First Western and the Bank contained in the Plan of Reorganization relate, among other things, to the organization and good standing of Zions, Zions Bank, First Western, and the Bank; the capitalization of Zions, First Western and the Bank; the authorization by Zions, Zions Bank, First Western and the Bank of the Plan of Reorganization and the absence of conflict with laws or other agreements; the accuracy and completeness of the financial statements and other information furnished to the other party; the absence of material adverse changes since June 30, 1994; the absence of undisclosed liabilities; and compliance with laws. First Western and the Bank have additionally warranted that since June 30, 1994 there has been no material deterioration in the quality of the Bank's loan portfolio or any major component thereof and no material increase in the level of non-performing assets or non-accrual loans at the Bank or in the level of its provision for credit losses or its reserve for possible credit losses. First Western has also warranted that its reserve for possible credit losses as of June 30, 1994, was adequate to absorb reasonably anticipated losses in the consolidated loan and lease portfolios in view of the size and character of such portfolios. Zions has additionally warranted since June 30, 1994 that there have been (a) no material adverse change in the condition, financial or otherwise, assets, properties, liabilities, or businesses of Zions, and (b) no material deterioration in the quality of the loan portfolio of Zions or of any major component thereof, and no material increase in the level of nonperforming assets or nonaccrual loans at Zions or in the level of its provision for credit losses or its reserve for possible credit losses. The representations and warranties contained in the Plan of Reorganization will survive the consummation of the Reorganizations. Amendment and Waiver Notwithstanding prior approval by the shareholders of First Western and the Bank, the Plan of Reorganization may be amended in any respect by written agreement between the parties, except that after such shareholder approval no amendment may prejudice the economic interests of the shareholders of First Western or the Bank. The parties may also (i) extend the time for performance of any of the obligations of the other; (ii) waive any inaccuracies in the representations and warranties of the other; (iii) waive compliance by the other with any of its obligations under the Plan of Reorganization; and (iv) waive any condition precedent to its obligations under the Plan of Reorganization other than approval of the Plan of Reorganization by the shareholders of First Western and the Bank, governmental regulatory approvals required to consummate the Reorganizations, and securities registration requirements incident to the issuance of Zions Common Stock in the Reorganizations. Authorized Termination and Damages for Breach The Plan of Reorganization may be terminated and abandoned at any time prior to the Effective Date, notwithstanding approval of the shareholders of First Western and the Bank and without payment of damages by either party except as provided below, as follows: (i) by mutual consent of the parties; (ii) unilaterally, by either party if any of the representations and warranties of the other party was materially incorrect when made or in the event of a material breach or material failure by a party to the Plan of Reorganization contained in the Plan of Reorganization which has not been, or cannot be, cured within 30 days after written notice of such breach or failure has been given to the other party; (iii) by First Western if the Average Closing Price is greater than $41.00 and First Western has provided Zions written notice before the close of business on the fourth trading day preceding the Effective Date of its intention to terminate based on price and Zions has not thereafter prior to the close of business on the third trading day preceding the Effective Date given First Western written notice of its intent to utilize $41.00 as the Average Closing Price; (iv) by Zions if the Average Closing Price is greater than $37.00 and Zions has provided First Western written notice before the close of business on the fourth trading day preceding the Effective Date of its intention to terminate based on price and First Western has not thereafter prior to the close of business on the third trading day preceding the Effective Date given Zions written notice of its intent to utilize $37.00 as the Average Closing Price; (v) by either Zions or First Western if the Reorganizations have become inadvisable or impracticable by reason of federal or state litigation to restrain or invalidate the Reorganizations; or (v) by either party on or after July 31, 1995, if the Effective Date has not occurred on or before that date. If either party terminates the Plan of Reorganization because any of the representations and warranties of a party were materially incorrect when made, or because of a material breach or material failure by a party of a covenant or agreement made under the Plan of Reorganization, then such party whose representations and warranties were materially incorrect or who materially breached its covenant shall be liable to the other party or parties to the Plan of Reorganization solely to the extent of the actual, reasonable out-of-pocket expenses, not to exceed $250,000, incurred by the other party in connection with the negotiation and preparation of the Plan of Reorganization and the carrying out of the transactions contemplated thereby. Dissenters' Rights of First Western and Bank Shareholders First Western Shareholders. A holder of shares of First Western Common Stock is entitled to exercise the rights of a dissenting shareholder under the Utah Revised Business Corporation Act sections 16-10a-1301 et seq. to object to the Plan of Reorganization and make written demand that First Western pay in cash the fair value of the shares held as determined in accordance with such statutory provisions. The following summary does not purport to be a complete statement of the provisions of Utah law and is qualified in its entirety by reference to such statutory provisions, which are set forth in full as Appendix A to this Joint Proxy Statement/Prospectus. Utah law requires that First Western shareholders must follow certain prescribed procedures in the exercise of their statutory right to dissent in connection with the Reorganization. The failure to follow such procedures on a timely basis, in the precise manner required by Utah law may result in a loss of a shareholder's dissenters' rights. To be entitled to compensation as a dissenting shareholder to the Reorganization, a shareholder must: (i) file written objection to the proposed merger, as described below; (ii) not vote in favor of the proposed merger, as described below; and (iii) make a demand for compensation, as provided below. Any shareholder, electing to exercise his or her right to dissent, must file with First Western, prior to the taking of the vote at the Special Meeting to be held on ____________, 1995, at ____________a.m., local time, at Main and Third South Streets, Moab, Utah, his or her written notice of such shareholder's intent to demand payment for the shares owned if the proposed action is effectuated. Such notice may be delivered to Mrs. Frankie Nightingale, Corporate Secretary, Main and Third South Streets, Moab, Utah 84532. Upon timely receipt of the demand notice, First Western must no later than ten days after the effective date of the corporate action notify any dissenting shareholder who is entitled to demand payment for his shares that the merger has been approved and provide other information to the shareholder (the "dissenters' notice"). Any shareholder who has not timely notified First Western of the demand for payment will be bound by the Reorganization and will have the same rights as if a written notice of demand had not been filed. A shareholder who is given a dissenters' notice must, in accordance with the dissenters' notice, cause First Western to receive a demand payment for the value of such shareholder's shares of First Western Common Stock and deposit the share certificates in accordance with the dissenters' notice. A shareholder who does not demand payment and deposit share certificates as required, by the date or dates set in the dissenters' notice, is not entitled to payment for shares. Upon the later of the Effective Date and receipt by First Western of each payment demand from the dissenting shareholders, First Western will pay the amount First Western estimates to be the fair value of the dissenters' shares, plus interest. Each payment must be accompanied by (a) First Western's balance sheet as of the end of its most recent fiscal year, (b) an income statement for that year, (c) a statement of changes in shareholders' equity for that year and a statement of cash flow for that year, if First Western customarily provides such statements to its shareholders, (d) the latest available interim financial statements, if any, (e) a statement of First Western's estimate of fair value of the shares and the amount of interest payable on such shares, (f) a statement of the dissenter's right to demand payment if the shareholder is dissatisfied with First Western's payment or offer, and (g) a copy of the Utah dissenters' rights provisions. A dissenter who has not accepted First Western's offer may notify First Western in writing of his own estimate of the fair value of his shares and demand payment of the estimated amount, plus interest, less any payment previously made by First Western if (a) the dissenter believes that the amount paid by First Western is less than the fair value of the shares, or (b) First Western fails to make payment within 60 days after the date set by First Western as the date by which it must receive the payment demand. A dissenter waives the right to demand payment as set forth in this paragraph unless he causes First Western to receive the notice required in this paragraph within 30 days after First Western made or offered payment for his shares. If a demand for payment under the previous paragraph remain unresolved, First Western will commence a proceeding within 60 days after receiving the payment demand set forth in the previous paragraph and will petition the court to determine the fair value of the shares and the amount of interest. If First Western does not commence the proceeding within the 60-day period, it will pay each dissenter whose demand remains unresolved the amount demanded. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The court, by judgment, will determine the value of the stock of the shareholder entitled to payment and will direct payment of such value, together with interest at a rate determined by the court, in its discretion. The court has the right to assess the costs of any dissenter's action as it may deem equitable. The court, in its discretion, may award either party any expenses, including reasonable attorneys' fees and expenses for experts. Upon payment of any amount determined by the court, the shareholder shall cease to have any interest in the shares. Shareholders considering seeking appraisal by exercising their dissenters' rights should be aware that the fair value of their First Western Common Stock determined pursuant to Utah law could be more than, the same as, or less than their pro rata share of the Holding Company Purchase Price that they are entitled to receive pursuant to the Plan of Reorganization if they do not seek appraisal of their First Western Common Stock. Bank Shareholders. Under the National Bank Act, 12 U.S.C. section 215a(b), any Bank shareholder has the right to dissent from the Reorganization and to receive fair value in cash for his or her Bank Common Stock. The shares as to which dissenters' rights are exercised are referred to herein as "Dissenting Shares." The express procedures of the National Bank Act must be followed precisely; if they are note, shareholders may lose their right to dissent. The procedures discussed below apply only if the Reorganization is approved by the Bank shareholders, approved by the Comptroller and consummated as provided in the Plan of Reorganization. In accordance with the dissenters' rights provisions of the National Bank Act (see Appendix B), any shareholder of the Bank who votes against the Plan of Reorganization at the Special Meeting or who gives written notice at or prior to the Special Meeting to the presiding officer that he dissents from the plan of merger shall be entitled to receive in cash the value of the shares held by him as of the Effective Date if he makes written request therefor to the surviving bank, Zions Bank, at any time before thirty days after the Effective Date, accompanied by the surrender of his stock certificates. After making demand for payment, the dissenting Bank shareholder will not be entitled to vote or exercise any other rights of a Bank shareholder. Any shareholder who votes against the Plan of Reorganization Agreement at the Special Meeting or who has given the aforesaid written notice at or before the Special Meeting that he dissents from the Plan of Reorganization will be notified in writing of the Effective Date. Failure to vote against the Plan of Reorganization will constitute a waiver of a shareholder's appraisal rights unless he gives written notice prior to or at the Special Meeting to the presiding officer at the Special Meeting that he dissents form the Plan of Reorganization. However, simply because a shareholder votes against the Plan of Reorganization at the Special Meeting or gives such written notice prior to or at the Special Meeting does not mean that he is then entitled to receive the value of his shares. Such a shareholder must also make a written request to the surviving bank (Zions Bank) for the value of his shares at any time before thirty days after the effective date and accompany such request with a surrender of his stock certificates. Mere failure to vote or merely voting against the Reorganization or merely filing a notice of dissent will not satisfy the requirement for a written demand. Unless the above procedure is followed, the Bank shareholder will be presumed to have acquiesced in the approval of the Reorganization and waived his or her dissenters' rights. If an executed proxy is received but no direction is indicated as to how such proxy should be voted, the Bank Common Stock represented by the proxy will be voted in favor of the Reorganization. Accordingly, the submission of an unmarked proxy, unless revoked prior to its being voted, will serve to waive the Bank shareholder's dissenters' rights. As noted above, failure to vote against the Reorganization will not waive a shareholder's dissenters' rights if the shareholder has filed a written notice prior to or at the meeting and has not voted in favor of the Reorganization. If a shareholder abstains from voting on the Reorganization, this will not waive dissenters' rights so long as the appropriate written notice is properly and timely filed. Mere notice filed after the Special Meeting, absent compliance with the other specific requirements, will not be effective to preserve a shareholder's dissenters' rights. In the event a shareholder abstains from voting and does not timely file all required notices in order to perfect dissenters' rights, such shareholder will lose his right to dissent but will nonetheless be entitled to the same consideration as if he or she had voted in favor of the transaction. Any shareholder failing to make demand and surrender his or her stock certificates within the 30-day period will be bound by the terms of the Plan of Reorganization, including the requirement to exchange his or her shares of Bank Common Stock for shares of Zions Common Stock. The value of the shares of any dissenting shareholder will be ascertained as of the Effective Date by an appraisal made by a committee of three persons, composed of (1) one selected by a majority vote of the dissenting shareholders, (2) one selected by the directors of the surviving bank (Zions Bank), and (3) one selected by the two so chosen. The value agreed upon by any two of the three so selected will govern. If this agreed-upon value is not satisfactory to any dissenting shareholder who has requested payment as provided by Section 215a(b), such shareholder may, within five days after being notified of such appraised value of his shares, appeal to the Comptroller, who will cause a reappraisal to be made which will be final and binding with respect to the value of the appellant's shares. If, within ninety (90) days after the Effective Date, for any reason one or more of the three appraisers is not selected as provided by Section 215a(c), or the appraisers fail to determine the value of the shares as provided above, the Comptroller will upon written request of any interested party cause an appraisal to be made which will be final and binding on all parties. The expenses incurred by the Comptroller in making any such appraisal or reappraisal, as the case may be, will be paid by the surviving bank. The surviving bank (Zions Bank) will promptly pay the ascertained value of the shares to the dissenting shareholders. Shareholders considering seeking appraisal by exercising their dissenters' rights should be aware that the fair value of their Bank Common Stock determined pursuant to the National Bank Act could be more than, the same as, or less than their pro rata share of the Bank Purchase Price that they are entitled to receive pursuant to the Plan of Reorganization if they do not seek appraisal of their Bank Common Stock. THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE APPRAISAL RIGHTS AND, IN VIEW OF THE FACT THAT EXERCISE OF SUCH RIGHTS REQUIRES STRICT ADHERENCE TO THE RELEVANT PROVISIONS OF THE NATIONAL BANK ACT, EACH SHAREHOLDER WHO MAY DESIRE TO EXERCISE APPRAISAL RIGHTS IS ADVISED INDIVIDUALLY TO CONSULT THE LAW (AS SET FORTH IN APPENDIX B TO THIS JOINT PROXY STATEMENT/PROSPECTUS) AND COMPLY WITH THE PROVISIONS THEREOF. FIRST WESTERN AND BANK SHAREHOLDERS WISHING TO EXERCISE DISSENTERS' RIGHTS ARE ADVISED TO CONSULT THEIR OWN COUNSEL TO ENSURE THAT THEY FULLY AND PROPERLY COMPLY WITH THE REQUIREMENTS OF UTAH AND FEDERAL LAW. Restrictions on Resales by First Western and Bank Affiliates The shares of Zions Common Stock issuable in the Reorganizations have been registered under the Securities Act, and such shares will generally be freely tradable by the First Western and Bank shareholders who receive Zions shares as a result of the Reorganizations. However, this registration does not cover resales by First Western or the Bank shareholders who may be deemed to control or be under common control with First Western, the Bank or Zions and who therefore may be deemed "affiliates" of First Western, the Bank or Zions as that term is defined in Rule 145 under the Securities Act. Such affiliates are not permitted to sell their shares of Zions Common Stock acquired in the Reorganization except pursuant to (i) an effective registration statement under the Securities Act covering the shares to be sold; or (ii) the conditions contemplated by Rules 144 and 145 under the Securities Act; or (iii) another applicable exemption from the registration requirements of the Securities Act. The management of First Western and the Bank will notify those persons who it believes may be such affiliates. Expenses Each party to the Plan of Reorganization will pay its own expenses, including those of its own counsel, accountants, and tax advisors, incurred in connection with the Plan of Reorganization. First Western and the Bank will pay the respective cost of printing and delivering this Joint Proxy Statement/Prospectus to their respective shareholders and for soliciting proxies for the respective Special Meeting. Zions will pay all costs attributable to registering its stock issuable pursuant to this Joint Proxy Statement/Prospectus under federal and state securities laws. Government Approvals Applications for approval (or requests for waiver of application requirements) of the Reorganizations must be made to, and approvals and consents or waivers must be obtained from, appropriate federal and Utah regulators, including the Federal Reserve Board, the Comptroller, and the Commissioner. The Federal Reserve Board has waived application and approval requirements otherwise applicable pursuant to Section 3(a) of the Bank Holding Company Act. The Comptroller has approved the merger of the Bank into Zions bank pursuant to the Bank Merger Act. The Commissioner has waived jurisdication with respect to the transactions contemplated by the Plan of Reorganization. Federal law prohibits consummation of the Reorganizations until 30 days after the approvals of the federal regulators have been obtained unless a shorter period has been prescribed by the federal regulator with the concurrence of the Attorney General pursuant to Section 321 of the Riegle Act. Effective Date of the Reorganizations It is presently anticipated that if the Plan of Reorganization is approved by the shareholders of First Western and of the Bank, the Reorganizations will become effective during the second quarter of 1995. However, as noted above, consummation of the Reorganizations is subject to the satisfaction of a number of conditions, some of which cannot be waived. There can be no assurance that all conditions to the Reorganizations will be satisfied or, if satisfied, that they will be satisfied in time to permit the Reorganizations to become effective during the second quarter of 1995. In addition, as also noted above, Zions, First Western and the Bank retain the power to abandon the Reorganization or to extend the time for performance of conditions or obligations necessary to its consummation, notwithstanding prior shareholder approval. PRO FORMA COMBINED FINANCIAL INFORMATION The following table, which shows comparative historical per Common Share data for Zions and First Western (separately and pro forma combined), and equivalent pro forma per share data for First Western, should be read in conjunction with the financial information appearing elsewhere in this Joint Proxy Statement/Prospectus or as incorporated herein by reference to other documents. The pro forma data in the table, presented as of December 31, 1994, are presented for comparative and illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations in the future of what the combined financial position or results of operations would have been had the Reorganization been consummated during the period or as of the date for which the information in the table is presented:
Historical Pro Forma Zions and First Western First Western First Pro-Forma Equivalent Per Common Share Zions Western Combined(4) Pro-Forma(5) NET INCOME(1) For the year ended December 31, 1994 $ 4.37 $ 18.70 $ 4.30 $ 28.82 CASH DIVIDENDS(2) For the year ended December 31, 1994 $ 1.16 -0- $ 1.16 $ 7.78 BOOK VALUE(3) As of December 31, 1994 $ 25.12 $ 134.42 $ 25.31 $ 169.65 - -------------------- (1) Net Income per share is based on weighted average common and common equivalent shares outstanding. (2) Pro forma cash dividends represent historical cash dividends of Zions. (3) Book value per common share is based on total period-end of Zions shareholders' equity. (4) Pro forma combined net income per share represents historical net income of Zions and First Western adjusted for amortization of goodwill resulting from purchase accounting computed using historical weighted average common and common equivalent shares of Zions adjusted by computed common and common equivalent shares to be issued in the purchase. Pro forma combined book value per share represents historical total shareholders' equity of Zions adjusted by the purchase price less amortization of goodwill resulting from purchase accounting computed using Zions' historical common shares outstanding adjusted by computed common shares to be issued in the purchase. (5) Pro forma equivalent amounts are computed by multiplying the pro forma combined amounts by the estimated exchange ratio as of January 3, 1995.
SUPERVISION AND REGULATION The information contained in this section summarizes portions of the applicable laws and regulations relating to the supervision and regulation of Zions and its subsidiaries. These summaries do not purport to be complete, and they are qualified in their entirety by reference to the particular statutes and regulations described. Zions Zions is a bank holding company within the meaning of the Bank Holding Company Act and is registered as such with the Federal Reserve Board. Under the current terms of that Act, Zions' activities, and those of companies which it controls or in which it holds more than 5% of the voting stock, are limited to banking or managing or controlling banks or furnishing services to or performing services for its subsidiaries, or any other activity which the Federal Reserve Board determines to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In making such determinations, the Federal Reserve Board is required to consider whether the performance of such activities by a bank holding company or its subsidiaries can reasonably be expected to produce benefits to the public such as greater convenience, increased competition or gains in efficiency that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. Bank holding companies, such as Zions, are required to obtain prior approval of the Federal Reserve Board to engage in any new activity or to acquire more than 5% of any class of voting stock of any company. Generally, no application to acquire shares of a bank located outside the state in which the operations of the applicant's banking subsidiaries were principally conducted on the date it became subject to the Act may be approved by the Federal Reserve Board unless such acquisition is specifically authorized by the laws of the state in which the bank whose shares are to be acquired is located. Most states have specifically authorized the acquisition of banks located in these states by out of state companies, in many cases subject to various restrictions. The Federal Reserve Board has authorized the acquisition and control by bank holding companies of savings and loan associations and certain other savings institutions without regard to geographic restrictions applicable to acquisition of shares of a bank. The Riegle-Neal Interstate Branching and Efficiency Act of 1994 ("Riegle-Neal Act") permits, beginning one year after enactment and subject to approval by the Federal Reserve Board, bank holding companies to acquire either control of, or substantial assets of, a bank located outside the bank holding company's home state. These acquisitions are subject to limitations, including, inter alia, adequate capitalization and management of the acquiring bank holding company, existence of the acquired bank for up to five years before purchase where required under state law, existence of state laws that condition acquisitions on institutions making assets available to a "state-sponsored housing entity," limitations on control by the acquiring bank holding company of not more than 10% of the total amount of deposits in insured depository institutions in the United States or not more than 30% of the deposits in insured depository institutions within that state. States may impose lower deposit concentration limits, so long as those limits apply to all bank holding companies equally. The Riegle-Neal Act reaffirms the right of states to segregate and tax separately incorporated subsidiaries of a bank or bank holding company. The Riegle-Neal Act also affects interstate branching and merger. See "Interstate Banking" below. The Federal Reserve Board is authorized to adopt regulations affecting various aspects of bank holding companies. Pursuant to the general supervisory authority of the Bank Holding Company Act and directives set forth in the International Lending Supervision Act of 1983, the Federal Reserve Board has adopted capital adequacy guidelines prescribing both risk-based capital and leverage ratios. Regulatory Capital Requirements Risk-Based Capital Guidelines. The Federal Reserve Board established riskbased capital guidelines for bank holding companies effective March 15, 1989. The guidelines define Tier 1 Capital and Total Capital. Tier 1 Capital consists of common and qualifying preferred shareholders' equity and minority interests in equity accounts of consolidated subsidiaries, less goodwill and 50% (and in some cases up to 100%) of investment in unconsolidated subsidiaries. Total Capital consists of Tier 1 Capital plus qualifying mandatory convertible debt, perpetual debt, certain hybrid capital instruments, certain preferred stock not qualifying as Tier 1 Capital, subordinated and other qualifying term debt up to specified limits, and a portion of the allowance for credit losses, less investments in unconsolidated subsidiaries and in other designated subsidiaries or other associated companies at the discretion of the Federal Reserve Board, certain intangible assets, a portion of limited-life capital instruments approaching maturity and reciprocal holdings of banking organizations' capital instruments. The Tier 1 component must constitute at least 50% of qualifying Total Capital. Risk-based capital ratios are calculated with reference to risk-weighted assets, which include both on-balance sheet and off-balance sheet exposures. The risk-based capital framework contains four risk weight categories for bank holding company assets -- 0%, 20%, 50% and 100%. Zero percent risk-weighted assets include, inter alia, cash and balances due from Federal Reserve Banks and obligations unconditionally guaranteed by the U.S. government or its agencies. Twenty percent risk-weighted assets include, inter alia, claims on U.S. Banks and obligations guaranteed by U.S. government sponsored agencies as well as general obligations of states or other political subdivisions of the United States. Fifty percent risk-weighted assets include, inter alia, loans fully secured by first liens on one-to-four family residential properties, subject to certain conditions. All assets not included in the foregoing categories are assigned to the 100% risk-weighted category, including loans to commercial and other borrowers. As of year-end 1992, the minimum required ratio for qualifying Total Capital became 8%, of which at least 4% must consist of Tier 1 Capital. At December 31, 1994, Zions' Tier 1 and Total Capital ratios were 11.81 and 14.96, respectively. The current risk-based capital ratio analysis establishes minimum supervisory guidelines and standards. It does not evaluate all factors affecting an organization's financial condition. Factors which are not evaluated include (i) overall interest rate exposure; (ii) liquidity, funding and market risks; (iii) quality and level of earnings; (iv) investment or loan portfolio concentrations; (v) quality of loans and investments; (vi) the effectiveness of loan and investment policies; (vii) certain risks arising from nontraditional activities; and (viii) management's overall ability to monitor and control other financial and operating risks, including the risks presented by concentrations of credit and nontraditional activities. The capital adequacy assessment of federal bank regulators will, however, continue to include analyses of the foregoing considerations and in particular, the level and severity of problem and classified assets. The following table presents Zions' regulatory capital position at December 31, 1994 under the risk-based capital guidelines and as adjusted to give effect to the offering of its stock in the Reorganization. Risk-Based Capital Zions Pro Forma Combined (Dollars in thousands) Percent Percent of Risk- of Risk- Adjusted Adjusted Amount Assets Amount Assets Tier 1 Capital $ 327,687 11.81% $ 332,564 11.88% Minimum Requirement 110,994 4.00 111,945 4.00 ---------- ------ ---------- ------ Excess $ 216,693 7.81% $ 220,619 7.88% ========== ====== ========== ====== Total Capital $ 415,172 14.96% $ 420,348 15.02% Minimum Requirement 221,987 8.00 223,890 8.00 ---------- ------ ---------- ------ Excess $ 193,185 6.96% $ 196,458 7.02% ========== ====== ========== ====== Risk-Adjusted Assets, Net of Goodwill and Excess Allowance $2,774,841 100.00% $2,798,619 100.00% ========== ====== ========== ====== Minimum Leverage Ratio. On June 20, 1990 the Federal Reserve Board adopted new capital standards and leverage capital guidelines that include a minimum leverage ratio of 3% Tier 1 Capital to total assets (the "leverage ratio"). The leverage ratio is used in tandem with the final risk-based ratio of 8% that took effect at the end of 1992. The Federal Reserve Board has emphasized that the leverage ratio constitutes a minimum requirement for well-run banking organizations having welldiversified risk, including no undue interest rate exposure, excellent asset quality, high liquidity, good earnings, and a composite rating of 1 under the Interagency Bank Rating System. Banking organizations experiencing or anticipating significant growth, as well as those organizations which do not exhibit the characteristics of a strong, well-run banking organization described above, will be required to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the Federal Reserve Board has indicated that it will consider a "tangible Tier I Capital Leverage Ratio" (deducting all intangibles) and other indices of capital strength in evaluating proposals for expansion or new activities. The Federal Reserve Board has adopted amendments to its capital guidelines, effective as of December 31, 1994, under which bank holding companies and state member banks must deduct from Tier 1 capital in calculating risk-based capital and leverage ratios net unrealized holding losses on available-for-sale equity securities (i.e., those securities a bank does not have the positive interest and ability to hold to maturity, but which it has no intent to trade as a part of a trading account). Zions does not expect that implementation of this amendment to the Federal Reserve Board's capital guidelines will result in a material increase in the capital requirements applicable to it. The Federal Reserve Board has also adopted a final rule amending its capital guidelines effective April 1, 1995, limiting the amount of certain deferred tax assets that may be included by bank holding companies and member banks in Tier 1 capital for calculation of risk-based capital and leverage ratios. Zions does not anticipate that implementation of this amendment to the Federal Reserve Board's capital guidelines will result in a material increase in the capital requirements applicable to it. The Federal Reserve Board has also recently (August 24, 1994) published proposed amendments to its risk-based capital guidelines which, if adopted in their current form, would generally increase the amount of capital required to be carried against certain long term derivative contracts; the proposal also recognizes the effect of certain bilateral netting arrangements in reducing potential future exposure under these contracts. Until the proposed amendments are adopted in final form by the Federal Reserve Board, Zions cannot predict their effect upon the capital requirements applicable to it. The following table presents Zions' leverage ratio at December 31, 1994 as adjusted to give effect to the offering of its common stock made hereby. A leverage ratio of 3% will be the minimum required for the most highly rated banking organizations, and according to the Federal Reserve Board, other banking organizations would be expected to maintain capital at higher levels.
Zions Pro Forma Combined (Dollars in thousands) Percent Percent of Average of Average Assets, Net Assets, Net Amount of Good Will Amount of Good Will Tier 1 Capital ............................... $ 327,687 6.24 $ 332,564 6.29 Minimum Requirement .......................... 157,604 3.00 158,721 3.00 ---------- ------ ---------- ------ Excess ....................................... $ 170,083 3.24% $ 173,843 3.29% ========== ====== ========== ====== Average Assets, Net Goodwill.................... $5,253,465 100.00% $5,290,771 100.00% ========== ====== ========== ======
Other Issues and Developments Relating to Regulatory Capital. Pursuant to such authority and directives set forth in the International Lending Supervision Act of 1983, the Comptroller, the FDIC and the Federal Reserve Board have issued regulations establishing the capital requirements for banks under federal law. The regulations, which apply to Zions' banking subsidiaries, establish minimum risk-based and leverage ratios which are substantially similar to those applicable to Zions. As of September 30, 1993, the risk-based and leverage ratios of each of Zions' banking subsidiaries exceeded the minimum requirements. On December 19, 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") was signed into law. FDICIA subjects banks to significantly increased regulation and supervision. Among other things, FDICIA requires federal bank regulatory authorities to revise their risk-based capital guidelines to ensure that those standards take account of interest rate risk, concentrations of credit and the risk of nontraditional activities, as well as reflect the actual performance and risk of multifamily mortgages. Pursuant to the Riegle Community Development and Regulatory Improvement Act of 1994 (the "Riegle Act"), signed into law on September 23, 1994, such revisions by the federal banking agencies to their risk-based capital guidelines must also take account of the size and activities of insured institutions and not cause undue reporting burdens to them. The manner of implementation by the FDIC of this requirement mandated by FDICIA, as modified by the Riegle Act, is described below. (i) In 1993 and 1994, the Federal Reserve Board, the Comptroller and the FDIC adopted rules which assigned a 50% risk weight for loans that are fully secured by multifamily residential property and do not exceed 80% of the property's value. To be eligible for the 50% risk weight, the property's annual net operating income must be 120% of the amount of the annual debt service and the loan must be amortized within 30 years. The principal and interest payments must be made on a timely basis for one year before the 50% risk weight may be applied and the loan must provide for principal repayment beginning within seven years of the date of the loan. Zions does not anticipate that the implementation of these rules will have a material adverse effect upon the capital requirements applicable to it or upon those applicable to its bank subsidiaries. (ii) The federal banking agencies have adopted rules, effective January 17, 1995, under which they will take account of risks from concentrations of credit (in specific countries, regions, industries and loan types) and from nontraditional activities in their analyses of capital adequacy of state nonmember banks. Pursuant to the rule, in such institutions are required to identify, monitor and control, significant exposures from concentrations of credit and from nontraditional activities, and hold additional capital above the regulatory minimums to reflect such risks. The level of such risks, as well as an institution's ability to identify, monitor and control them, will be considered by the federal banking agencies in determining the capital adequacy of the institution. Zions does not anticipate that implementation of this rule will result in an increase in the capital requirements applicable to it or upon those applicable to its bank subsidiaries. (iii) On September 14, 1993, the Federal Reserve Board, the Comptroller and the FDIC published in the Federal Register a proposed measure of interest rate risk exposure which measures such exposure as the effect that a specified change in market interest rates would have on the net economic value of banks. Under this proposal, banks (excluding certain "low risk" institutions as defined therein) would calculate and report estimated changes in their net economic value resulting from the effect of specified changes in market interest rates on their assets, liabilities and off-balance sheet positions, utilizing either a supervisory model or approved internal models. The proposal sets forth two alternative methods for utilizing such results in assessing institutions' capital adequacy for interest rate risk exposure. One method would require institutions to hold capital equal to the dollar decline in their net economic value exceeding a supervisory threshold of one percent of total assets; the other method provides for an agency assessment of institutions' capital needs for interest rate risk in light of both the level of measured interest rate risk exposure and qualitative factors. However, the proposal is still under consideration. Because the final terms of the regulators' implementation of this requirement of FDICIA are not yet known, Zions cannot predict the effect the inclusion of interest rate risk factors in the risk-based capital rules of the federal banking agencies will have upon capital requirements applicable to it or its bank subsidiaries. FDICIA amended Section 38 of the Federal Deposit Insurance Act ("FDICIA") to require the federal banking regulators to take "prompt corrective action" in respect of banks that do not meet minimum capital requirements and imposes certain restrictions upon banks which meet minimum capital requirements but are not "well capitalized" for purposes of FDICIA. FDICIA establishes five capital tiers: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized." Implementing regulations adopted by the federal banking agencies in September 1992 and effective on December 19, 1992 define the capital categories for banks which will determine the necessity for prompt corrective action by the federal banking agencies. A bank may be placed in a capitalization category that is lower than is indicated by its capital position if it receives an unsatisfactory examination rating with respect to certain matters. Failure to meet capital guidelines could subject a bank to a variety of restrictions and enforcement remedies. Under FDICIA, all insured banks are generally prohibited from making any capital distributions and from paying management fees to persons having control of the bank where such payments would cause the bank to be undercapitalized. Holding companies of significantly undercapitalized, critically undercapitalized and certain undercapitalized banks may be required to obtain the approval of the Federal Reserve Board before paying capital distributions to their shareholders. Moreover, a bank that is not well capitalized is generally subject to various restrictions on "pass through" insurance coverage for certain of its accounts and is generally prohibited from accepting brokered deposits and offering interest rates on any deposits significantly higher than the prevailing rate in its normal market area or nationally (depending upon where the deposits are solicited). Such banks and their holding companies are also required to obtain regulatory approval prior to their retention of senior executive officers. Banks which are classified undercapitalized, significantly undercapitalized or critically undercapitalized are required to submit capital restoration plans satisfactory to their federal banking regulator and guaranteed within stated limits by companies having control of such banks (i.e., to the extent of the lesser of five percent of the institution's total assets at the time it became undercapitalized or the amount necessary to bring the institution into compliance with all applicable capital standards as of the time the institution fails to comply with its capital restoration plan, until the institution is adequately capitalized on average during each of four consecutive calendar quarters), and are subject to regulatory monitoring and various restrictions on their operations and activities, including those upon asset growth, acquisitions, branching and entry into new lines of business and may be required to divest themselves of or liquidate subsidiaries under certain circumstances. Holding companies of such institutions may be required to divest themselves of such institutions or divest themselves of or liquidate nondepository affiliates under certain circumstances. Critically undercapitalized institutions are also prohibited from making payments of principal and interest on debt subordinated to the claims of general creditors as well as to the mandatory appointment of a conservator or receiver within 90 days of becoming critically undercapitalized unless periodic determinations are made by the appropriate federal banking agency, with the concurrence of the FDIC, that forbearance from such action would better protect the affected deposit insurance fund. Unless appropriate findings and certifications are made by the appropriate federal banking agency with the concurrence of the FDIC, a critically undercapitalized institution must be placed in receivership if its remains critically undercapitalized on average during the calendar quarter beginning 270 days after the date it became critically undercapitalized. Other Regulations FDICIA requires the federal banking agencies to adopt regulations prescribing standards for safety and soundness of insured banks and their holding companies, including standards relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality, earnings and stock valuation, as well as other operational and managerial standards deemed appropriate by the agencies. Upon a determination by a federal banking agency that an insured bank has failed to satisfy any such standard, the bank will be required to file an acceptable plan to correct the deficiency. If the bank fails to submit or implement an acceptable plan, the federal banking agency may, and in some instances must, issue an order requiring the institution to correct the deficiency, restrict its asset growth, increase its ratio of tangible equity to assets, or imposing other operating restrictions. The Riegle Act modified this provision of FDICIA to authorize the federal banking agencies to prescribe safety and soundness standards by regulation or by guidelines for all insured depository institutions, afford the federal banking agencies flexibility to establish asset quality, earnings and stock valuation standards that they determine to be appropriate and eliminate the requirement that such standards apply to depository institution holding companies. On February 2, 1995, the Federal Reserve Board agreed to seek (and Zions believes the other federal banking agencies will soon seek) public comment on proposed guidelines applicable to state member banks setting forth asset quality, earnings and stock valuation standards, final guidelines with respect to all other standards required under FDICIA and a final rule establishing deadlines and procedures for submission and review of safety and soundness compliance plans and issuance of compliance orders. In the view of the Federal Reserve Board, the proposed and final standards, respectively, do not represent a change in existing policies but, instead, formalize fundamental standards already applied by the agencies. In general, the standards establish objectives of proper operations and management while leaving the specific methods for achieving those objectives to each institution. The final rule implements the requirements of FDICIA regarding the submission and review of safety and soundness plans by institutions failing to meet the prescribed standards and the issuance of orders where institutions have failed to submit acceptable compliance plans or implement an accepted plan in any material respect. Zions does not believe that implementation of the final guidelines and rule will have a material adverse effect upon the operations or earnings of its bank subsidiaries. Until final guidelines prescribing asset quality, earnings and stock valuation standards are adopted by the federal banking agencies, Zions cannot predict the effect of their application to its operations or earnings or the operations or earnings of its subsidiaries. FDICIA also contains provisions which, among other things, restrict investments and activities as principal by state nonmember banks to those eligible for national banks, impose limitations on deposit account balance determinations for the purpose of the calculation of interest, and require the federal banking regulators to prescribe, implement or modify standards, respectively, for extensions of credit secured by liens on interests in real estate or made for the purpose of financing construction of a building or other improvements to real estate, loans to bank insiders, regulatory accounting and reports, internal control reports, independent audits, exposure on interbank liabilities, contractual arrangements under which institutions receive goods, products or services, deposit account-related disclosures and advertising as well as to impose restrictions on federal reserve discount window advances for certain institutions and to require that insured depository institutions generally be examined on-site by federal or state personnel at least once every 12 months. In connection with an institutional failure or FDIC rescue of a financial institution, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") grants to the FDIC the right, in many situations, to charge its actual or anticipated losses against commonly controlled depository institution affiliates of the failed or rescued institution (although not against a bank holding company itself). FIRREA also explicitly allows bank holding companies to acquire healthy as well as troubled savings associations (including savings and loan associations and federal savings banks) under Section 4 of the Bank Holding Company Act. In connection with this authorization, the Federal Reserve Board has been instructed not to impose so-called "tandem operating restrictions" which might otherwise limit the joint marketing or joint operations of affiliated banks and thrifts beyond those restrictions otherwise embodied in law. FIRREA also relieves bank holding companies that own savings associations of certain duplicative or intrusive savings and loan holding company regulations and, in some instances, allows savings associations that have been acquired by bank holding companies to merge into affiliated banks or become banks themselves. On October 28, 1992, the Housing and Community Development Act of 1992 was enacted which, inter alia, modified prior law regarding the establishment of compensation standards by the federal banking agencies, deposit account disclosures, loans to bank insiders and real estate appraisal requirements; made certain technical corrections to FDICIA; imposed new sanctions upon banks convicted of money laundering or cash transaction reporting offenses; and restricted the methods banks may employ to calculate and refund prepaid interest on mortgage refinancings and consumer loans. In addition, on October 23, 1992, the Depository Institutions Disaster Relief Act of 1992 was enacted, affording the federal banking agencies limited discretion to provide relief from certain regulatory requirements to depository institutions doing business or seeking to do business in an emergency or major disaster area. Zions does not currently expect that the implementation of these laws will have a material adverse effect upon its earnings or capital position, or the earnings or capital position of its subsidiaries. On August 10, 1993 the President signed into law the Omnibus Budget Reconciliation Act of 1993 which contains provisions that, inter alia, affect the amortization of intangible assets by banks, require securities dealers (including banks) to adopt mark-to-market accounting to calculate income taxes, transfer surplus funds from the Federal Reserve System to the Department of the Treasury, authorize the United States Government to originate student loans and establish a preference for depositors in liquidations of FDIC-insured banks. Zions does not currently expect that the implementation of these laws will have a material adverse effect upon its earnings or capital position or the earnings or capital position of its subsidiaries. The Riegle Act, in addition to enacting measures intended to increase credit available to businesses in distressed communities (by providing incentives to lenders to provide credit in those communities), remove impediments to the securitization of small business loans, improve the National Flood Insurance Program and strengthen enforcement against money laundering, mandates modifications to federal laws and regulations affecting banks and bank holding companies in an attempt to reduce regulatory and administrative burdens on these entities (including the modifications to requirements mandated by FDICIA noted previously). These changes include, inter alia, requirements that federal banking agencies consider the burden and benefits which may affect insured depository institutions and their customers when establishing the effective dates of certain new regulations or imposing certain new administrative compliance requirements, that certain new federal regulations affecting depository institutions and amendments to existing regulations take effect on the first day of a calendar quarter and that federal banking agencies streamline regulatory requirements and eliminate duplicative filings and coordinate examinations of financial institutions. The Riegle Act also provides for simplified bank holding company formation and bank and bank holding company merger application procedures, modified insider lending rules and capital rules applicable to assets transferred with recourse. Because all provisions of the Riegle Act have not been implemented, Zions cannot predict the effect of these changes upon its operations or upon those of its subsidiaries. The nature of the banking and financial services industry, as well as banking regulation, may be further affected by various legislative and regulatory measures currently under consideration. Such measures include, inter alia, legislation designed to permit increased affiliations between commercial and financial firms (including securities firms) and federally-insured banks, reduce regulatory burdens on financial institutions, impose a moratorium on the application of federal regulations and establish standards for federal supervision of derivatives activities of insured institutions. It is impossible to predict whether or in what form these proposals may be adopted in the future and, if adopted, what the effect of their adoption will be on the Zions or its subsidiaries. Deposit Insurance Assessments The insured bank subsidiaries of Zions are required to pay quarterly deposit insurance assessments to the BIF. FDICIA requires the FDIC to establish a schedule to increase the reserve ratio of the BIF to 1.25% of insured deposits (or such higher ratio as the FDIC determines to be justified for any year by circumstances raising a significant risk of substantial future losses) over a 15 year period, and to increase the assessment rate on banks, if necessary, to achieve that ratio. FDICIA also requires the FDIC to establish a risk-based assessment system for deposit insurance which will take into account the probability that the deposit insurance fund will incur a loss with respect to an institution, the likely amount of such loss and the revenue needs of the deposit insurance fund. The FDIC revised, effective October 1, 1993, its deposit insurance regulation to establish a permanent risk-based assessment system. Each insured bank's insurance assessment rate is determined by the risk assessment classification into which it has been placed by the FDIC. The FDIC places each insured bank in one of nine risk assessment classifications based upon its level of capital and supervisory evaluations by its regulators: "well capitalized" banks, "adequately capitalized" banks or "less than adequately capitalized" banks, with each category of banks divided into subcategories of banks which are either "healthy," of "supervisory concern" or of "substantial supervisory concern." An eight basis point spread exists between the assessment rate established for the highest and lowest risk classification, so that banks classified as strongest by the FDIC are subject to a rate of .23% (the same rate as under the previous flatrate assessment system) while those classified as weakest by the FDIC are subject to a rate of .31% (with intermediate rates of .26%, .29% and .30%). The FDIC is authorized to increase assessment rates beyond those currently in effect if, in the judgment of its Board of Directors, the condition of the BIF so requires. The FDIC also possesses authority to impose special assessments from time to time. Implementation of the permanent risk-based deposit insurance assessment system has not had a material adverse impact on the financial condition or results of operations of the Zions or upon those of its bank subsidiaries. Premiums paid to the FDIC have been an increasing burden on bank earnings. In recognition of this trend, the FDIC may, when the BIF reaches a target ratio of 1.25% of insured deposits, reduce insurance premiums. The Board of Directors of the FDIC is currently considering a proposal under which the assessment rate payable by the healthiest banks would be reduced from .23% to .04% at such time as the target ratio is achieved; other assessment rates, depending on an institution's supervisory risk group, would be .07%, .14%, .21%, .28% and .31%. The proposal would also establish a procedure for adjusting assessment rates semiannually within a range of up to five basis points without seeking public comment. The FDIC is also considering whether the deposit assessment base, against which the applicable assessment rate is multiplied in determining the deposit insurance assessment to be paid by each insured institution, should be redefined in light of the adoption of the risk-based assessment system and certain statutory and other developments effecting insured depository institutions. Currently, the assessment base is defined to include the total domestic deposits of each insured institution as adjusted for certain elements. Depending upon the nature of the changes, if any, made by the FDIC to the definition of the assessment base, the aggregate liabilities of each insured institution subject to assessment could increase or could be reduced, or an assessment base consisting of other than bank liabilities could be adopted, thereby potentially affecting the earnings of each institution. Until the nature of the changes to be adopted by the FDIC to the assessment base definition are known, Zions cannot predict their effect upon its overall financial condition or results of operations or upon those of its bank subsidiaries. Interstate Banking Existing laws and various regulatory developments have allowed financial institutions to conduct significant activities on an interstate basis for a number of years. During recent years, a number of financial institutions have expanded their out-of-state activities and various states have enacted legislation intended to allow certain interstate banking combinations which otherwise would have been prohibited by federal law. Under Utah law, any out-of-state bank of bank holding company may acquire a Utah bank or bank holding company upon approval of the state banking supervisor. There is no requirement that the laws of the state in which the out-of-state bank or bank holding company's operations are principally conducted afford reciprocal privileges to Utah based acquirers. The Riegle-Neal Act dramatically affects interstate banking activities. As discussed previously, the Riegle-Neal Act allows the Federal Reserve Board to approve the acquisition by a bank holding company of control or substantial assets of a bank located outside the bank holding company's home state as of September 29, 1995. Beginning on June 1, 1997, and earlier if permitted by applicable state law, an insured bank may apply to the appropriate federal agency for permission to merge with an out-of-state bank and convert its offices into branches of the resulting bank. States retain the option to prohibit out-of-state mergers if they enact a statute specifically barring such mergers before June 1, 1997 and such law applies equally to all out-of-state banks. Interstate mergers authorized by the Riegle-Neal Act are subject to conditions and requirements, including, inter alia, adequate capitalization and management of the acquiring bank or bank holding company, existence of the acquired bank for up to five years before purchase where required under state law, and limitations on control by the acquiring bank holding company of not more than 10% of the total amount of deposits in insured depository institutions in the United States or not more than 30% of the deposits in insured depository institutions within that state. States may impose lower deposit concentration limits, so long as those limits apply to all bank holding companies equally. Additional requirements placed on mergers include conformity with state law branching requirements and compliance with "host state" merger filing requirements to the extent that those requirements do not discriminate against out-of-state banks or out-of-state bank holding companies. The Riegle-Neal Act also permits banks to establish and operate a "de novo branch" in any state that expressly permits all out-of-state banks to establish de novo branches in such state, if the law applies equally to all banks. (A "de novo branch" is a branch office of a national bank or state bank that is originally established as a branch and does not become a branch as a result of an acquisition, conversion, merger, or consolidation.) Utilization of this authority is conditioned upon satisfaction of most of the conditions applicable to interstate mergers under the Riegle-Neal Act, including, inter alia, adequate capitalization and management of the branching institution, satisfaction with certain filing and notice requirements imposed under state law and receipt of federal regulatory approvals. Because important components of the Riegle-Neal Act have not yet become effective, Zions cannot predict the effects of the Act's implementation upon its operations or earnings or upon those of its subsidiaries. Zions Bank Zions Bank, as a national bank, is subject to the supervision of, and regulation and examination by, the Comptroller. Deposits, reserves, investments, loans, consumer law compliance, issuance of securities, payment of dividends, mergers and consolidations, electronic funds transfers, management practices, and other aspects of Zions Bank's operations are subject to regulation. The approval of the Comptroller is required for the establishment of additional branch offices by Zions Bank, subject to applicable state law restrictions. Zions Bank is a member of the Federal Reserve System, and the deposits of Zions Bank are insured by the FDIC. Accordingly, Zions Bank is subject to certain regulations of the Federal Reserve Board and the FDIC as well as those of the Comptroller. Some of the aspects of the lending and deposit business of Zions Bank that are subject to regulation by the Federal Reserve Board or the FDIC include disclosure requirements in connection with personal and mortgage loans, interest on deposits, and reserve requirements. In addition, Zions Bank is subject to numerous federal, state, and local laws and regulations which set forth specific restrictions and procedural requirements with respect to the extension of credit, credit practices, the disclosure of credit terms, and discrimination in credit transactions. As a consequence of the extensive regulation of the commercial banking business in the United States, the business of Zions Bank is particularly susceptible to being affected by federal and state legislation and regulations, which may increase the cost of doing business. MONETARY POLICY The earnings of Zions, Zions Bank, First Western, and the Bank are directly affected by the monetary and fiscal policies of the federal government and governmental agencies. The Federal Reserve Board has broad powers to expand and constrict the supply of money and credit and to regulate the reserves which its member banks must maintain based on deposits. These broad powers are used to influence the growth of bank loans, investments and deposits, and may affect the interest rates which will prevail in the market for loans and investments and deposits. Governmental and Federal Reserve Board monetary policies have had a significant effect on the operating results of commercial banks in the past and are expected to do so in the future. The future impact of such policies and practices on the growth or profitability of Zions, Zions Bank, First Western, and the Bank cannot be predicted. ZIONS BANCORPORATION SELECTED CONSOLIDATED FINANCIAL DATA The following unaudited table of selected financial data should be read in conjunction with the related notes included herein and Zions Bancorporation consolidated financial statements and the related notes, incorporated by reference. ZIONS BANCORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share and ratio data)
As of, and for the Year Ended December 31, -------------------------------------------------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- EARNINGS SUMMARY Taxable-equivalent net interest income $ 203,313 $ 178,636 $ 160,854 $ 142,614 $ 131,077 Net interest income 198,606 174,657 157,282 139,871 128,121 Noninterest income 73,202 79,880 62,849 52,456 47,919 Provision for loan losses 2,181 2,993 10,929 25,561 20,083 Noninterest expenses (1) 174,900 167,750 139,069 122,999 116,289 Income taxes 30,900 27,248 22,924 13,318 11,903 Income before cumulative effect of changes in accounting principles 63,827 56,546 47,209 30,449 27,765 Cumulative effect of changes in accounting principles (2) - 1,659 - - - Net income 63,827 58,205 47,209 30,449 27,765 COMMON STOCK DATA Earnings per common share: Income before cumulative effect of changes in accounting principles $ 4.37 $ 3.96 $ 3.42 $ 2.23 $ 2.07 Net income 4.37 4.08 3.42 2.23 2.07 Dividends paid per share 1.16 .98 .75 .72 .72 Dividend payout ratio (%) 27.06% 21.81% 20.31% 29.89% 32.20% Book value per share at year end 25.12 22.01 18.95 16.23 14.63 Market to book value at year end (%) 142.83% 168.11% 200.53% 132.47% 108.54% Weighted average common and common equivalent shares outstanding during the year 14,601,000 14,280,000 13,790,000 13,634,000 13,430,000 Common shares outstanding at year end 14,559,552 14,201,367 13,727,544 13,603,812 13,442,040 AVERAGE BALANCE SHEET DATA Money market investments $ 869,709 $ 788,694 $ 469,062 $ 670,584 $ 550,192 Securities 1,545,704 1,209,165 927,976 702,027 529,737 Loan and leases, net 2,574,995 2,222,182 2,104,679 1,875,928 1,806,188 Total interest-earning assets 4,990,408 4,220,041 3,501,717 3,248,539 2,886,117 Total assets 5,456,613 4,643,918 3,807,832 3,536,809 3,208,963 Interest-bearing deposits 2,744,976 2,449,275 2,356,384 2,219,341 2,068,939 Total deposits 3,583,094 3,178,926 2,912,860 2,701,131 2,531,611 FHLB advances and other borrowings 151,164 195,097 128,856 154,564 36,935 Long-term debt 59,493 75,623 82,219 86,967 94,923 Total interest-bearing liabilities 4,197,865 3,556,746 2,962,079 2,792,239 2,498,239 Shareholders' equity 339,181 286,331 240,411 208,729 186,715 YEAR END BALANCE SHEET DATA Money market investments $ 403,446 $ 597,680 $ 616,180 $ 714,238 $ 831,086 Securities 1,663,433 1,258,939 981,695 852,861 630,800 Loans and leases, net 2,391,278 2,486,346 2,107,433 1,979,726 1,868,199 Allowance for loan losses 67,018 68,461 59,807 58,238 60,948 Total assets 4,934,095 4,801,054 4,107,924 3,883,938 3,720,227 Total deposits 3,705,976 3,432,289 3,075,110 2,877,860 2,684,826 FHLB advances and other borrowings 127,319 288,249 205,222 203,685 289,986 Long-term debt 58,182 59,587 99,223 81,134 92,794 Shareholders' equity 365,770 312,592 260,070 220,753 196,706
As of, and for the Year Ended December 31, -------------------------------------------------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Nonperforming assets: Nonaccrual loans $ 13,635 $ 23,364 $ 21,556 $ 33,497 $ 35,802 Restructured loans 567 4,006 4,003 3,225 10,181 Other real estate owned and other nonperforming assets 4,741 3,267 5,971 9,938 17,434 Total nonperforming assets 18,943 30,637 31,530 46,660 63,417 Accruing loans past due 90 days or more 3,041 10,821 6,409 5,315 10,273 SELECTED RATIOS Net interest margin (3) 4.07% 4.23% 4.59% 4.39% 4.54% Return on average assets 1.17% 1.25% 1.24% .86% .87% Return on average common equity 18.82% 20.33% 19.64% 14.59% 14.87% Ratio of average common equity to average assets 6.22% 6.17% 6.31% 5.90% 5.82% Tier I risk-based capital - year end 11.81% 10.85% 10.23% 8.40% 8.11% Total risk-based capital - year end 14.96% 14.12% 15.13% 12.09% 12.49% Leverage ratio - year end 6.24% 5.44% 6.21% 5.86% 5.72% Ratio of nonperforming assets to total assets - year end .38% .64% .77% 1.20% 1.70% Ratio of nonperforming assets to net loans and leases and other real estate owned and other nonperforming assets at year end .79% 1.23% 1.49% 2.35% 3.36% Ratio of net charge-offs (recoveries) to average loans and leases .19% (.23)% .44% 1.51% 1.10% Ratio of allowance for loan losses to net loans and leases outstanding at year end 2.80% 2.75% 2.84% 2.94% 3.26% Ratio of allowance for loan losses to nonperforming loans at year end 471.89% 250.13% 234.00% 158.59% 132.54% (1) Noninterest expenses for the year ended December 31, 1993 included a one-time expense of $6,022,000 in the first quarter of 1993, related to the early extinguishment of debt which was necessitated by the decision in March 1993, to notify holders of floating rate notes totaling $37,450,000 and industrial revenue bonds totaling $4,720,000 that the debt would be redeemed during the second quarter of 1993. The expense consisted of marking to market an interest rate exchange agreement entered into several years ago in conjunction with the issuance of the floating rate notes and writing off deferred costs associated with the notes and bonds. Early redemption of the bonds and notes in the second quarter of 1993, allowed Zions Bancorporation to avail itself of lower cost funding. (2) Cumulative effect of changes in accounting principles for the year ended December 31, 1993 resulted from the cumulative effect of changes in accounting principles in the first quarter of 1993, arising from the adoption as of January 1, 1993, of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," and SFAS No. 109, "Accounting for Income Taxes." The election of immediate recognition of the cumulative effect (transition obligation) of such change in accounting method for postretirement benefit other than pensions of SFAS No. 106 decreased pretax and after-tax net income by $5,760,000 and $3,631,000, respectively. In addition to the $2,129,000 deferred tax benefit resulting from the adoption of SFAS No. 106 the election to apply SFAS No. 109 prospectively and not restate prior years resulted in net deferred tax benefits of $5,290,000 for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities. (3) Net interest margin represents net interest income on a taxable-equivalent basis as a percentage of average earning assets.
STOCK PRICES OF AND DIVIDENDS ON ZIONS COMMON STOCK Zions Common Stock is traded in the over-the-counter market under the symbol "ZION" and is listed in the NASDAQ National Market System. The following table sets forth the high and low bid quotations for Zions Common Stock for the periods indicated, in each case as reported by NASDAQ, and the cash dividends per share declared on Zions Common Stock for such periods. Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.
Quarterly Bid Cash Price Range Dividends ------------------ High Low Declared ------ ----- --------- 1993 First Quarter ............................... $ 49.00 $ 41.50 $ .21 Second Quarter .............................. 48.75 38.50 .21 Third Quarter ............................... 44.25 38.50 .28 Fourth Quarter .............................. 45.50 36.00 .28 ----- $ .98 1994 First Quarter ............................... $ 39.75 $ 36.50 $ .28 Second Quarter .............................. 42.00 37.00 .28 Third Quarter ............................... 40.63 38.50 .30 Fourth Quarter .............................. 39.25 33.50 .30 ----- $ 1.16 1995 First Quarter ............................... $ 40.50 $ 35.50 $ .30 Second Quarter (through _____, 1995)
On October 31, 1994, the last NASDAQ trading day prior to the public announcement of the Reorganization, the closing sale price for the Zions Common Stock was $ 37.625. On April 3, 1995, the closing sale price for the Zions Common Stock was $38.50. On April 3, 1995, there were approximately 14,600,125 shares of Zions Common Stock outstanding, held by approximately 3,981 shareholders of record. While Zions is not obligated to pay cash dividends, Zions' Board of Directors presently intends to continue the policy of paying quarterly cash dividends. Future dividends will depend, in part, upon the earnings and financial condition of Zions. PRINCIPAL HOLDERS OF ZIONS COMMON STOCK The following table sets forth as of February 27, 1995, the record and beneficial ownership of Zions Common Stock by the principal common shareholders of Zions.
Common Stock ------------ Name and Address Type of Ownership No. of Shares % of Class - ---------------- ----------------- ------------- ---------- Roy W. Simmons, David E. Simmons, Record 1,135,226 7.80% Harris H. Simmons, I.J. Wagner, and Louis H. Callister, Jr., as Voting Trustees(1) One Main Street Salt Lake City, Utah 84133 Roy W. Simmons Record and Beneficial 415,051 2.85% One Main Street Beneficial(2) 635,804 4.37% --------- ---- Salt Lake City, Utah 84133 1,050,855 7.22% Corporation of the President of the Beneficial 776,445 5.33% Church of Jesus Christ of Latter-day Saints 47 East South Temple Street Salt Lake City, Utah 84150 Zions First National Bank Record(3) 1,071,528 7.36% One Main Street Salt Lake City, Utah 84133 - --------------------- (1) The voting trust will expire on December 31, 1996, unless sooner terminated by a vote of two-thirds of the shares deposited under the voting trust. The voting trustees, three of the five of whom are directors of Zions and/or its subsidiaries, have exclusive voting rights with respect to the shares, and have the further right to sell any or all of the shares after consultation with the beneficial owners as to their desires to such sale and the price thereof. The beneficial owners may transfer their voting trust certificates, but are prohibited from selling any of the underlying shares held by the voting trustees without the consent of a majority of the voting trustees. The addresses of the voting trustees are as follows: Roy W. Simmons, 1 South Main Street, Salt Lake City, Utah; David E. Simmons, 1000 Kennecott Building, Salt Lake City, Utah; Harris H. Simmons, 1 South Main Street, Salt Lake City, Utah; I.J. Wagner, 680 Kennecott Building, Salt Lake City, Utah; and Louis H. Callister, Jr., 800 Kennecott Building, Salt Lake City, Utah. (2) Includes Roy W. Simmons' beneficial ownership interest in 586,928 shares deposited with the voting trust referred to in note (1) above. (3) These shares are owned of record as of February 27, 1995, by Zions Bank in its capacity as fiduciary for various trust and advisory accounts. Of the shares shown, Zions Bank has sole voting power with respect to a total of 827,867 shares (5.69% of the class) it holds as trustee for the Zions Bancorporation Employee Stock Savings Plan and the Zions Bancorporation Employee Investment Savings Plan. Zions Bank also acts as trustee for the Zions Bancorporation Dividend Reinvestment Plan, which holds 243,661 shares (1.67% of the class) as to which Zions Bank does not have or share voting power.
As of February 27, 1995, all directors and executive officers of Zions as a group beneficially owned 2,442,523 shares of Zions Common Stock, or 16.51% of the outstanding shares of Zions Common Stock. Included in the above-referenced amount are 1,135,226 shares held by the Zions Voting Trust. ZIONS DOCUMENTS INCORPORATED BY REFERENCE Zions' Annual Report on Form 10-K for the year ended December 31, 1994 ("Zions Form 10-K"), previously filed by Zions with the SEC pursuant to the Exchange Act, is hereby incorporated by reference in this Joint Proxy Statement/Prospectus. All documents filed by Zions with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy Statement/Prospectus and prior to the date of the Special Meetings shall be deemed to be incorporated by reference in this Joint Proxy Statement/Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Joint Proxy Statement/Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Joint Proxy Statement/Prospectus. For the convenience of First Western and Bank shareholders, a copy of Zions' 1994 Annual Report to Shareholders ("Zions Annual Report") is being mailed to First Western and Bank shareholders along with this Joint Proxy Statement/Prospectus. The Zions Annual Report is not part of this Joint Proxy Statement/Prospectus. The Zions Annual Report does not contain all of the information contained in the Zions Form 10-K. First Western or Bank shareholders who wish to obtain copies of the Zions Form 10-K or other documents incorporated by reference herein may do so by following the instructions under "Available Information" above. INFORMATION CONCERNING FIRST WESTERN AND THE BANK First Western was organized in 1961 under federal law as Moab National Bank. Pursuant to a plan of reorganization, the Bank in 1977 became a majority-owned subsidiary of First Western (upon the organization under Utah law of First Western) and certain shares of the Bank were converted into shares of First Western. First Western, through the Bank, operates three branches, one in Moab in Grand County, one in Monticello and one in Blanding in San Juan County. The Bank provides a full range of commercial banking services, including, among other things, consumer and commercial loans, residential real estate loans, and construction and permanent mortgage loans. The Bank offers a variety of deposit accounts, including, among other things, non-interest bearing demand accounts, interest bearing checking accounts and savings accounts, and certificates of deposit. See "First Western Bancorporation Selected Consolidated Financial Data," "Management's Discussion and Analysis," and "First Western Bancorporation Consolidated Financial Statements" for additional information concerning the business and operations of First Western and the Bank. FIRST WESTERN BANCORPORATION SELECTED CONSOLIDATED FINANCIAL DATA The following selected financial data should be read in conjunction with First Western's consolidated financial statements and the related notes and with First Western's management's discussion and analysis of financial condition and results of operations, provided elsewhere herein. See "First Western Bancorporation Consolidated Financial Data" below. First Western Bancorporation Selected Consolidated Financial Data As of, and for the years ended December 31, 1994 1993 1992 -------- -------- ------ (Dollars and outstanding shares in thousands, except per share and ratio data) EARNINGS SUMMARY Net interest income $ 2,951 $ 3,126 $ 2,676 Provision for loan losses 417 170 370 Other operating income 505 669 810 Other operating expense 1,794 1,856 1,499 Net income 748 1,062 983 COMMON STOCK DATA Earnings per common share $ 18.70 $ 26.56 $ 24.58 Book value per share at period end 134.42 115.12 86.40 Weighted average common and common equivalent shares outstanding during the period 40 40 40 Common shares outstanding at period end 37 37 37 AVERAGE BALANCE SHEET DATA Securities $12,183 $12,602 $15,006 Loans and leases, net 22,595 20,815 18,397 Total interest-earning assets 34,778 33,417 33,403 Total assets 37,625 36,072 36,382 Interest-bearing deposits 25,211 25,866 27,433 Total deposits 30,879 31,043 32,409 Borrowed funds 1,603 445 247 Shareholders' equity 4,615 3,727 2,770 END OF PERIOD BALANCE SHEET DATA Securities $10,438 $ 7,004 $12,942 Loans and leases, net 20,069 27,800 17,680 Allowance for loan losses 433 533 549 Total assets 37,210 39,448 36,941 Total deposits 30,072 32,908 32,499 Shareholders' equity 4,972 4,258 3,196 Non-performing assets Nonaccrual loans $ 27 $ 117 $ 9 Other real estate owned 3 18 109 Total nonperforming assets 30 135 118 SELECTED RATIOS Net interest margin 8.48% 9.36% 8.04% Return on average assets 1.99% 2.94% 2.70% Ratio of average common equity to average assets 12.27% 10.33% 7.61% Ratio of nonperforming assets to total assets .08% .34% .32% Ratio of allowance for loan losses to net loans and leases outstanding at period end 2.11% 1.88% 3.01% Ratio of allowance for loan losses to nonperforming loans 1443.33% 394.81% 465.25% STOCK PRICES OF AND DIVIDENDS ON FIRST WESTERN COMMON STOCK AND BANK COMMON STOCK First Western's common stock and the Bank's commons stock are not listed with a national securities exchange or quoted on any automated quotation system. The common stock occasionally trades through private negotiated transactions between individuals. As a result, no established public trading market for either First Western's common stock or the Bank's common stock presently exists. Over the years little trading has occurred in either stock. Reliable information concerning the prices at which First Western's and the Bank's stock has traded in private, negotiated transactions is not publicly available or generally known to First Western and the Bank. On occassion, First Western and the Bank have become aware of the trading price of their common stock in private transactions. information concerning those trading prices has been omitted based on First Western's and the Bank's beliefs that such prices are not necessarily representative of the market price for their common stock during any particular period. Since October 31, 1994, the date the Plan of Reorganization was publicly announced, there have been no trades in either stock. As of the date of this Joint Proxy Statement/Prospectus, there were seven holders of First Western Common Stock and 31 holders (one of which is First Western) of Bank Common Stock. The holders of First Western's and the Bank's common stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefor. First Western's ability to pay dividends is governed by Utah law. Generally, Utah law provides that no distribution may be made if, after giving effect to the distribution, (a) the corporation would not be able to pay its debts as they become due in the usual course of business or (b) the corporation's total assets would be less than the sum of its total liabilities. Funds for the payment of dividends by First Western are primarily obtained from dividends paid by the Bank. Under the National Bank Act to which the Bank is subject, the directors of a national banking association may, quarterly, semiannually, or annually, declare a dividend of so much of the net profits of the association as they judge expedient, except that until the surplus fund of such association shall equal its common capital, no dividends shall be declared unless there has been carried to the surplus fund not less than 10% of the association's net profits of the preceding half year in the case of quarterly or semiannual dividends or of the preceding two consecutive half-year periods in the case of annual dividends. Moreover, the prior approval of the Comptroller is required for the payment of any dividend if the total of all dividends declared by a national bank in any calendar year will exceed such bank's net profits (as defined by statute) for the year combined with its retained net profits of the preceding two years, less any required transfers to surplus. No dividend may be paid by a national bank, with or without the approval of the Comptroller, if the bank's capital would be impaired following the payment except in the case of liquidation. In addition, the Comptroller has authority under the Financial Institutions Supervisory Act to initiate proceedings designed to prohibit a national bank from engaging in what, in his opinion, constitutes an unsafe or an unsound practice in conducting its business, and under certain circumstances relating to the financial condition of a national bank, the Comptroller may determine that the payment of dividends would be an unsafe or unsound practice. Under FDICIA, all insured banks are generally prohibited from making any capital distributions and from paying management fees to persons having control of the bank where such payments would cause the bank to be undercapitalized. Holding companies of undercapitalized banks may be required to obtain the approval of the Federal Reserve Board before making capital distributions to their shareholders. See "Supervision and Regulation -- Regulatory Capital Requirements -- Other Issues and Developments Relating to Regulatory Capital." STOCKHOLDINGS OF PRINCIPAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS OF FIRST WESTERN AND THE BANK First Western Bancorporation Persons who were beneficial owners of 5% or more of the issued and outstanding First Western Common Stock at the record date are shown in the following table. Name of Bene- Amount of Percent of ficial Owner (1) Beneficial Ownership (2) Common Stock (3) - ---------------- ------------------------ ---------------- SN, Ltd. (4) 10,893 27.24% I.D. Nightingale 12,599(5) 31.51(5) Frankie Nightingale 12,820(5) 32.06(5) Gary and Jill Jacobson P.O. Box 923 Moab, Utah 84532 3,180 7.95 (1) Except as otherwise indicated, the address of each named individual is that of First Western. (2) The table includes any shares owned jointly with a spouse, although the person named may not have sole or shared voting and investment power over those shares; otherwise, each person named has the sole voting and investment power of the shares shown. (3) Assumes that 39,988 shares are outstanding. (4) SN, Ltd. is a limited partnership whose general partners are I.D. Nightingale and Frankie Nightingale, his wife. (5) Does not include the shares of First Western Common Stock held by SN, Ltd. Under the beneficial ownership rules of the SEC, I.D. Nightingale and Frankie Nightingale may be deemed to be the beneficial owner of all shares held by SN, Ltd. As of the record date, directors and executive officers were beneficial owners of that number of shares of First Western Common Stock shown below.
Amount of Percent of Name of Beneficial Owner Position Beneficial Ownership (1) Common Stock (2) - ------------------------ -------- ------------------------ ------------ Gary Jacobson Director 3,180 7.95% Frankie Nightingale Secretary, Treasurer, 12,820(3) 32.06(3) Director I.D. Nightingale Chairman of the 12,599(3) 31.51(3) Board, President All executive officers 28,599(4) 71.52(4) and directors as a group (1) The table includes any shares owned jointly with a spouse, although the person named may not have sole or shared voting and investment power over those shares; otherwise, each person named has the sole voting and investment power of the shares shown. (2) Assumes that 39,988 shares are outstanding. (3) Does not include 10,893 shares owned by SN, Ltd., a Utah limited partnership whose general partners are I.D. Nightingale and Frankie Nightingale. (4) If the shares owned by SN, Ltd. are added to those owned by I.D. Nightingale, the total shares owned by all executive officers and directors as a group would be 39,562 shares, which represent 98.93% of the total outstanding shares.
First Western National Bank The only person who was beneficial owner of 5% of more of the issued and outstanding Bank Common Stock at the record date is First Western Bancorporation which owned 56,097 shares, which represented 93.5% of the issued and outstanding shares of Bank Common Stock. As of the record date, directors and executive officers were beneficial owners of that number of shares of Bank Common Stock shown below.
Amount of Percent of Name of Beneficial Owner Position Beneficial Ownership (1) Common Stock (2) - ------------------------ -------- ------------------------ ------------ David Adams Director 300 * David W. Allen Director 300 * Gary L. Jacobson Executive Vice 100 * President, Director Charles R. Klepzig Director 100 * Frankie Nightingale Vice President, Cashier, Director 200(3) *(3) I.D. Nightingale Chairman of the Board, President 300(3) *(3) All executive officers and directors as a group 1,300(3) *(3) * - less than 1% (1) The table includes any shares owned jointly with a spouse, although the person named may not have sole or shared voting and investment power over those shares; otherwise, each person named has the sole voting and investment power of the shares shown. (2) Assumes that 60,000 shares are outstanding. (3) Does not include 56,097 shares owned by First Western, which is controlled by Frankie and I.D. Nightingale. See "First Western Bancorporation," above.
CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT FIRST WESTERN BANCORPORATION AND SUBSIDIARIES December 31, 1994 and 1993 INDEPENDENT AUDITORS' REPORT Board of Directors First Western Bancorporation and Subsidiaries Moab, Utah We have audited the accompanying consolidated balance sheets of First Western Bancorporation and Subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly in all material respects, the consolidated financial position of First Western Bancorporation and Subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. As discussed in note A to the financial statements, the Company changed its method of accounting for investments to adopt the provisions of Financial Accounting Standard No. 115, "Accounting for Certain Investments in Debt and Equity Securities", at January 1, 1994. /s/ Fortner, Bayens, Levkulich and Co., P.C. Denver, Colorado February 23, 1995
First Western Bancorporation and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, 1994 1993 ----------- -------- ASSETS Cash and due from banks $ 1,460,025 $ 1,165,747 Interest-bearing deposits 100,000 - Federal funds sold and overnight deposits at Federal Home Loan Bank 3,745,194 2,077,193 Securities to be held to maturity (market value of $7,109,443 in 1994 and $7,030,598 in 1993) 7,229,290 6,795,144 Securities available for sale 3,208,627 208,910 Loans, net (notes D, J, and L) 20,502,061 28,332,675 Less allowance for loan losses (note E) (433,289) (533,085) ---------- ---------- 20,068,772 27,799,590 Premises and equipment (note F) 398,014 460,246 Accrued interest receivable 378,970 297,856 Real estate acquired by foreclosure 3,087 18,087 Deferred tax asset (note G) 181,646 173,096 Other assets 436,476 452,181 ---------- ---------- $37,210,101 $39,448,050 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Demand, non-interest bearing $ 5,423,993 $ 5,968,209 Demand, interest bearing 5,782,675 9,139,170 Savings 9,883,775 9,637,424 Time, $100,000 and over 958,769 881,612 Other time deposits 8,022,627 7,281,479 ---------- ---------- Total deposits 30,071,839 32,907,894 Treasury, tax and loan notes 420,941 339,774 Accrued interest payable 48,951 42,554 Income taxes payable - 114,935 Other liabilities 150,748 34,788 Long-term debt (note I) 1,240,502 1,500,000 ---------- ---------- Total liabilities 31,932,981 34,939,945 Commitments and contingencies (notes J, K, and N) Minority interest in bank subsidiary 305,245 249,945 Stockholders' equity Preferred stock - authorized, but unissued, 50,000 shares $10 par value Common stock, authorized 150,000 shares of $10 par value; issued, 52,036 shares 520,360 520,360 Capital surplus 50,827 50,827 Retained earnings 4,802,513 4,054,698 Net unrealized loss on securities available for sale, net of taxes (34,100) - ---------- --------- 5,339,600 4,625,885 Less 15,048 shares of common stock in treasury - at cost (367,725) (367,725) ---------- ---------- 4,971,875 4,258,160 ---------- ---------- $37,210,101 $39,448,050 ========== ==========
The accompanying notes are an integral part of these statements.
First Western Bancorporation and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, 1994 1993 1992 -------- --------- -------- Interest income Interest and fees on loans $3,102,246 $3,213,383 $2,893,096 Interest on investment securities Taxable 465,267 520,033 686,491 Exempt from federal income tax 100,078 102,905 97,313 Other interest income 110,518 92,107 100,868 --------- --------- --------- Total interest income 3,778,109 3,928,428 3,777,768 Interest expense Demand deposits 156,387 189,876 298,812 Savings deposits 272,100 296,789 346,812 Time deposits - $100,000 and over 13,261 18,934 26,977 Time deposits - under $100,000 310,682 289,705 408,796 Borrowed funds 74,825 7,378 19,956 -------- --------- --------- Total interest expense 827,255 802,682 1,101,353 --------- --------- --------- Net interest income 2,950,854 3,125,746 2,676,415 Provision for loan losses (note E) 417,000 170,000 370,000 --------- --------- --------- Net interest income after provision for loan losses 2,533,854 2,955,746 2,306,415 Net interest income after provision for loan losses $2,533,854 $2,955,746 $2,306,415 Other income Service charges on deposit accounts 337,714 344,388 278,241 Gain on sale of investment securities - 131,400 252,455 Other income 167,356 192,840 279,105 --------- --------- --------- Total other income 505,070 668,628 809,801 Other expenses Salaries and benefits 1,028,254 923,990 721,210 Occupancy expense 89,242 111,013 83,933 Equipment expense 121,927 141,210 123,120 Other expense 554,330 680,227 570,525 --------- --------- --------- Total other expenses 1,793,753 1,856,440 1,498,788 --------- --------- --------- Income before income taxes and minority interest 1,245,171 1,767,934 1,617,428 Income tax expense (note G) 439,682 627,646 560,296 Minority interest in earnings of bank subsidiary 57,674 78,064 74,337 --------- --------- --------- NET INCOME $ 747,815 $1,062,224 $ 982,795 ========= ========= ========= Net income per share $ 18.70 $ 26.56 $ 24.58 ========= ========= ======== Weighted average number of common shares outstanding 39,988 39,988 39,988 ========= ========= =========
The accompanying notes are an integral part of these statements. First Western Bancorporation and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years ended December 31, 1994, 1993 and 1992
Net unrealized loss on securities available Common Capital Retained for sale, Treasury stock surplus earnings net of taxes stock Total Balance at January 1, 1992 $ 520,360 $ 50,827 $ 2,120,643 -- $ (367,725) $ 2,324,105 Net income for the year -- -- 982,795 -- -- 982,795 Cash dividends paid, $3 per share -- -- (110,964) -- -- (110,964) ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 1992 520,360 50,827 2,992,474 -- (367,725) 3,195,936 Net income for the year -- -- 1,062,224 -- -- 1,062,224 ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 1993 520,360 50,827 4,054,698 -- (367,725) 4,258,160 Net income for the year -- -- 747,815 -- -- 747,815 Net unrealized loss on securities available for sale, net of taxes -- -- -- (34,100) -- (34,100) ----------- ----------- ----------- ----------- ----------- ----------- Balance at December 31, 1994 $ 520,360 $ 50,827 $ 4,802,513 $ (34,100) $ (367,725) $ 4,971,875 =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this statement.
First Western Bancorporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASHFLOWS Years ended December 31, 1994 1993 1992 ---------- ---------- -------- Operating activities Net income $ 747,815 $1,062,224 $ 982,795 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses 417,000 170,000 370,000 Depreciation and amortization 110,887 124,142 122,105 Gain on disposition of real estate acquired by foreclosure (2,288) (3,908) (9,587) Gain on sale of equipment - (6,063) (15,209) Gain on sale of investment securities - (131,400) (252,455) Minority interest in net income 57,674 78,064 74,337 Write down of real estate acquired by foreclosure and other assets - - 20,000 Changes in deferrals and accruals Interest receivable (81,114) 18,447 39,360 Interest payable 6,397 (8,668) (37,068) Increase in cash surrender value of life insurance (25,601) - (34,278) Increase in deferred tax benefits 12,872 (18,549) (131,383) Decrease in taxes payable (114,935) (427,453) 435,476 Other 153,039 10,023 (30,369) --------- --------- --------- Net cash provided by operating activities 1,281,746 866,859 1,533,724 Investing activities Net decrease (increase) in federal funds sold and overnight deposits at Federal Home Loan Bank (1,668,001) 1,101,001 (778,194) Purchase of investment securities held to maturity (4,590,073) (1,505,578) (8,036,379) Purchase of securities available for sale (1,478,723) - - Proceeds from sales of investment securities - 7,265,195 7,089,911 Proceeds from maturities of investment securities held to maturity 974,764 279,958 3,442,000 Proceeds from maturities of securities available for sale 1,600,000 - - Net decrease (increase) in loans made to customers 7,313,818 (10,301,559) (6,973,756) Expenditures for equipment (42,155) (114,885) (49,496) Proceeds from sale of real estate acquired by foreclosure 17,288 106,891 360,209 Proceeds from sale of other assets - 9,500 120,000 Net increase in interest-bearing deposits in other banks (100,000) - - Purchase of building and land - (125,000) - Acquisition of additional bank subsidiary stock - - (17,016) --------- --------- --------- Net cash provided by (used in) investing activities 2,026,918 (3,284,477) (4,842,721) Financing activities Principal payment on long-term debt $ (259,498) $ (110,000) $ (50,000) Net (decrease) increase in deposits (2,836,055) 409,085 3,785,669 Proceeds from long-term debt - 1,500,000 - Net increase in treasury, tax and loan notes 81,167 30,348 167,363 Dividends paid - - (220,444) --------- --------- --------- Net cash provided by (used in) financing activities (3,014,386) 1,829,433 3,682,588 --------- --------- ---------
First Western Bancorporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Years ended December 31, 1994 1993 1992 ---------- ---------- -------- Net increase (decrease) increase in cash and due from banks 294,278 (588,185) 373,591 Cash and due from banks at beginning of year 1,165,747 1,753,932 1,380,341 --------- --------- --------- Cash and due from banks at end of year $1,460,025 $1,165,747 $1,753,932 ========= ========= ========= Supplemental disclosures of cash flow information - ------------------------------------------------- Cash paid during the year for: Interest expense $ 820,858 $ 811,350 $1,138,421 Income taxes paid 555,473 1,073,648 259,250 Securities transferred from held to maturity to available for sale on January 1, 1994 U.S. Treasry securities 2,001,019 - - U.S. government agency securities 998,996 - - Municipal securities 165,368 - - Supplemental noncash investing and financing activities ======================================================= Loan balances were transferred to real estate acquired by foreclosure and other assets in 1994, 1993 and 1992 in the amounts of $-0-, $29,092 and $141,712, respectively.
The accompanying notes are an integral part of this statement. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of First Western Bancorporation and Subsidiaries is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of First Western Bancorporation (the Company), its wholly-owned subsidiary, Moab Land Company, and its 93.5% owned subsidiary First Western National Bank (the Bank). All significant intercompany accounts and transactions have been eliminated. Accrual Basis of Accounting Financial accounting records are generally maintained on an accrual basis. Certain fee income, such as loan fees and insurance commissions, are recognized as received. In all cases, the difference between the accrual basis and the cash basis is not material. Earnings per Share Earnings per share are computed using the weighted average method. Intangible Assets The excess cost over the net assets of the Bank is recorded as goodwill, which is amortized on a straight-line basis over 30 years. At December 31, 1994 and 1993, unamortized goodwill included in other assets in the accompanying financial statements totaled $95,412 and $101,912, respectively. Investment Securities Effective January 1, 1994, the Company adopted Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", (FAS 115). FAS 115 requires, among other things, that securities designated as available for sale be revalued at each reporting period with the unrealized gain or loss, net of tax effect recorded as an element of stockholders' equity. Investments in debt securities and related activity prior to 1994 have been classified as held to maturity for reporting purposes. The designation of a security as held to maturity or available for sale is made at the time of acquisition. The held to maturity classification includes debt securities that the Bank has the positive intent and ability to hold to maturity which are carried at amortized cost. The available for sale classification includes debt and equity securities which are carried at fair value. Unrealized gains and losses on securities available for sale are included as a separate component of stockholders' equity, net of tax effect. Gains or losses on sales of securities are recognized by the specific identification method. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Loans Loans are reported at the principal amount outstanding, net of the allowance for loan losses. Interest on loans is calculated by using the simple interest method on the daily balance of the principal amount outstanding. Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal. When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest. Renegotiated loans are those loans on which concessions in terms have been granted because of a borrower's financial difficulty. Interest is generally accrued on such loans in accordance with the new terms. Allowance for Loan Losses The allowance for loan losses for financial reporting purposes consists of the amounts available to absorb future loan losses. The allowance is an amount that management believes will be adequate to absorb possible losses on existing loans that may become uncollectible, based on evaluations of the collectibility of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans and current economic conditions that may affect a borrower's ability to pay. Premises and Equipment Premises and equipment are stated at cost. Depreciation and amortization, computed principally on the straight-line basis, have been provided for in amounts sufficient to relate the cost of the assets to operations over their estimated service lives. Real Estate Acquired by Foreclosure Real estate acquired by foreclosure is recorded at the lower of cost or estimated fair market value. Gains or losses upon disposition are reflected in current operations. Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year (after exclusion of non-taxable income such as interest on state and municipal securities) and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, "Accounting for Income Taxes". As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Statement of Cash Flows For purposes of the statement of cash flows, the Company has defined cash equivalents as those amounts included in the balance sheet caption "Cash and Due from Banks". Current Accounting Developments The Financial Accounting Standards Board has issued Statement No. 114, "Accounting by Creditors for Impairment of a Loan", ("FAS 114") which becomes effective in 1995. FAS 114 generally requires impaired loans to be measured on the present value of expected future cash flows discounted at the loan's effective interest rate, or as an expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. A loan is impaired when it is probable the creditor will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. The Company has not yet applied the provisions of FAS 114. NOTE B - RESTRICTIONS ON CASH AND DUE FROM BANK The Bank is required to maintain reserve balances in cash with Federal Reserve banks. The total of those reserve balances was approximately $265,000 and $190,000 at December 31, 1994 and 1993, respectively. NOTE C - INVESTMENT SECURITIES On January 1, 1994, the Company adopted Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The following presents information related to the Company's portfolio of securities held to maturity and available for sale. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE C - INVESTMENT SECURITIES (CONTINUED)
1994 ------------------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Securities to be held to maturity U.S. Treasury securities $2,497,507 $ 2,039 $ 39,546 $2,460,000 U.S. government agency obligations 3,006,998 157 66,765 2,940,390 Municipal securities 1,722,197 17,248 32,980 1,706,465 Mortgage-backed securities 2,588 - - 2,588 --------- --------- --------- --------- $7,229,290 $ 19,444 $ 139,291 $7,109,443 ========= ========= ========= ========= Securities available for sale U.S. Treasury securities $1,978,254 $ 14,837 $ 42,243 $1,950,848 U.S. government agency obligations 1,000,116 - 31,501 968,615 Municipal securities 65,044 1,010 - 66,054 Equity securities 223,110 - - 223,110 --------- --------- --------- --------- $3,266,524 $ 15,847 $ 73,744 $3,208,627 ========= ========= ========= =========
1993 -------------------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Securities to be held to maturity U.S. Treasury securities $3,499,219 $ 133,619 $ 2,369 $3,630,469 U.S. government agency obligations 998,684 14,441 - 1,013,125 Municipal securities 1,903,289 90,868 194 1,993,963 Mortgage-backed securities 393,952 - 911 393,041 --------- --------- --------- --------- $6,795,144 $ 238,928 $ 3,474 $7,030,598 ========= ========= ========= ========= Securities available for sale Equity securities $ 208,910 $ - $ - $ 208,910 ========= ========= ========= =========
First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE C - INVESTMENT SECURITIES (CONTINUED) The amortized cost and estimated market value of investment securities at December 31, 1994 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations without call or prepayment penalties.
Securities to be Securities held to maturity available for sale Amortized Market Amortized Market Cost Value Cost Value Due in one year or less $ 200,000 $ 199,847 $1,043,555 $1,059,402 Due after one year through five years 6,225,185 6,128,187 1,999,859 1,926,115 Due after five years through ten years 681,601 663,895 - - Due after ten years 119,916 114,926 - - --------- --------- --------- -------- 7,226,702 7,106,855 3,043,414 2,985,517 Collateralized mortgage obligations 2,588 2,588 - - Federal Home Loan Bank, Federal Reserve Bank and other equity securities - - 223,110 223,110 --------- --------- --------- --------- $7,229,290 $7,109,443 $3,266,524 $3,208,627 ========= ========= ========= =========
Securities included in the accompanying balance sheet at December 31, 1994 and 1993 with a carrying value of $495,149 and $993,995, respectively, are pledged as collateral with the Federal Reserve Bank for purposes as required or permitted by law. Gross gains and gross losses on sales of securities were:
1994 1993 1992 -------- -------- ------ Gross realized gains $ - $131,400 $252,455 Gross realized losses - - - ------- ------- ------ $ - $131,400 $252,455 ======= ======= =======
First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE D - LOANS Major classifications of loans and leases at December 31, are as follows:
1994 1993 ----------- ------- Commercial $ 4,593,298 $ 4,897,852 Real estate 10,070,123 11,225,806 Installment 6,391,731 13,295,652 Overdrafts 21,878 25,473 Leases 18,364 - ---------- --------- 21,095,394 29,444,783 Less unearned discount (593,333) (1,112,108) ---------- ---------- Loans and leases, net $20,502,061 $28,332,675 ========== ==========
The outstanding principal balance of loans having payments delinquent more than sixty days at December 31, 1994 and 1993 amounted to approximately $646,193 and $2,197,000, respectively. The amount for 1993 includes approximately $1,897,000 from loan packages purchased from the FDIC during the last two months of the year. Loans on which the accrual of interest has been discontinued or reduced amounted to $27,447 and $116,551 at December 31, 1994 and 1993, respectively. NOTE E - ALLOWANCE FOR POSSIBLE LOAN LOSSES Transactions in the allowance for possible loan losses for the years ending December 31, are as follows:
1994 1993 1992 -------- --------- ------ Balance at beginning of year $533,085 $549,464 $180,937 Provision for possible loan losses 417,000 170,000 370,000 Recoveries on loans previously charged off 130,051 150,505 136,067 Loans charged off (646,847) (336,884) (137,540) ------- ------- ------- Balance at December 31, $433,289 $533,085 $549,464 ======= ======= =======
First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE F - PREMISES AND EQUIPMENT At December 31, premises and equipment, less accumulated depreciation and amortization, consisted of the following:
1994 Accumulated depreciation Net Cost and amortization amount Land $ 71,741 $ - $ 71,741 Building 649,679 457,829 191,850 Furniture and equipment 599,023 464,600 134,423 --------- ------- ------- $1,320,443 $922,429 $398,014 ========= ======= =======
1993 Accumulated depreciation Net Cost and amortization amount Land $ 71,741 $ - $ 71,741 Building 644,175 427,111 217,064 Furniture and equipment 572,885 401,444 171,441 --------- ------- ------- $1,288,801 $828,555 $460,246 ========= ======= =======
NOTE G - INCOME TAXES The consolidated provision for income taxes consisted of the following:
1994 1993 1992 -------- -------- ------ Current $426,810 $646,195 $691,679 Deferred 12,872 (18,549) (131,383) ------- ------- ------- $439,682 $627,646 $560,296 ======= ======= =======
A deferred tax asset or liability is recognized for the tax consequences of temporary differences in the recognition of revenue and expense for financial reporting and tax purposes. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE G - INCOME TAXES (CONTINUED) Listed below are the components of the net deferred tax asset as of December 31:
1994 1993 -------- ------ Deferred tax assets Allowance for loan losses $101,403 $160,566 Write downs of foreclosed real estate 5,595 5,595 Depreciation 16,457 13,052 Deferred compensation 48,285 - Unrealized loss on available for sale securities 21,421 - ------- ------ Total deferred tax assets 193,161 179,213 Deferred tax liabilities Stock dividends (11,515) (6,117) ------- ------- Net deferred tax asset $181,646 $173,096 ======= =======
The effective income tax rate varies from the statutory federal rate because of several factors, the most significant being interest earned on tax-exempt securities and state income taxes. NOTE H - EMPLOYEE BENEFIT PLANS Substantially all employees who meet a minimum service requirement are eligible to participate in a tax-sheltered savings plan which provides a mandatory matching of employee contributions up to a maximum of 2% of gross annual wages. Full vesting occurs after seven years. Contributions to the plan totaled $10,223, $18,885 and $11,057 in 1994, 1993, and 1992, respectively. NOTE I - LONG-TERM DEBT Long-term debt consisted of the following at year end:
1994 1993 ---------- ------- 4.3675% note payable to Federal Home Loan Bank $ 337,814 $ 500,000 5.4624% note payable to Federal Home Loan Bank 902,688 1,000,000 --------- --------- $1,240,502 $1,500,000 ========= =========
The 4.3675% note is payable in equal monthly installments of $13,889 plus interest through December 10, 1996. The 5.4624% note is payable in equal monthly installments of $8,333 through December 10, 2003. Both of these notes are collateralized by investment securities and loans and may be prepaid with the payment of a prepayment fee. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE I - LONG-TERM DEBT (CONTINUED) The following table summarizes the maturities of long-term debt: Year 1995 $ 266,664 1996 271,142 1997 99,996 1998 99,996 1999 99,996 2000 and thereafter 402,708 --------- $1,240,502 NOTE J - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and stand-by letters of credit. Those instruments involve, to a varying degree, elements of credit risk in excess of the amount recognized in the statement of financial position. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company's maximum exposure to credit loss for commitments to extend credit and stand-by letters of credit at December 31, 1994 is as follows: 1994 1993 ---------- ------- Financial instruments whose contract amounts represent credit risk Commitments to extend credit $1,016,903 $ 583,168 Credit card arrangement 948,225 864,330 Stand-by letters of credit 55,000 105,000 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management's credit evaluation. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE J - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK (CONTINUED) Stand-by letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank grants loans to various business and consumer customers in the southeastern Utah area. The Bank has also acquired several loan portfolios from the Resolution Trust Corporation and Federal Deposit Insurance Corporation. At December 31, 1994, the largest portfolios consisted of approximately $2,500,000 (net) in loans secured by vehicles in the Dallas-Fort Worth, Texas, metropolitan area and $3,000,000 in loans secured by residential and recreational real estate in the Phoenix, Arizona, metropolitan area. NOTE K - CONTINGENCIES In the normal course of business, the Bank is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material effect on the Company's financial statements. NOTE L - RELATED PARTY TRANSACTIONS In the ordinary course of business, certain directors and executive officers of the Company and the Company's subsidiary bank were borrowers of the bank. All loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with other persons and did not involve more than the normal risk of collectibility. Aggregate loan transactions with related parties were as follows for the years ended December 31: 1994 1993 -------- ------ Balance beginning $747,400 $654,400 New loans 678,400 668,100 Repayments (784,000) (575,100) ------- ------- $641,800 $747,400 ======= ======= Also, during 1994, the Company paid $50,000 in consulting fees to a party related to the Company's executive officers and major shareholders. During 1994 the Company recorded $129,450 as salary and benefit expense for a deferred compensation agreement covering the Company's President and major shareholder. The agreement requires the Company to pay 120 monthly payments of $1,250, beginning with the President's termination of employment. First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE M - REGULATORY MATTERS Banking laws and regulations limit the amount of dividends that may be paid without prior approval of the Bank's regulatory agency. Banking regulations also require the Bank to maintain capital levels in relation to Bank assets. At december 31, 1994, regulations required a ratio of capital (tier-one) to risk-weighted assets of 4% and total adjusted capital (tier-two) to risk-weighted assets of 8%. The bank's capital, as defined by these regulations, was 19.8% and 21.1%, respectively. In addition, banks are expected to maintain a tier-one capital to total assets ratio (leverage) of at least 4%. At December 31, 1994, the Bank's leverage ratio was 12.6%. NOTE N - STOCK OPTION In 1992, the Company granted an executive officer the option to purchase 3,000 shares of common stock at the price of $53.40 per share. The entire option was exercised during January 1995. NOTE O - PARENT COMPANY FINANCIAL INFORMATION Summarized financial statements of the Company on a parent company only basis as of December 31, are as follows: Balance Sheets
1994 1993 ----------- -------- ASSETS Cash $ 219,751 $ 372,604 Due from unconsolidated subsidiary First Western National Bank 39,146 11,800 Notes receivable 127,612 51,000 Investment in unconsolidated subsidiaries Moab Land Company 136,305 138,933 First Western National Bank Equity in net assets 4,383,394 3,589,468 Cost in excess of net assets, less accumulated amortization 95,412 101,912 --------- --------- 4,478,806 3,691,380 --------- --------- 4,615,111 3,830,313 Equipment 42,672 42,672 Less accumulated depreciation (41,668) (39,088) --------- --------- 1,004 3,584 Accrued interest receivable 1,184 2,792 --------- --------- $5,003,808 $4,272,093 ========= =========
First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE O - PARENT COMPANY FINANCIAL INFORMATION (CONTINUED) Balance Sheets (Continued)
1994 1993 ----------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accrued liabilities $ 18,000 $ - Due to unconsolidated subsidiary Moab Land Company 13,933 13,933 --------- --------- Total liabilities 31,933 13,933 Stockholder's equity Preferred stock - authorized, but unissued, 50,000 shares $10 par value Common stock - authorized, 150,000 shares of $10 par value; 52,036 shares issued; 36,988 shares outstanding 520,360 520,360 Paid-in-capital 50,827 50,827 Retained earnings 4,802,513 4,054,698 Net unrealized loss on securities available for sale, net of taxes (34,100) - --------- -------- 5,339,600 4,625,885 Less common stock in treasury at cost; 15,048 shares (367,725) (367,725) --------- --------- 4,971,875 4,258,160 --------- --------- $5,003,808 $4,272,093 ========= =========
First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE O - PARENT COMPANY FINANCIAL INFORMATION (CONTINUED) Statements of Income Years ended December 31,
1994 1993 1992 -------- ---------- ------ Revenue Dividends from unconsolidated subsidiary $ - $ 378,655 $306,999 Insurance management fees 3,896 4,083 5,528 Interest income 5,944 2,646 2,924 Gain on sale of investment - - 19,998 ------- ------- ------- 9,840 385,384 335,449 Expenses Salaries 18,000 - - Interest expense - 232 8,472 Depreciation 2,580 2,580 2,580 Other 9,247 5,649 9,250 Rent 2,005 1,690 1,680 Professional services 76,438 28,076 10,942 ------- --------- ------- 108,270 38,227 32,924 ------- --------- ------- Income (loss) before income taxes and equity in undistributed net earnings of unconsolidated subsidiaries (98,430) 347,157 302,525 Income tax benefit 27,346 10,280 1,520 ------- --------- ------- Income (loss) before equity in undistributed net earnings of unconsolidated subsidiaries (71,084) 357,437 304,045 Equity in undistributed net earnings of unconsolidated subsidiaries 825,399 711,287 685,250 Amortization of cost in excess of net assets of unconsolidated bank subsidiary on a 30 year straight-line basis (6,500) (6,500) (6,500) ------- --------- ------- NET INCOME $747,815 $1,062,224 $982,795 ======= ========= =======
First Western Bancorporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE O - PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)
Statements of Cash Flows Years ended December 31, 1994 1993 1992 -------- ---------- ------ Operating activities Net income $747,815 $1,062,224 $982,795 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 2,580 2,580 2,580 Amortization of goodwill 6,500 6,500 6,500 Gain on sale of investment - - (19,998) Equity in undistributed net income of unconsolidated subsidiaries (825,399) (711,287) (685,250) Changes in deferrals and accruals Accrued interest receivable 1,608 (2,076) 1,315 Accrued interest payable - (1,736) (986) Due from unconsolidated subsidiaries (27,346) (10,280) 139,513 Accrued liabilities 18,000 - (1,527) ------- --------- ------- Net cash (used in) provided by operating activities (76,242) 345,925 424,942 Investing activities Proceeds from sale of investment - - 49,995 Capital injection - Moab Land Company - (125,000) - Acquisition of First Western National Bank common stock - (13,808) (17,016) Funds advanced - notes receivable (141,219) (129,900) (97,000) Payments received - notes receivable 64,608 102,900 128,908 ------- --------- ------- Net cash provided by (used in) investing activities (76,611) (165,808) 64,887 Financing activities Dividends paid $ - $ - $(186,050) Principal payment on note payable - (110,000) (50,000) ------- --------- ------- Net cash used in financing activities - (110,000) (236,050) ------- --------- ------- Net (decrease) increase in cash (152,853) 70,117 253,779 Cash at beginning of year 372,604 302,487 48,708 ------- --------- ------- Cash at end of year $219,751 $ 372,604 $302,487 ======= ========= ======= Supplemental Disclosure of Cash Flow Information Cash paid (received) during the year for: Interest expense $ - $ 1,968 $ 9,458 Income taxes - - 1,527
Management's Discussion and Analysis of Financial Condition and Results of operations for Three-Year Period Ended December 31, 1994 The following analysis of First Western's financial condition and results of operations as of and for the three year period ended December 31, 1994, should be read in conjunction with the consolidated financial statements of First Western and statistical data presented elsewhere herein. Overview First Western does not engage in any substantial business activity other than as a bank holding company that holds 93.5% of the issued and outstanding stock of First Western National Bank (herein, the "Bank"), its principal asset. Unless otherwise noted, the following discussion relates to First Western and the Bank on a consolidated basis. Results of Operations Net Income Net income for First Western for 1994 was $747,815, a decrease of 29.6% or $314,409 from the $1,062,224 earned in 1993. This decrease is primarily due to a 245% increase (or $247,000) in the provision to the allowance for loan losses. Also, net interest income decreased by 5.6% or $174,892. Net income for 1993 of $1,062,224 represented an 8% or $79,429 increase over the $982,795 earned in 1992. The increase is primarily attributable to a $298,671 decrease in interest expense partially offset by an increase in salary and benefits expense of $202,780. Net Interest Income Net interest income is interest earned on loans and the investment portfolio, less interest paid on customer deposits and debt. Net interest income for 1994 was $2,950,854; a decrease of 5.6% or $174,892 over the $3,125,746 earned in 1993. Net interest income for 1993 was $3,125,746; an increase of 16.8% or $449,331 over the $2,676,415 earned in 1992. The increase in 1992 is attributable primarily to a decrease in interest expense of $298,671. Average interest earning assets of First Western were $34,778,675 during 1994; an increase of 1% or $361,173 compared to $33,417,502 for 1993. Average interest earning assets in 1993 were $33,417,502 compared to $33,402,544 for 1992; an increase of $14,958 over 1992. First Western's interest rate spread was 7.77% in 1994, 8.72% in 1993 and 7.36% in 1992. "Interest rate spread" is the difference between the rate of interest earned on interest earning assets and the rate of interest paid on interest bearing liabilities. First Western's net interest margin was 8.48% in 1994, 9.36% in 1993, and 8.04% in 1992. "Net interest margin" is the difference between interest income and interest expense expressed as a percentage of average interest earning assets. Non-interest Income The following table presents a summary of non-interest income:
1994 1993 1992 -------- -------- ------ Service charges $337,714 $344,388 $278,241 Net gains on sales of investments - 131,400 252,455 Other 167,356 192,840 279,105 ------- ------- ------- $505,070 $668,628 $809,801 ======= ======= =======
Non-interest income was $505,070 in 1994, a decrease of 24.5% or $163,558 over the prior year figure of $668,628. Most of this decrease was attributable to a decrease in gains realized on investment securities. Non-interest income was $668,628 in 1993, a decrease of 17.4% or $141,173 from the $809,801 for 1992. Again, this decrease was primarily attributable to a decrease in gains on the sale of investment securities. Non-interest Expense The following table presents a summary of non-interest expense:
1994 1993 1992 ---------- ---------- ------- Salaries and benefits $1,028,254 $ 923,990 $ 721,210 Occupancy and equipment 211,169 252,223 207,053 Other expenses 554,330 680,227 570,525 --------- --------- --------- $1,793,753 $1,856,440 $1,498,788 ========= ========= =========
Non-interest expense decreased by $62,687 or 3.4% to $1,793,753 for the year ended December 31, 1994, from $1,856,440 for the year ended December 31, 1993. This decrease was due primarily to decreased expenses related to employee education, travel, and facility repairs. For 1993, non-interest expense increased to $1,856,440 from $1,498,788, an increase of $357,652 or 23.9%. This increase was principally due to increased personnel and related costs. Income Taxes First Western's income tax provision for 1994 was $439,682 compared with $627,646 in 1993 and $560,296 in 1992. The effective rates were 35.3% in 1994, 35.5% in 1993 and 34.6% in 1992. The effective tax rate differs from the federal statutory rate primarily as a result of state income taxes. FINANCIAL CONDITION Loans The following table presents the balance of each major category of loans at the dates indicated:
1994 1993 1992 ---------------------------- -------------------------- ------------------------- % of % of % of Amount Loans Amount Loans Amount Loans Loan Category Commercial $ 4,593,298 21.77% $ 4,897,852 16.64% $ 4,292,035 22.58% Real estate Construction 873,964 4.14 954,829 3.24 991,810 5.22 Residential 7,425,065 35.20 7,828,947 26.59 8,424,463 44.31 Other 1,771,094 8.40 2,442,030 8.29 944,722 4.97 Leases 18,364 .09 - - 8,658 .05 Consumer/other 6,413,609 30.40 13,321,125 45.24 4,347,674 22.87 ---------- ------ ---------- ------ ---------- ------ 21,095,394 100.00% 29,444,783 100.00% 19,009,362 100.00% ====== ======= ====== Less Discount 593,333 1,112,108 780,234 Allowance for loan losses 433,289 533,085 549,464 ---------- ---------- ---------- $20,068,772 $27,799,590 $17,679,664 ========== ========== ==========
During 1993 and 1992, First Western actively pursued the acquisition of loan portfolios of failed financial institutions from the Resolution Trust Corporation (RTC) and the Federal Deposit Insurance Corporation (FDIC). These acquired loan portfolios were primarily in the western United States and consisted of residential real estate and installment/consumer loans. The breakdown of "regular" and acquired loans (net of discount) at December 31 is as follows:
1994 1993 1992 ------------- ------------- --------- Regular $12,622,050 $12,536,023 $ 9,997,551 Acquired 7,880,011 15,796,652 8,231,577 ---------- ---------- ---------- $20,502,061 $28,332,675 $18,229,128 ========== ========== ==========
Certain non-performing assets of First Western are summarized for the years ended December 31,
1994 1993 1992 -------- ----------- ------ Non-accrual loans $ 27,447 $ 116,551 $ 9,340 Restructured loans - - - Loans past due 90 days or more 482,436 1,450,370 17,879
The increased amount of past due loans at December 31, 1993, was caused by the fourth quarter acquisition of a loan portfolio from the FDIC. Managements' collection efforts and administration of this portfolio has resulted in the significant decrease in past due loans at December 31, 1994. First Western's policy with regard to non-accrual loans is generally to place loans on non-accrual status when loans are more than 90 days past due, unless it is well collateralized and collection is being actively pursued. The allowance for loan losses is maintained at an amount deemed necessary by First Western's management, based on its frequent and extensive review of the loan portfolio combined with trend and other statistical analysis tools. The following are some of the more significant items taken into consideration by management when evaluating the adequacy of the allowance for loan losses: * Loan delinquency trends and loans on non-accrual; * Analysis of "graded" loans; * The mix of the loan portfolio including concentrations by borrower type; and * Analysis of allowance for loan loss reserve ratios for prior periods. The following table sets forth changes in First Western's loan loss reserve as of the date indicated for the years ended December 31:
1994 1993 1992 ---------- ---------- ------- Balance, beginning of year $533,085 $549,464 $180,937 Provision for loan losses 417,000 170,000 370,000 Charge offs Commercial - - 25,301 Consumer 646,847 319,426 62,913 Real estate - 17,458 49,326 ----------- ------- ------- Total charge offs 646,847 336,884 137,540 Recoveries Commercial 15,068 100,475 118,719 Consumer 114,983 49,930 17,348 Real estate - 100 - ---------- ------- --------- Total recoveries 130,051 150,505 136,067 ------- ------- ------- Net charge offs 516,796 186,379 1,473 ------- ------- -------- Balance, end of year $433,289 $533,085 $549,464 ======= ======= =======
The following table allocates the loan loss reserve based on management's judgment of potential losses in the respective areas. While management has allocated reserves to various portfolio segments for purposes of this table, the reserve is general in nature and is available for the portfolio in its entirety:
Commercial Real Estate Consumer Unallocated Total 1994 Allowance for loan losses $ 75,324 $ 62,312 $291,321 $ 4,332 $433,289 % to loans in category 1.64% .62% 4.54% 2.11% 1993 Allowance for loan losses $ 80,624 $ 63,234 $389,227 $ - $533,085 % to loans in category 1.65% .56% 2.92% 1.88% 1992 Allowance for loan losses $126,377 $313,194 $104,398 $ 5,495 $549,464 % to loans in category 2.94% 3.02% 2.40% 3.01%
Investment Portfolio The investment activities of First Western are designed to provide an investment alternative for funds not presently required to meet loan demand; assist the Bank in meeting potential liquidity requirements; assist in maximizing income consistent with quality and liquidity requirements; supply collateral to secure public funds; and provide consistent income and market value throughout changing economic times. First Western's portfolio consists primarily of obligations of U.S. government., U.S. government agency and corporate obligations, and state and local governments, as well as agency collateralized obligation securities. The following table sets forth the composition of First Western's investment portfolio for the years ended December 31:
1994 1993 1992 ----------- ----------- -------- U.S. Treasuries $ 4,448,355 $ 3,499,219 $ 7,614,512 Agencies 3,975,613 998,684 3,546,492 Municipal 1,788,251 1,903,289 1,129,208 Other 225,698 602,862 651,855 ----------- ----------- ----------- $10,437,917 $7,004,054 $12,942,067 ========== ========= ==========
For the investment portfolio as of December 31, 1994, the following table sets forth a summary of yields and maturities:
One Year or Less 1 - 5 Years 5 - 10 years Over 10 years Total --------------------- ---------------------- ------------------ ------------------- ---------------------- Weighted Weighted Weighted Weighted Weighted Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield U.S. Treasuries $978,511 5.349% $3,497,250 7.599% $ - $ - $ 4,475,761 7.107% Agencies - .0 4,007,114 7.508 - .0 - 4,007,114 7.508 Municipal 265,044 5.012 720,681 6.115 681,601 5.952% 119,916 6.053% 1,787,241 5.885 Other securities - - - - - - 225,698 7.599 225,698 7.599 ---------- ------- ----------- ------ --------- ------ ------- -------- ---------- ------- Total 1,243,555 5.277% 8,225,045 7.425% 681,601 5.952% 345,614 7.063% 10,495,814 7.063% ===== ===== ===== ===== ======= Less unrealized gain (loss) 15,847 (73,744) - - (57,897) ---------- ---------- --------- -------- ---------- Total $1,259,402 $8,151,301 $681,601 $345,614 $10,437,917 ========= ========= ======= ======= ==========
In May 1993 the FASB issued Statement of Financial Accounting Standards No. 115 "FAS 115"), Accounting for Certain investments in Debt and Equity Securities. This statement addresses the accounting and reporting for investments that have readily determinable fair market values. Those investments are to be classified in three categories and accounted for as follows: 1. Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost. 2. Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair market value, with unrealized gains and losses included in earnings. 3. Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair market value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders' equity. First Western implemented FAS 115 on January 1, 1994, by properly classifying all securities into either held-to-maturity investment accounts or the available-for-sale accounts. First Western does not maintain a trading portfolio. Deposits The following table sets forth a summary of First Western's deposits as of the years ended December 31, and the maturity of time deposits over $100,000:
1994 1993 1992 ---------------------------- --------------------------- ------------------------ Average Average Average Average Average Average Amount Rate Paid Amount Rate Paid Amount Rate Paid Non-interest bearing $ 5,667,902 .00% $ 5,176,939 .00% $ 4,976,621 .00% Interest bearing NOW and SuperNOW 6,064,635 1.83 6,739,604 2.13 7,755,228 3.07 Savings and MMDA 10,598,965 3.00 11,141,541 3.08 11,130,913 3.66 Time deposits 8,547,317 3.79 7,984,441 3.84 8,546,599 5.10 ---------- ---- ----------- ---- ----------- ----- $30,878,819 2.44% $31,042,525 2.56% $32,409,361 3.34% ========== ==== ========== ==== ========== ====
Time Deposit Maturity Schedule As of December 31, 1994
Less than Greater than 3 months 3 - 6 months 6 - 12 months 12 months Total -------- ------------ ------------- ----------- ------- Time deposits $100,000 and over $211,252 $231,998 $214,070 $301,449 $958,769 ======== ======== ======== ======== ========
Statistical Information and Analysis The following tables present certain statistical information regarding First Western and should be read in connection with First Western's consolidated Financial Statements and notes set forth elsewhere herein. First Western Bancorporation Balance Sheets Based on Average Balances Years ended December 31,
1994 1993 1992 ------------- ------------- --------- ASSETS Cash and due froms $ 1,588,160 $ 1,314,884 $ 1,431,795 Investments Federal funds sold 2,909,110 3,271,777 2,838,626 U.S. Treasuries 4,348,207 5,004,772 6,569,703 U.S. agencies 2,579,720 1,912,529 3,534,753 Mortgage backed 201,288 500,923 172,542 Municipal obligations 1,909,647 1,755,156 1,758,866 Other investments 235,388 157,126 131,435 ----------- ----------- ----------- Total investments 12,183,360 12,602,283 15,005,925 Loans Commercial 4,721,096 5,019,917 4,432,026 Real estate 10,064,541 9,946,273 9,757,156 Consumer 8,241,984 6,359,753 4,627,851 Less allowance for loan losses (432,307) (510,724) (420,414) ----------- ----------- ----------- Total loans 22,595,314 20,815,219 18,396,619 Other assets Bank premises and furniture, fixtures, and equipment, net 435,530 401,203 462,964 Accrued interest receivable 329,606 345,228 378,906 Other real estate owned 65,514 74,795 234,005 Other assets 427,295 518,758 471,864 ---------- ---------- ---------- Total other assets 1,257,945 1,339,984 1,547,739 ---------- ---------- ---------- Total assets $37,624,779 $36,072,370 $36,382,078 ========== ========== ==========
First Western Bancorporation Balance Sheets Based on Average Balances Years ended December 31,
1994 1993 1992 ------------- ------------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Non-interest bearing $ 5,667,902 $ 5,176,939 $ 4,976,621 Interest bearing 6,064,635 6,739,604 7,755,228 MMDA and savings 10,598,965 11,141,541 11,130,913 Certificates of deposit 8,547,317 7,984,441 8,546,599 ---------- ---------- ---------- Total deposits 30,878,819 31,042,525 32,409,361 Borrowed funds 1,603,375 444,768 247,297 Accrued interest payable 65,677 67,337 91,008 Other liabilities 111,883 272,309 451,047 ---------- ---------- ---------- Total liabilities 32,659,754 31,826,939 33,198,713 Minority interests 350,008 518,383 413,460 Common stock 520,360 520,360 520,360 Surplus 50,827 50,827 50,827 Undivided profits 4,428,605 3,523,586 2,566,443 Unrealized loss on available for sale (17,050) - - Treasury stock (367,725) (367,725) (367,725) ----------- ----------- ----------- Total equity 4,615,017 3,727,048 2,769,905 ---------- ---------- ---------- Total liabilities and stockholders' equity $37,624,779 $36,072,370 $36,382,078 ========== ========== ==========
First Western Bancorporation Analysis of Net Interest Earnings Years ended December 31, 1992 - 1994
Average Average rate paid Average interest interest amount Interest Average Average earning earning Net yield outstanding earned yield (1) rate paid assets liabilities on assets ----------- ----------- --------- ------------------------------------------- 1994 Assets Federal funds sold $ 2,909,110 $ 110,518 3.80% U.S. Treasuries 4,348,207 268,836 6.18 U.S. agencies 2,579,720 167,341 6.49 Mortgage backed 201,288 6,789 3.37 Municipal obligations 1,909,647 112,172 5.87 Other investments 235,389 10,207 4.34 Loans 22,595,314 3,102,246 13.73 ---------- --------- Total $34,778,675 $3,778,109 10.86% 8.48% ========== ========= Liabilities Deposits Interest bearing demand $ 6,064,635 $ 110,880 1.83% MMDA and savings 10,598,965 317,607 3.00 Certificates of deposit 8,547,317 323,943 3.79 Borrowed funds 1,603,375 74,825 4.67 ---------- ---------- Total $26,814,292 $ 827,255 3.09% ========== ========= 1993 Assets Federal funds sold $ 3,271,777 $ 92,107 2.82% U.S. Treasuries 5,004,772 299,199 5.98 U.S. agencies 1,912,529 141,027 7.37 Mortgage backed 500,923 36,749 7.34 Municipal obligations 1,755,156 126,933 7.23 Other investments 157,126 19,030 12.11 Loans 20,815,219 3,213,383 15.44 ---------- --------- Total $33,417,502 $3,928,428 11.76% 9.36% ========== ========= Liabilities Deposits Interest bearing demand $ 6,739,604 $ 143,890 2.13% MMDA and savings 11,141,541 342,775 3.08 Certificates of deposit 7,984,441 306,971 3.84 Borrowed funds 444,768 7,146 1.61 ----------- ---------- Total $26,310,354 $ 800,782 3.04% ========== =========
First Western Bancorporation Analysis of Net Interest Earnings Years ended December 31, 1992 - 1994
Average Average rate paid Average interest interest amount Interest Average Average earning earning Net yield outstanding earned yield (1) rate paid assets liabilities on assets ----------- ----------- --------- ------------------------------------------- 1992 Assets Federal funds sold $ 2,838,626 $ 100,868 3.55% U.S. Treasuries 6,569,703 360,490 5.49 U.S. agencies 3,534,753 269,742 7.63 Mortgage backed 172,542 17,862 10.35 Municipal obligations 1,758,866 123,771 7.04 Other investments 131,435 11,939 9.08 Loans 18,396,619 2,893,020 15.73 ---------- --------- Total $33,402,544 $3,777,692 11.31% 8.04% ========== ========= Liabilities Deposits Interest bearing demand $ 7,755,228 $ 238,306 3.07% MMDA and savings 11,130,913 407,318 3.66 Certificates of deposit 8,546,599 435,774 5.10 Borrowed funds 248,510 11,484 4.62 ----------- --------- Total $27,681,250 $1,092,882 3.95% ========== ========= (1) Yields on tax-exempt obligations are not computed on a tax-equivalent basis.
1994 compared to 1993 1993 compared to 1992 --------------------------------------- ------------------------------ Attributable to change Attributable to change ----------------------- ---------------------- Total Change in Volume in Rate Total Change in Volume in Rate Interest income Federal funds sold $ 18,411 $(10,210) $ 28,621 $ (8,761) $ 15,392 $(24,153) U.S. Treasuries (30,363) (39,251) 8,888 (61,291) (85,870) 24,579 U.S. agencies 26,314 49,198 (22,884) (128,715) (123,794) (4,921) Mortgage backed (29,960) (21,982) (7,978) 18,887 33,995 (15,108) Municipal obligations (14,761) 11,173 (25,934) 3,162 (261) 3,423 Other investments (8,823) 9,479 (18,302) 7,091 2,334 4,757 Loans (111,137) 274,805 (385,942) 320,363 380,345 (59,982) ------- ------- ------- ------- ------- ------- Total (150,319) 273,212 (423,531) 150,736 222,141 (71,405) Interest expense Deposits Interest bearing (33,010) (14,411) (18,599) (94,416) (31,209) (63,207) MMDA and savings (25,168) (16,693) (8,475) (64,543) 389 (64,932) Certificates of depsoit 16,972 21,640 (4,668) (128,803) (28,663) (100,140) Borrowed funds 67,679 18,615 49,064 (4,338) 9,069 (13,407) ------- ------- ------- ------- ------- ------- Total 26,473 9,151 17,322 (292,100) (50,414) (241,686) ------- ------- ------- ------- ------- ------- $(176,792) $ 264,060 $(440,852) $442,836 $272,555 $170,281 ======= ======== ======== ======= ======= =======
First Western Bancorporation Analysis of Net Income Years ended December 31, 1994 1993 1992 --------- ------- ------- Net income $747,815 $1,062,224 $982,795 Dividends paid - - 110,964 Return on average assets 1.99% 2.94% 2.70% Return on average equity 16.20 28.50 35.48 Dividend payout ratio .00 .00 12.20 Equity to assets 12.27 10.33 7.61 First Western Bancorporation Loan Repricing or Maturing As of December 31, 1994
Less than one year 1 - 5 years 5 - 10 years Total ------------ ------------ ------------ --------- Loan Category Commercial $2,099,606 $1,383,673 $1,110,019 $ 4,593,298 Real estate 4,774,547 2,853,906 2,441,670 10,070,123 Consumer and other 3,123,971 1,871,276 1,414,847 6,410,094 --------- --------- --------- ---------- $9 ,998,124 $6,108,855 $4,966,536 $21,073,515 ========== ========= ========= ========== Fixed interest rate loans $5,231,925 $6,108,855 $4,966,536 $16,307,316 Floating interest rate loans 4,766,199 - - 4,766,199 --------- -------------- -------------- ---------- $9,998,124 $6,108,855 $4,966,536 $21,073,515 ========= ========= ========= ==========
First Western Bancorporation Interest Rate Sensitivity As of December 31, 1994
One year or less 1 - 5 years Over 5 years Total --------------- ------------ ------------ ---------- Rate Sensitive Assets Loans $ 9,998,124 $ 6,108,855 $ 4,966,536 $21,073,515 Investment securities 1,259,402 8,151,300 801,517 10,212,219 Other interest-bearing assets 3,845,194 - - 3,845,194 ---------- ------------- -------------- ---------- 15,102,720 14,260,155 5,768,053 35,130,928 Rate Sensitive Liabilities Savings and interest bearing checking 15,908,985 - - 15,908,985 Time deposits 6,333,740 2,647,656 - 8,981,396 Short-term borrowings 420,941 - - 420,941 Long-term borrowings 338,000 - 902,502 1,240,502 ----------- -------------- ----------- ---------- 23,001,666 2,647,656 902,502 26,551,824 ---------- ---------- ----------- ---------- Rate sensitive gap $(7,898,946) $11,612,499 $4,865,551 $ 8,579,104 ========== ========== ========= ========== Cumulative rate sensitive gap $(7,898,946) $3,713,553 $8,579,104 $17,158,208 Rate sensitive gap percentage 65.66% 538.60% 639.12% 132.31% Cumulative rate sensitive gap percentage 65.66% 114.48% 132.31% 132.31%
COMPARISON OF ZIONS COMMON STOCK, FIRST WESTERN COMMON STOCK AND BANK COMMON STOCK General Upon consummation of the Reorganizations, shareholders of First Western and of the Bank will become shareholders of Zions, a Utah corporation. Thus the Utah Revised Business Corporation Act and Zions' Articles of Incorporation ("Articles") and Bylaws will govern the rights of First Western and Bank shareholders who become shareholders of Zions. Since the articles and bylaws of Zions, First Western and the Bank are not the same, the Reorganizations will result in certain differences in the rights of the holders of First Western Common Stock and Bank Common Stock. The following is a summary of certain of the more significant differences. Voting Rights General. The holders of Zions Common Stock, like the holders of First Western Common Stock and Bank Common Stock, are generally entitled to one vote for each share held of record on all matters submitted to a shareholder vote. The holders of Bank Common Stock currently have cumulative voting rights in the election of directors, meaning that in all elections for directors every shareholder will have the right to vote, in person or by proxy, that number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled and give one candidate that resulting amount or distribute the shareholder's votes in the manner and among as many candidates as the shareholder so determines. The directors who receive the most votes are elected for the available directorships being voted upon. The holders of Zions Common Stock and First Western Common Stock do not have cumulative voting rights. The absence of cumulative voting means that a nominee for director must receive the votes of a plurality of the shares voted in order to be elected. Special Votes for Certain Transactions. The Articles of Zions contain provisions requiring special shareholder votes to approve certain types of transactions. In the absence of these provisions, either the transactions would require approval by a majority of the shares voted at a meeting or no shareholder vote would be required. Zions' Articles require that certain "business transactions" between Zions or a subsidiary and a "related person" be approved by the affirmative votes of the holders of not less than 80% of the voting power of all outstanding voting stock of Zions. A "related person" is generally defined by Zions' Articles to mean a person, corporation, partnership, or group acting in concert that beneficially owns 10% or more of the voting power of Zions' outstanding voting stock. The "business transactions with a related person" subject to Zions' special vote requirements include (1) a merger or consolidation involving Zions or a subsidiary of Zions with a related person; (2) the sale, lease, exchange, transfer or other disposition of all or any substantial part of the assets of either Zions or a subsidiary of Zions to, with or for the benefit of a related person; (3) the issuance, sale, exchange or other disposition by Zions or a subsidiary of Zions to a related person of securities of Zions or a subsidiary of Zions having an aggregate fair market value of $5 million or more; (4) any liquidation, spinoff, splitoff, splitup, or dissolution of Zions by or on behalf of a related person; (5) any recapitalization or reclassification of the securities of Zions or other transaction that would have the effect of increasing the voting power of a related person or reducing the number of shares of each class of voting securities outstanding; and (6) any agreement, contract, or other arrangement providing for any of the transactions set forth above. Zions' special shareholder vote requirements for business transactions with related persons do not apply to any transaction approved by a majority of the "continuing directors" or if various specified conditions are met. A continuing director is any member of the Zions Board who is not a related person or an interested shareholder or an affiliate or associate of a related person and who (1) was a director on February 21, 1986 or (2) became a director subsequent to that date and whose election or nomination for election by Zions' shareholders was approved by a majority of the continuing directors then on the Board. The governing instruments of First Western and the Bank have no similar provisions. Under its bylaws, First Western may not merge or consolidate with another entity or conduct a sale of substantially all of its assets without the prior approval of the holders of two-thirds of its outstanding voting stock. The National Bank Act, the Bank's governing law, requires the affirmative vote of the holders of two-thirds of the outstanding shares of the corporation to approve a merger, consolidation, or sale of all or substantially all of its assets. See "Plan of Reorganization -- Vote Required; Management Recommendation." Board of Directors Director Liability. Zions's articles of incorporation contain a "director liability" provision. This provision generally shields a director from liability to the corporation or its shareholders for a breach of fiduciary duty as a director other than (i) a breach of a director's duty of loyalty, (ii) acts or omissions not taken in good faith or which involve intentional misconduct or a knowing violation of law, (iii) authorizing the unlawful payment of dividends, and (iv) transactions in which a director receives an improper benefit. First Western and the Bank have no similar provision in their articles of incorporation or bylaws. Both First Western's and the Bank's governing instruments provide, subject to certain conditions, for indemnification or reimbursement by First Western or the Bank, as the case may be, for reasonable expenses actually incurred by a person in connection with any action, suit, or proceeding to which he is made a party by reason of his being or having been a director, officer, or employee of First Western or the Bank, as the case may be. Classified Board. The articles of incorporation of Zions divide the Board of Directors into three classes, each consisting of one-third (or as near as may be) of the whole number of the Board of Directors. One class of directors is elected at each annual meeting of shareholders, and each class serves for a term of three years. The governing instruments of First Western and the Bank make no provision for a classified board, the result of which is that the entire board of First Western and of the Bank is elected at each annual meeting. The number of directors which constitute Zions' full Board of Directors may be increased or decreased only by amendment of the bylaws, which requires the affirmative vote of two-thirds of the total number of directors constituting the entire Board, or by the shareholders of Zions at a regular or special meeting by the affirmative vote of two-thirds of the outstanding and issued shares entitled by statute to vote. Except as otherwise required by law, vacancies on Zions' Board of Directors, including vacancies resulting from an increase in the size of the Board, may be filled by the affirmative vote of a majority of the remaining directors even though less than a quorum of the Board of Directors. Zions' directors elected by the Board to fill vacancies serve for the full remainder of the term of the class to which they have been elected. Any directorship filled by reason of an increase in the number of directors may be filled for a term of office continuing only until the next election of directors by the shareholders. First Western's articles of incorporation and bylaws provide that the number of directors of First Western is set at ten. The Bank's articles of incorporation and bylaws provide that the number of directors of the Bank will be not less than five nor more than twenty-five shareholders and that the shareholders by a two-thirds vote may determine the number of directors to be elected at the annual meeting of shareholders. First Western's bylaw provisions governing vacancies are similar to Zions', with the exception that any directors elected by the Board will continue in office only until their successor has been elected at the next annual election. The Bank's bylaws provide that vacancies will be filled in accordance with the requirements of the law of the United States. The National Bank Act has provisions similar to those of First Western. Removal of Directors. Zions' Articles provide that any director (or the entire Board of Directors) may be removed from office by shareholder vote only if such removal is approved by the holders of two-thirds of the issued and outstanding shares then entitled to vote at an election of directors. First Western's bylaws adopt the provisions of Utah law for the removal of directors. Utah law provides that, at a meeting of shareholders called expressly for that purpose, any or all directors may be removed with or without cause by a vote of the shareholders then entitled to vote at an election of directors. However, no director may be removed if the number of votes cast against his removal would be enough to elect him if then cumulatively voted at an election of the entire Board of Directors. The Bank's governing instruments and the National Bank Act are silent with respect to the removal of directors. Shareholder Meetings Utah law provides that special meetings of a corporation's shareholders may be called by the board of directors or such other persons authorized by the bylaws to call a special meeting or by the holders of at least one-tenth of all the votes entitled to be cast on any issue proposed to be considered at the special meeting. Under Zions' Bylaws, special meetings may be called by the president or by the Board of Directors. Under First Western's bylaws, special meetings of shareholders may be called by the president, a vice president, the Board of Directors, or shareholders entitled to cast at least one-tenth of the shares entitled to vote. The Bank's articles and bylaws provide that the Board of Directors or three or more shareholders owning in the aggregate not less than 10% of the Bank's stock may call a special meeting. Amendment of Articles and Bylaws Zions' Articles require the affirmative votes of the holders of two-thirds of all outstanding voting stock of Zions to approve any amendment to Zions' Articles, except that to repeal or amend the provisions in the Article regarding business transactions with related persons requires the affirmative vote of 80% of the issued and outstanding stock entitled to vote. Zions' bylaws may be amended by an affirmative vote of two-thirds of the total number of directors constituting the entire Board or by the affirmative vote of two-thirds of the issued and outstanding shares entitled to vote. First Western's articles are silent with respect to amendment of its articles. Under Utah law, First Western's articles of incorporation may be amended at an annual or special shareholder meeting by an affirmative two-thirds vote of all holders of the shares entitled to vote. First Western's bylaws may be amended at an annual or special shareholder meeting by an affirmative vote of two-thirds of all shares entitled to vote or by an affirmative vote of two-thirds of the Board of Directors at a Board meeting called for that purpose. The Bank's articles provide that the articles may be amended by the shareholders by the affirmative vote of a majority of the outstanding stock. The Bank's bylaws provide that the bylaws may be amended by the vote of a majority of the Board of Directors at a meeting of the Board, provided ten days' notice of the proposed amendment has been given to each member of the Board. Dissenters' Rights Zions is incorporated under the laws of Utah. Utah law provides for dissenters' rights in a variety of transactions including: (i) any plan of merger to which a corporation is a party (other than mergers or consolidations not requiring a shareholder vote); (ii) certain sales, leases, exchanges or other dispositions of all or substantially all of the assets of a corporation; and (iii) certain share exchanges. However, shareholders of a Utah business corporation are not entitled to dissenters' rights in any of the transactions mentioned above if their stock is either listed on a national securities exchange or on the National Market System of NASDAQ or held of record by 2,000 or more shareholders. The aforementioned provisions do not apply if the shareholder will receive for his shares anything except (a) shares of the corporation surviving the consummation of the plan of merger or share exchange, (b) shares of a corporation whose shares are listed on a national securities exchange or the National Market System of NASDAQ or held of record by more than 2,000 holders, or (c) cash in lieu of fractional shares. Zions Common Stock currently is listed for trading in the National Market System of NASDAQ and has more than 2,000 shareholders of record. First Western is incorporated under the laws of Utah and is therefore subject to the requirements set forth in the previous paragraph. First Western's common stock is held by fewer than 2,000 holders of record and is not traded on a national securities exchange. As a result, shareholders of First Western will be entitled to exercise all applicable rights of dissenting shareholders under Utah law. The Bank is a national banking association and is therefore subject to the National Bank Act. Under 12 U.S.C. section 215a(b), any Bank shareholder has the right to dissent to a merger of a national banking association with another national banking association. See "Plan of Reorganization--Dissenters' Rights of First Western and Bank Shareholders." Preferred Stock The Articles of Zions authorize the corporation to issue shares of preferred stock. Zions' Articles authorize up to 3,000,000 shares of Zions preferred stock. The authorized shares of preferred stock are issuable in one or more series on the terms set by the resolution or resolutions of the Board of Directors of Zions providing for the issuance thereof. Each series of preferred stock would have such dividend rate, which might or might not be cumulative, such voting rights, which might be general or special, and such liquidation preferences, redemption and sinking funds provisions, conversion rights or other rights and preferences, if any, as the Board of Directors may determine. Except for such rights as may be granted to the holders of any series of preferred stock in the resolution establishing such series or as required by law, all of the voting and other rights of the shareholders of Zions belong exclusively to the holders of common stock. First Western's articles of incorporation authorize the issuance of up to 50,000 shares of preferred stock, $10.00 par value. The articles provide that the preferred stock when issued will be entitled to 7% cumulative annual dividends, will have a preferential right (over the holders of the common stock) to receive dividends, and will be redeemable at par without penalty by First Western after three years from the date of issue. The articles forbid the issuance of any class of stock in issues and provide that preferred stock will have no voting rights. No shareholder approval is required for the issuance of such shares. The Bank's articles make no provision for preferred stock. Dividend Rights Utah law generally allows a corporation, subject to restrictions in its certificate of incorporation, to declare and pay dividends in cash or property, but only if the corporation is solvent and payment would not render the corporation insolvent. Zions' Articles place no further restrictions on distributions. Thus, the holders of Zions Common Stock are entitled to dividends when, as and if declared by their Board of Directors out of funds legally available therefor. However, if Zions preferred stock is issued, the Board of Directors of Zions may grant preferential dividend rights to the holders of such stock which would prohibit payment of dividends on the corporation's common stock unless and until specified dividends on the preferred stock had been paid. First Western's articles place no restrictions on distributions, and therefore any distributions by First Western are governed by the Utah provisions summarized above. Under the National Bank Act to which the Bank is subject, the directors of a national banking association may, quarterly, semiannually, or annually, declare a dividend of so much of the net profits of the association as they judge expedient, except that until the surplus fund of such association shall equal its common capital, no dividends shall be declared unless there has been carried to the surplus fund not less than 10% of the association's net profits of the preceding half year in the case of quarterly or semiannual dividends or of the preceding two consecutive half-year periods in the case of annual dividends. Moreover, the prior approval of the Comptroller is required for the payment of any dividend if the total of all dividends declared by a national bank in any calendar year will exceed such bank's net profits (as defined by statute) for the year combined with its retained net profits of the preceding two years, less any required transfers to surplus. No dividend may be paid by a national bank, with or without the approval of the Comptroller, if the bank's capital would be impaired following the payment, except in the case of liquidation. In addition, the Comptroller has authority under the Financial Institutions Supervisory Act to initiate proceedings designed to prohibit a national bank from engaging in what, in his opinion, constitutes an unsafe or an unsound practice in conducting its business, and under certain circumstances relating to the financial condition of a national bank, the Comptroller may determine that the payment of dividends would be an unsafe or unsound practice. Liquidation Rights Upon liquidation, dissolution or winding up of Zions, whether voluntary or involuntary, the holders of Zions Common Stock are entitled to share ratably in the assets of the corporation available for distribution after all liabilities of the corporation have been satisfied. However, if preferred stock is issued by Zions, the Board of Directors of Zions may grant preferential liquidation rights to the holders of such stock which would entitle them to be paid out of the assets of Zions available for distribution before any distribution is made to the holders of common stock. As a Utah corporation, First Western is subject to the same requirements regarding liquidation as are applicable to Zions, as summarized above. Although First Western does not have any shares of preferred stock outstanding, First Western's Board of Directors, like that of Zions, may issue shares of preferred stock with preferential liquidation rights without shareholder approval. The rights of the holders of Bank Common Stock in the event of a liquidation are substantially similar to those applicable to Zions and First Western shareholders. Miscellaneous There are no preemptive rights (except as stated in the next sentence), sinking fund provisions, conversion rights, or redemption provisions applicable to Zions Common Stock, First Western Common Stock or Bank Common Stock. The First Western articles provide that the holders of shares of First Western Common Stock have preemptive rights, which allow existing First Western shareholders to purchase additional shares of a new issue of First Western Common Stock before other persons who are not First Western shareholders may purchase shares of a new issue, in order for current First Western shareholders, if they or any of them so choose, to maintain their proportionate share of the ownership of First Western. Holders of fully paid shares of Zions Common Stock, First Western Common Stock and Bank Common Stock are not subject to any liability for further calls or assessments. LEGAL OPINIONS Opinions with respect to certain legal matters in connection with the Reorganizations will be rendered by Metzger, Hollis, Gordon & Mortimer, Washington, D.C., as counsel for Zions, and by Cohne, Rappaport & Segal, P.C., as counsel for First Western and the Bank. EXPERTS The consolidated financial statements and schedule of Zions Bancorporation as of December 31, 1994 and 1993, and for each of the years in the three-year period ended December 31, 1994, incorporated by reference herein, have been incorporated by reference herein and in the registration statement in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of such firm as experts in auditing and accounting. The reports of KPMG Peat Marwick LLP covering the December 31, 1994 and 1993 consolidated financial statements and schedule refer to changes in accounting principles relating to the adoption of the Financial Accounting Standards Board's Statements of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, No. 109 Accounting for Income Taxes, and No. 115, Accounting for Certain Investments in Debt and Equity Securities. The consolidated financial statements of First Western as of December 31, 1994 and 1993, and for each of the years in the three-year period ended December 31, 1994, included herein have been included herein in reliance upon the report of Fortner, Bayens, Levkulich and Co., P.C., independent certified public accountants, appearing elsewhere herein, and upon their authority as experts in auditing and accounting. The report of Fortner, Bayens, Levkulich and Co., P.C. covering the December 31, 1994 and 1993, consolidated financial statements refer to the change in accounting principles relating to the adoption of the Financial Accounting Standards Board's Statements of Financial Accounting Standards No. 115, Accounting for Certain Investments In Debt and Equity Securities. OTHER MATTERS The respective managements of First Western and the Bank do not know of any other matters intended to be presented for shareholder action at the Special Meetings. If any other matter does properly come before either Special Meeting and is put to a shareholder vote, the respective proxies solicited hereby will be voted in accordance with the judgment of the proxyholders named thereon. APPENDIX A Utah Business Corporation Act Part 13. Dissenters' Rights 16-10a-1301 DEFINITIONS. -- For purposes of Part 13: (1) "Beneficial shareholder" means the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder. (2) "Corporation" means the issuer of the shares held by a dissenter before the corporate action, or the surviving or acquiring corporation by merger or share exchange of that issuer. (3) "Dissenter" means a shareholder who is entitled to dissent from corporate action under Section 16-10a-1302 and who exercises that right when and in the manner required by Sections 16-10a-1320 through 16-10a-1328. (4) "Fair value" with respect to a dissenter's shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action. (5) "Interest" means interest from the effective date of the corporate action until the date of payment, at the statutory rate set forth in Section 15- 1-1, compounded annually. (6) "Record shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares that are registered in the name of a nominee to the extent the beneficial owner is recognized by the corporation as the shareholder as provided in Section 16-10-723. (7) "Shareholder" means the record shareholder or the beneficial shareholder. 16-10a-1302 RIGHT TO DISSENT.--(1) A shareholder, whether or not entitled to vote, is entitled to dissent from, and obtain payment of the fair value of shares held by him in the event of, any of the following corporate actions: (a) consummation of a plan of merger to which the corporation is a party if: (i) shareholder approval is required for the merger by Section 16-10a-1103 or the articles of incorporation; or (ii) the corporation is a subsidiary that is merged with its parent under Section 16-10a-1104; (b) consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired; (c) consummation of a sale, lease, exchange, or other disposition of all, or substantially all, of the property of the corporation for which a shareholder vote is required under Subsection 16-10a-1202(1), but not including a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale; and (d) consummation of a sale, lease, exchange, or other disposition of all, or substantially all, of the property of an entity controlled by the corporation if the shareholders of the corporation were entitled to vote upon the consent of the corporation to the disposition pursuant to Subsection 16-10a-1202(2). (2) A shareholder is entitled to dissent and obtain payment of the fair value of his shares in the event of any other corporate action to the extent the articles of incorporation, bylaws, or a resolution of the board of directors so provides. (3) Notwithstanding the other provisions of this part, except to the extent otherwise provided in the articles of incorporation, bylaws, or a resolution of the board of directors, and subject to the limitations set forth in Subsection (4), a shareholder is not entitled to dissent and obtain payment under Subsection (1) of the fair value of the shares of any class or series of shares which either were listed on a national securities exchange registered under the federal Securities Exchange Act of 1934, as amended, or on the National Market System of the National Association of Securities Dealers Automated Quotation System, or were held of record by more than 2,000 shareholders, at the time of: (a) the record date fixed under Section 16-10a-707 to determine the shareholders entitled to receive notice of the shareholders' meeting at which the corporate action is submitted to a vote; (b) the record date fixed under Section 16-10a-704 to determine shareholders entitled to sign writings consenting to the proposed corporate action; or (c) the effective date of the corporate action if the corporate action is authorized other than by a vote of shareholders. (4) The limitation set forth in Subsection (3) does not apply if the shareholder will receive for his shares, pursuant to the corporate action, anything except: (a) shares of the corporation surviving the consummation of the plan of merger or share exchange; (b) shares of a corporation which at the effective date of the plan of merger or share exchange either will be listed on a national securities exchange registered under the federal Securities Exchange Act of 1934, as amended, or on the National Market System of the National Association of Securities Dealers Automated Quotation System, or will be held of record by more than 2,000 shareholders; (c) cash in lieu of fractional shares; or (d) any combination of the shares described in Subsection (4), or cash in lieu of fractional shares. (5) A shareholder entitled to dissent and obtain payment for his shares under this part may not challenge the corporate action creating the entitlement unless the action is unlawful or fraudulent with respect to him or to the corporation. 16-10a-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. --(1) A record shareholder may assert dissenters' rights as to fewer than all the shares registered in his name only if the shareholder dissents with respect to all shares beneficially owned by any one person and causes the corporation to receive written notice which states the dissent and the name and address of each person on whose behalf dissenters' rights are being asserted. The rights of a partial dissenter under this subsection are determined as if the shares as to which the shareholder dissents and the other shares held of record by him were registered in the names of different shareholders. (2) A beneficial shareholder may assert dissenters' rights as to shares held on his behalf only if: (a) the beneficial shareholder causes the corporation to receive the record shareholder's written consent to the dissent not later than the time the beneficial shareholder asserts dissenters' rights; and (b) the beneficial shareholder dissents with respect to all shares of which he is the beneficial shareholder. (3) The corporation may require that, when a record shareholder dissents with respect to the shares held by any one or more beneficial shareholders, each beneficial shareholder must certify to the corporation that both he and the record shareholders of all shares owned beneficially by him have asserted, or will timely assert, dissenters' rights as to all the shares unlimited on the ability to exercise dissenters' rights. The certification requirement must be stated in the dissenters' notice given pursuant to Section 16-10a-1322. 16-10a-1320 NOTICE OF DISSENTERS' RIGHTS. --(1) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, the meeting notice must be sent to all shareholders of the corporation as of the applicable record date, whether or not they are entitled to vote at the meeting. The notice shall state that shareholders are or may be entitled to assert dissenters' rights under this part. The notice must be accompanied by a copy of this part and the materials, if any, that under this chapter are required to be given the shareholders entitled to vote on the proposed action at the meeting. Failure to give notice as required by this subsection does not affect any action taken at the shareholders' meeting for which the notice was to have been given. (2) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to Section 16-10a-704, any written or oral solicitation of a shareholder to execute a written consent to the action contemplated by Section 16-10a-704 must be accompanied or preceded by a written notice stating that shareholders are or may be entitled to assert dissenters' rights under this part, by a copy of this part, and by the materials, if any, that under this chapter would have been required to be given to shareholders entitled to vote on the proposed action if the proposed action were submitted to a vote at a shareholders' meeting. Failure to give written notice as provided by this subsection does not affect any action taken pursuant to Section 16-10a-704 for which the notice was to have been given. 16-10a-1321 DEMAND FOR PAYMENT -- ELIGIBILITY AND NOTICE OF INTENT.--(1) If a proposed corporate action creating dissenters' rights under Section 16-10a- 1302 is submitted to a vote at a shareholders' meeting, a shareholder who wishes to assert dissenters' rights: (a) must cause the corporation to receive, before the vote is taken, written notice of his intent to demand payment for shares if the proposed action is effectuated; and (b) may not vote any of his shares in favor of the proposed action. (2) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to Section 16-10a-704, a shareholder who wishes to assert dissenters' rights may not execute a writing consenting to the proposed corporate action. (3) In order to be entitled to payment for shares under this part, unless otherwise provided in the articles of incorporation, bylaws, or a resolution adopted by the board of directors, a shareholder must have been a shareholder with respect to the shares for which payment is demanded as of the date the proposed corporate action creating dissenters' rights under Section 16-10a-1302 is approved by the shareholders, if shareholder approval is required, or as of the effective date of the corporate action if the corporate action is authorized other than by a vote of shareholders. (4) A shareholder who does not satisfy the requirements of Subsections (1) through (3) is not entitled to payment for shares under this part. 16-10a-1322 DISSENTERS' NOTICE. --(1) If a proposed corporate action creating dissenters' rights under Section 16-10a-1302 is authorized, the corporation shall give a written dissenters' notice to all shareholders who are entitled to demand payment for their shares under this part. (2) The dissenters' notice required by Subsection (1) must be sent no later than ten days after the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302, and shall: (a) state that the corporate action was authorized and the effective date or proposed effective date of the corporate action; (b) state an address at which the corporation will receive payment demands and an address at which certificates for certificated shares must be deposited; (c) inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received; (d) supply a form for demanding payment, which form requests a dissenter to state an address to which payment is to be made; (e) set a date by which the corporation must receive the payment demand and by which certificates for certificated shares must be deposited at the address indicated in the dissenters' notice, which dates may not be fewer than 30 nor more than 70 days after the date the dissenters' notice required by Subsection (1) is given; (f) state the requirement contemplated by Subsection 16-10a-1303(3), if the requirement is imposed; and (g) be accompanied by a copy of this part. 16-10a-1323 PROCEDURE TO DEMAND PAYMENT.--(1) A shareholder who is given a dissenters' notice described in Section 16-10a-1322, who meets the requirements of Section 15-10a-1321, and wishes to assert dissenters' rights must, in accordance with the terms of the dissenters' notice: (a) cause the corporation to receive a payment demand, which may be the payment demand form contemplated in Subsection 16-10a-1322(2)(d), duly completed, or may be stated in another writing; (b) deposit certificates for his certificated shares in accordance with the terms of the dissenters' notice; and (c) if required by the corporation in the dissenters' notice described in Section 16-10a-1322, as contemplated by Section 16-10a-1327, certify in writing, in or with the payment demand, whether or not he or the person on whose behalf he asserts dissenters' rights acquired beneficial ownership of the shares before the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action creating dissenters' rights under Section 16-10a-1302. (2) A shareholder who demands payment in accordance with Subsection (1) retains all rights of a shareholder except the right to transfer the shares until the effective date of proposed corporate action giving rise to the exercise of dissenters' rights and has only the right to receive payment for the shares after the effective date of the corporate action. (3) A shareholder who does not demand payment and deposit share certificates as required, by the date or dates set in the dissenters' notice, is not entitled to payment for shares under this part. 16-10a-1324 UNCERTIFICATED SHARES.--(1) Upon receipt of a demand for payment under Section 16-10a-1326 from a shareholder holding uncertificated shares, and in lieu of the deposit of certificates representing the shares, the corporation may restrict the transfer of the shares until the proposed corporate action is taken or the restrictions are released under Section 16-10a-1326. (2) In all other respects, the provisions of Section 16-10a-1323 apply to shareholders who own uncertificated shares. 16-10a-1325 PAYMENT. --(1) Except as provided in Section 16-10a-1327, upon the later of the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302, and receipt by the corporation of each payment demand pursuant to Section 16-10a-1323, the corporation shall pay the amount the corporation estimates to be the fair value of the dissenters' shares, plus interest to each dissenter who has complied with Section 16-10a-1323, and who meets the requirements of Section 16-10a-1321, and who has not yet received payment. (2) Each payment made pursuant to Subsection (1) must be accompanied by: (a)(i)(A) the corporation's balance sheet as of the end of its most recent fiscal year, of if not available, a fiscal year ending not more than 16 months before the date of payment; (B) an income statement for that year; (C) a statement of changes in shareholders' equity for that year and a statement of cash flow for that year, if the corporation customarily provides such statements to shareholders; and (D) the latest available interim financial statements, if any; (ii) the balance sheet and statements referred to in Subsection (i) must be audited if the corporation customarily provides audited financial statements to shareholders; (b) a statement of the corporation's estimate of the fair value of the shares and the amount of interest payable with respect to the shares; (c) a statement of the dissenters' right to demand payment under Section 16-10a-1328; and (d) a copy of this part. 16-10a-1326 FAILURE TO TAKE ACTION. --(1) If the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302 does not occur within 60 days after the date set by the corporation as the date by which the corporation must receive payment demands as provided in Section 16-10a-1322, the corporation shall return all deposited certificates and release the transfer restrictions imposed on uncertificated shares, and all shareholders who submitted demand for payment pursuant to Section 16-10a-1323 shall thereafter have all rights of a shareholder as if no demand for payment had been made. (2) If the effective date of the corporate action creating dissenters' rights under Section 16-10a-1302 occurs more than 60 days after the date set by the corporation as the date by which the corporation must receive payment demands as provided in Section 16-10a-1322, then the corporation shall send a new dissenters' notice, as provided in Section 16-10a-1322, and the provisions of Sections 16-10a-1323 through 16-10a-1328 shall again be applicable. 16-10a-1327 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.--(1) A corporation may, with the dissenters' notice given pursuant to Section 16-10a-1302, state the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action creating dissenters' rights under Section 16-10a-1302 and state that a shareholder who asserts dissenters' rights must certify in writing, in or with the payment demand, whether or not he or the person on whose behalf he asserts dissenters' rights acquired beneficial ownership of the shares before that date. With respect to any dissenter who does not certify in writing, in or with the payment demand that he or the person on whose behalf the dissenters' rights are being asserted, acquired beneficial ownership of the shares before that date, the corporation may, in lieu of making the payment provided in Section 16-10a-1325, offer to make payment if the dissenter agrees to accept it in full satisfaction of the demand. (2) An offer to make payment under Subsection (1) shall include or be accompanied by the information required by Subsection 16-10a-1325(2). 16-10a-1328 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.--(1) A dissenter who has not accepted an offer made by a corporation under Section 16-10a-1327 may notify the corporation in writing of his own estimate of the fair value of his shares and demand payment of the estimated amount, plus interest, less any payment made under Section 16-10a-1325, if: (a) the dissenter believes that the amount paid under Section 16-10a-1325 or offered under Section 16-10a-1327 is less than the fair value of the shares; (b) the corporation fails to make payment under Section 16- 10a-1325 within 60 days after the date set by the corporation as the date by which it must receive the payment demand; or (c) the corporation, having failed to take the proposed corporate action creating dissenters' rights, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares as required by Section 16-10a-1326. (2) A dissenter waives the right to demand payment under this section unless he causes the corporation to receive the notice required by Subsection (1) within 30 days after the corporation made or offered payment for his shares. 16-10a-1330 JUDICIAL APPRAISAL OF SHARES-COURT ACTION.--(1) If a demand for payment under Section 16-10a-1328 remains unresolved, the corporation shall commence a proceeding within 60 days after receiving the payment demand contemplated by Section 16-10a-1328, and petition the court to determine the fair value of the shares and the amount of interest. If the corporation does not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unresolved the amount demanded. (2) The corporation shall commence the proceeding described in Subsection (1) in the district court of the county in this state where the corporation's principal office, or if it has no principal office in this state, the county where its registered office is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with, or whose shares were acquired by, the foreign corporation was located. (3) The corporation shall make all dissenters who have satisfied the requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether or not they are residents of this state whose demands remain unresolved, parties to the proceeding commenced under Subsection (2) as an action against their shares. All such dissenters who are named as parties must be served with a copy of the petition. Service on each dissenter may be by registered or certified mail to the address stated in his payment demand made pursuant to Section 16-10a-1328. If no address is stated in the payment demand, service may be made at the address stated in the payment demand given pursuant to Section 16-10a-1323. If no address is stated in the payment demand, service may be made at the address shown on the corporation's current record of shareholders for the record shareholder holding the dissenter's shares. Service may also be made otherwise as provided by law. (4) The jurisdiction of the court in which the proceeding is commenced under Subsection (2) is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it. The dissenters are entitled to the same discovery rights as parties in other civil proceedings. (5) Each dissenter made a party to the proceeding commenced under Subsection (2) is entitled to judgment: (a) for the amount, if any, by which the court finds that the fair value of his shares, plus interest, exceeds the amount paid by the corporation pursuant to Section 16-10a-1325; or (b) for the fair value, plus interest, of the dissenter's after-acquired shares for which the corporation elected to withhold payment under Section 16- 10a-1327. 16-10a-1331 COURT COSTS AND COUNSEL FEES.--(1) The court in an appraisal proceeding commenced under Section 16-10a-1330 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the effect the court finds that the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under Section 16-10a-1328. (2) The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable: (a) against the corporation and in favor of any or all dissenters if the court finds the corporation did not substantially comply with the requirements of Sections 16-10a-1320 through 16-10a-1328; or (b) against either the corporation or one or more dissenters, in favor of an other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this part. (3) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to those counsel reasonable fees to be paid out of the amounts awarded the dissenters who were benefited. APPENDIX B The National Bank Act 12 U.S.C. section 215a(b) section 215a. Merger of national banks or State banks into national banks (b) Dissenting shareholders If a merger shall be voted for at the called meetings by the necessary majorities of the shareholders of each association or State bank participating in the plan of merger, and thereafter the merger shall be approved by the Comptroller, any shareholder of any association or State bank to be merged into the receiving association who has voted against such merger at the meeting of the association or bank of which he is a stockholder, or has given notice in writing at or prior to such meeting to the presiding officer that he dissents from the plan of merger, shall be entitled to receive the value of the shares so held by him when such merger shall be approved by the Comptroller upon written request made to the receiving association at any time before thirty days after the date of consummation of the merger, accompanied by the surrender of his stock certificates. APPENDIX C ---------- April 5, 1995 First Western Bancorporation P.O. Box 249 Moab, UT 84532 Zions Bancorporation 1380 Kennecott Building Salt Lake City, UT 84133 Mesdames and Gentlemen: We have acted as tax counsel to First Western Bancorporation, a Utah corporation, and First Western National Bank in connection with an Agreement and Plan of Reorganization dated October 24, 1994 and amended January 4, 1995 ("Agreement"). The Agreement provides for, among other things, the merger (the "Holding Company Merger") of First Western Bancorporation with and into Zions Bancorporation a Utah corporation and the merger ("Bank Merger") of First Western National Bank, a national banking association organized under the laws of the United States, with and into Zions First National Bank ("Zions Bank"), a national banking association. First Western Bank is a majority owned subsidiary of First Western Bancorporation, and Zions Bank is a wholly owned subsidiary of Zions Bancorporation. Unless stated otherwise, all capitalized terms herein shall have the same meaning as specifically defined in the Agreement. First Western Bancorporation is a one bank holding company that has outstanding 40,988 shares of $3 par value common stock owned by approximately nine shareholders. First Western Bancorporation owns 93.49% of the issued and outstanding stock of First Western Bank with approximately 30 shareholders owning the remaining stock. Zions Bancorporation is a Utah corporation registered under the Bank Holding Company Act of 1956 and is engaged primarily in commercial banking business through its banking subsidiaries. Zions Bancorporation owns all of the issued and outstanding stock of Zions Bank which is a full service commercial banking institution having 84 banking offices of which 83 are located in the State of Utah plus one foreign office. For valid business reasons, on the effective date of the Holding Company and Bank Mergers, each shareholder of First Western Bancorporation will receive that number of shares of common stock of Zions Bancorporation calculated by dividing the Company Purchase Price by the average closing price of Zions Bancorporation and by further dividing that number by the number of shares of First Western Bancorporation that are issued and outstanding as the effective date and multiplying it by the number of shares of First Western Bancorporation held by that shareholder. Should the average daily sales price of Zions Bancorporation's common stock preceding the effective date of the Merger establish the average closing price at more than $41 per share, First Western may, upon notice, terminate the Merger pursuant to the Agreement subject to Zions Bancorporation's right to exercise the Fixed Closing Price Election. Further, should the average daily sales price of Zions Bancorporation preceding the effective date of the Merger establish the average closing price at less than $37 per share, Zions Bancorporation may, upon notice, terminate the Merger pursuant to the Agreement subject to First Western Bancorporation's right to exercise the Fixed Closing Price Election. The Company Purchase Price equals the share of the Bank Purchase Price equivalent to the proportionate ownership of First Western Bancorporation in the stock of First Western Bank, as adjusted to account for certain assets and certain liabilities of First Western Bancorporation on the last day of the month preceding the effective date. The Bank Purchase Price is defined in Article 1.2 of the Agreement as $9,300,000.00 plus the net undistributed income of First Western Bank between the opening of business on September 1, 1994 and the close of business on the effective date as well as adjustments for various items set forth in section 1.2 of the Agreement. As a result of the Bank Merger, each shareholder of First Western Bank, except First Western Bancorporation, will receive shares of common stock of Zions Bancorporation based on his or her proportionate share interest in the Bank Purchase Price. In both Reorganizations cash in lieu of fractional shares will be issued. The Agreement is subject to the approval of the shareholders of First Western Bancorporation, First Western Bank and Zions Bank, the Comptroller of the Currency, and the approval by or waiver of jurisdiction of the Board of Governors of the Federal Reserve System. As a result of the Bank Merger, Zions Bancorporation will hold substantially all of its properties and substantially all of the properties of First Western Bancorporation. In addition, Zions Bank will continue the historic business or use significant portions of the historic assets of First Western Bank in its business operations in Moab, Monticello, and Blanding, Utah. The shareholders of First Western Bancorporation who do not vote their shares in favor of the Agreement and Plan of Reorganization and who otherwise perfect applicable dissenters rights will be entitled to receive the value of their shares in accordance with the provisions of applicable state and national laws. Pursuant to letters and certificates dated __________ __, 1995, managements of First Western Bancorporation, First Western Bank, and Zions Bancorporation and Zions Bank have made representations to us regarding the Holding Company and Bank Mergers. In rendering the opinions set forth herein, we have reviewed various documents, corporate minutes, the Agreement and Plan of Reorganization dated October 24, 1994 and amended January 4, 1995 and the attachments thereto, and such other documents and records as we have deemed necessary and appropriate to form a foundation for the opinions set forth herein. In addition, we have investigated such questions of law as we have deemed necessary or appropriate. For the purposes of this opinion, it has been assumed by us that all such agreements and documents are currently valid, binding and represent legal obligations of their respective parties and are consistent with sound banking and business practices and have been maintained in the normal course. It is further assumed that no material event has occurred or will occur which has not been brought to our attention which would impact upon the opinions set forth herein. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as original, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such copies. We also have assumed: (i) the valid authorization, execution, and delivery of the Agreement together with the schedules attached thereto, (ii) that all resolutions adopted by the parties and their Board of Directors are valid and binding resolutions upon the respective corporations, (iii) that each party to the Agreement and Plan of Reorganization, other than individuals, has been duly organized and was on the date of execution, validly existing and in good standing in the jurisdiction of its organization with the requisite corporate or other organization power to perform its obligations thereunder, (iv) that all representations and warranties by all parties as set forth in the Agreement and Plan of Reorganization are true and accurate and Zions Bancorporation and First Western Bancorporation will adhere to each of the covenants set forth therein. Based upon the foregoing and based on the representations submitted to us, we are of the opinion that: 1. The Holding Company Merger as defined and set forth in the Agreement and Plan of Reorganization will, under current law, constitute a tax free reorganization under section 368(a)(1)(A) of the Internal Revenue Code, 1986, as amended. 2. The simultaneous Bank Merger as defined and set forth in the Agreement and Plan of Reorganization will constitute a tax free reorganization within the meaning of section 368(a) of the Internal Revenue Code, 1986, as amended. Zions Bancorporation, Zions Bank, and First Western Bancorporation and First Western Bank will each be "a party to a reorganization" within the meaning and intent of section 368(b) of the Internal Revenue Code of 1986, as amended to date. 3. No gain or loss will be recognized by any of the holders of the common stock of First Western Bancorporation or First Western Bank as a result of the exchange of such shares for shares of the Zions Bancorporation's common stock pursuant to the Holding Company Merger and Bank Merger, except that gain or loss will be recognized on the receipt of cash, if any, received in lieu of fractional shares. Any cash received by a shareholder of First Western Bancorporation or First Western in lieu of a fractional share will be treated as received in exchange for such fractional share and not as a dividend, and any gain or loss recognized as a result of the receipt of such cash will be equal to the difference between the cash received and the portion of the shareholder's basis in First Western Bancorporation's stock or First Western's stock allocable to such fractional share interest. 4. The tax basis of the shares of Zions Bancorporation's common stock received by each shareholder of First Western Bancorporation or First Western Bank will equal the tax basis of such shareholder's shares of First Western Bancorporation's or First Western Bank's common stock (reduced by any amount allocable to a fractional share interest). 5. The holding period for the shares of Zions Bancorporation's common stock received by each shareholder of First Western Bancorporation or First Western Bank will include the holding period for the shares or First Western Bancorporation's or First Western Bank's common stock surrendered in exchange therefor, provided that the shares were held as capital assets on the date of the exchange. 6. The shareholders, if any, who exercise and perfect their dissenters rights will be treated as having received the cash as a distribution in redemption of their First Western Bancorporation or First Western Bank common stock subject to the provisions and limitations of section 302 of the Internal Revenue Code of 1986, as amended. The opinion expressed herein is expressly limited to the laws and regulations of the State of Utah and the applicable federal laws of the United States of America, and we do not express any opinion herein concerning any other laws or regulations. The opinions expressed herein are based upon the laws and regulations in effect on the date hereof, and we assume no obligation to revise or supplement this opinion should any such law or regulation be changed by legislative action, judicial decision or otherwise. No opinion is hereby expressed regarding any other federal, state, local or other tax issues or on any other matter not specifically mentioned herein. If any statement of facts, assumptions or representations contained herein are subsequently determined to be incorrect in whole or in part, such that they would have a material impact or effect upon the tax treatment of the issues addressed herein, then no opinion is expressed as to the tax treatment of the proposed transaction. This opinion is being furnished solely to First Western Bancorporation and First Western Bank, Zions Bancorporation and Zions Bank, their respective shareholders and agents as required under the Agreement and may not be otherwise used, quoted or relied upon by any other person or for any other purpose without, in each instance, our prior written consent. Very truly yours, COHNE, RAPPAPORT & SEGAL P.C. By:_____________________________ (c) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. (2) A director's conduct with respect to any employee benefit plan for a purpose he reasonably believed to be in or not opposed to the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of Subsection (1)(b). (3) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section. (4) A corporation may not indemnify a director under this section: (a) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (b) in connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in his official capacity, in which proceeding he was adjudged liable on the basis that he derived an improper personal benefit. (5) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding. 16-10a-903 MANDATORY INDEMNIFICATION OF DIRECTORS. Unless limited by its articles of incorporation, a corporation shall indemnify a director who was successful, on the merits or otherwise, in the defense of any proceeding, or in the defense of any claim, issue, or matter in the proceeding, to which he was a party because he is or was a director of the corporation, against reasonable expenses incurred by him in connection with the proceeding or claim with respect to which he has been successful. 16-10a-907 INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS. Unless a corporation's articles of incorporation provide otherwise: (1) an officer of the corporation is entitled to mandatory indemnification under Section 16-10a-903, and is entitled to apply for court- ordered indemnification under Section 16-10a-905, in each case to the same extent as a director; (2) the corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the corporation to the same extent as to a director; and (3) a corporation may also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent, if not inconsistent with public policy, and if provided for by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract. 16-10a-908 INSURANCE. A corporation may purchase and maintain liability insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the corporation, or who, while serving as a director, officer, employee, fiduciary, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another foreign or domestic corporation or other person, or of an employee benefit plan, against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have power to indemnify him against the same liability under Sections 16-10a-902, 16-10a-903, or 16-10a-907. Insurance may be procured from any insurance company designated by the board of directors, whether the insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the corporation has an equity or any other interest through stock ownership or otherwise. 16-10a-909 LIMITATIONS OF INDEMNIFICATION OF DIRECTORS. (1) A provision treating a corporation's indemnification of, or advance for expenses to, directors that is contained in its articles of incorporation or bylaws, in a resolution of its shareholders or board of directors, or in a contract (except an insurance policy) or otherwise, is valid only if and to the extent the provision is not inconsistent with this part. If the articles of incorporation limit indemnification or advance of expenses, indemnification and advance of expenses are valid only to the extent not inconsistent with the articles of incorporation. (2) This part does not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with the director's appearance as a witness in a proceeding at a time when the director has not been made a named defendant or respondent to the proceeding. Item 21. Exhibits and Financial Statement Schedules. (a) Exhibits. An Exhibit Index, containing a list of all exhibits filed with this Registration Statement, is included beginning on page II-7. (b) Financial Statement Schedules. Not applicable. (c) Report, Opinion or Appraisal. Not applicable. Item 22. Undertakings. The undersigned registrant hereby undertakes as follows: (1) that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section l5(d) of the Securities Exchange Act of l934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. (3) that prior to any public reoffering of the securities registered hereunder through the use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (4) that every prospectus (i) that is filed pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet the requirements of Section 1O(a)(3) of the Securities Act of 1933, as amended, and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) that insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (6) to respond to requests for information that is incorporated by reference into the Proxy Statement/Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the Effective Date of the registration statement through the date of responding to the request. (7) to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Salt Lake City, Utah, on the 10th day of April, 1995. Zions Bancorporation By: /s/ Harris H. Simmons ---------------------------- Harris H. Simmons, President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Harris H. Simmons, Roy W. Simmons, and Gary L. Anderson, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them, or their or his substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Capacity Date - --------- -------- ---- /s/ Harris H. Simmons President, Chief Executive April 10, 1995 - ------------------------ Harris H. Simmons Officer and Director /s/ Gary L. Anderson Secretary, Senior Vice April 10, 1995 - ------------------------ Gary L. Anderson President and Chief Financial Officer /s/ Walter E. Kelly Controller April 10, 1995 - ------------------------ Walter E. Kelly /s/ Roy W. Simmons Chairman and Director April 10, 1995 - ------------------------ Roy W. Simmons Director __________, 199_ - ------------------------ Jerry C. Atkin /s/ Grant R. Caldwell Director April 10, 1995 - ------------------------ Grant R. Caldwell /s/ R.D. Cash Director April 10, 1995 - ------------------------ R. D. Cash Director __________, 199_ - ------------------------ Richard H. Madsen Director __________, 199_ - ------------------------ Robert B. Porter Director __________, 199_ - ------------------------ Robert G. Sarver Director __________, 199_ - ------------------------ L. E. Simmons /s/ I.J. Wagner Director April 10, 1995 - ------------------------ I. J. Wagner /s/ Dale W. Westergard Director April 10, 1995 - ------------------------ Dale W. Westergard
EXHIBIT INDEX (Pursuant to Item 601 of Regulation S-K)
Page Number in Sequential Exhibit Numbering No. Description and Method of Filing System ------ -------------------------------- 2.1 Agreement and Plan of Reorganization dated as of October 24, 1994 among Zions Bancorporation, Zions First National Bank, First Western Bancorporation and First Western National Bank (filed herewith) 2.2 First Amendment to Agreement and Plan of Reorganization among Zions Bancorporation, Zions First National Bank, First Western Bancorporation, and First Western National Bank dated January 4, 1995 (filed herewith) 3.1 Restated Articles of Incorporation of Zions Bancorporation * dated November 8, 1993, and filed with the Department of Business Regulation, Division of Corporations of the State of Utah on November 9, 1993 (incorporated by reference to Exhibit 3.1 to the Registrant's Form S-4 Registration Statement, File No. 33-51145, filed on November 22, 1993) 3.2 Restated Bylaws of Zions Bancorporation, dated November 8, * 1993 (incorporated by reference to Exhibit 3.2 to the Registrant's Form S-4 Registration Statement, File No. 33-51145, filed November 22, 1993) 5 Opinion of Metzger, Hollis, Gordon & Mortimer regarding the legality of the shares of Common Stock being registered (filed herewith) 8 Opinion of Cohne, Rappaport & Segal, P.C. regarding tax matters (filed herewith as Appendix C to the Proxy Statement/Prospectus) 9 Voting Trust Agreement, dated December 31, 1991 (incorporated * by reference to Exhibit 9 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1991) 10.1 Amended and Restated Zions Bancorporation Pension Plan * (incorporated by reference to Exhibit 10.1 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1994) 10.2 Amendment to Zions Bancorporation Pension Plan effective * December 1, 1994 (incorporated by reference to Exhibit 10.2 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1994) 10.3 Zions Utah Bancorporation Supplemental Retirement Plan Form * (incorporated by reference to Exhibit 19.4 of Zions Utah Bancorporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1985) 10.4 Amendment to Zions Bancorporation (formerly Zions Utah * Bancorporation) Key Employee Incentive Stock Option Plan approved by the shareholders of the Company on April 27, 1990 (incorporated by reference to Exhibit 19 of Zions Bancorporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990) 10.5 Zions Bancorporation Deferred Compensation Plan for * Directors, as amended May 1, 1991 (incorporated by reference to Exhibit 19 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1991) 10.6 Zions Bancorporation Senior Management Value Sharing Plan, * Award Period 1991-1994 (incorporated by reference to Exhibit 19 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1992) 10.7 Zions Bancorporation Senior Management Value Sharing Plan, * Award Period 1992-1995 (incorporated by reference to Exhibit 10.6 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1992) 10.8 Zions Bancorporation Senior Management Value Sharing Plan, * Award Period 1993-1996 (incorporated by reference to Exhibit 10.8 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1993) 10.9 Zions Bancorporation Senior Management Value Sharing Plan, * Award Period 1994-1997 (incorporated by reference to exhibit 10.9 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1994) 10.10 Zions Bancorporation Executive Management Pension Plan * (incorporated by reference to Exhibit 10.10 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1994) 21 List of subsidiaries of Zions Bancorporation (incorporated by * reference to Exhibit 21 of Zions Bancorporation's Annual Report on Form 10-K for the year ended December 31, 1994). 23.1 Consent of KPMG Peat Marwick LLP, independent certified public accountants for Zions Bancorporation (filed herewith) 23.2 Consent of Fortner, Bayens, Levkulich and Co., independent certified public accountants for First Western Bancorporation (filed herewith) 23.3 Consent of Metzger, Hollis, Gordon & Mortimer (contained in their opinion filed as Exhibit 5) 23.4 Consent of Cohne, Rappaport & Segal, P.C. with respect to certain tax matters (filed herewith) 24.1 Power of Attorney (set forth on Page II-5 of the Registration Statement) 99.1 Preliminary copy of letter to shareholders of First Western Bancorporation (filed herewith) 99.2 Preliminary copy of letter to shareholders of First Western National Bank (filed herewith) 99.3 Preliminary copy of Notice of Special Meeting of Shareholders of First Western Bancorporation (filed herewith) 99.4 Preliminary copy of Notice of Special meeting of Shareholders of First Western National Bank (filed herewith) 99.5 Preliminary copy of form of proxy for use by shareholders of First Western Bancorporation (filed herewith) 99.6 Preliminary copy of form of proxy for use by shareholders of First Western National Bank (filed herewith) 99.7 Form of Agreement between Zions Bancorporation and each director of First Western Bancorporation and each director of First Western National Bank (filed herewith as part of Agreement and Plan of Reorganization, filed as Exhibit 2.1) 99.8 Voting Agreement dated October 24, 1994 between I.D. Nightingale and Zions Bancorporation regarding shares of First Western Bancorporation common stock (filed herewith) 99.9 Voting Agreement dated October 24, 1994 between Frankie Nightingale and Zions Bancorporation regarding shares of First Western Bancorporation common stock (filed herewith) 99.10 Voting Agreement dated October 24, 1994 between SN, Ltd. and Zions Bancorporation regarding shares of First Western Bancorporation common stock (filed herewith) 99.11 Voting Agreement dated October 24, 1994 between I.D. Nightingale and Zions Bancorporation regarding shares of First Western National Bank common stock (filed herewith) 99.12 Voting Agreement dated October 24, 1994 between Frankie Nightingale and Zions Bancorporation regarding shares of First Western National Bank common stock (filed herewith) 99.13 Voting Agreement dated October 24, 1994 between SN, Ltd. and Zions Bancorporation regarding shares of First Western National Bank common stock (filed herewith) * incorporated by reference
EX-2.1 2 EXHIBIT 2.1 EXHIBIT 2.1 CONFORMED COPY AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION made as of the twenty-fourth day of October, 1994, between ZIONS BANCORPORATION ("Zions Bancorp"), a Utah corporation having its principal office in Salt Lake City, Utah, ZIONS FIRST NATIONAL BANK ("Zions Bank"), a national banking association having its head office in Salt Lake City, Utah, FIRST WESTERN BANCORPORATION (the "Company"), a Utah corporation having its principal office in Moab, Utah, and FIRST WESTERN NATIONAL BANK, a national banking association having its head office in Moab, Utah (the "Bank") W I T N E S S E T H T H A T : WHEREAS, Zions Bancorp is a bank holding company and Zions Bank is a national banking association and each of them desires to affiliate with the Company and its subsidiary, the Bank; and WHEREAS, the Board of Directors of the Company has determined that it would be in the best interests of the Company, its shareholders, its customers, and the areas served by it to become affiliated with Zions Bancorp and Zions Bank; WHEREAS, the Board of Directors of the Bank has determined that it would be in the best interests of that Bank, its customers, and the areas served by it to become affiliated with Zions Bancorp and Zions Bank; WHEREAS, the respective Boards of Directors of the Company and Zions Bancorp have agreed to the merger (the "Holding Company Merger") of the Company with and into Zions Bancorp pursuant to the provisions of section 16-10a-1101 et seq. of the Utah Business Corporation Act; WHEREAS, the respective Boards of Directors of the Bank and Zions Bank have agreed to the merger (the "Bank Merger") of the Bank with and into Zions Bank pursuant to the provisions of section 215a of the National Bank Act (12 U.S.C. section 215a); and WHEREAS, the parties intend that the transactions contemplated by the Holding Company Merger and the Bank Merger (collectively, the "Mergers") qualify as one or more tax-free reorganizations under section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); NOW, THEREFORE, in consideration of these premises and the mutual agreements hereinafter set forth, the parties agree as follows: 1. Combinations. 1.1. Form of Combinations. (a) Holding Company Combination. Zions Bancorp and the Company will execute a merger agreement (the "Holding Company Merger Agreement") substantially in the form of Exhibit I annexed hereto. Subject to the provisions of the Holding Company Merger Agreement, the Company will be merged with and into Zions Bancorp, and Zions Bancorp shall be the surviving corporation. The shares of common stock of the Company shall be canceled and immediately converted into the right to receive, subject to the terms, conditions, and limitations set forth herein, such consideration as is provided in section 1.2(b)(i) hereof. (b) Bank Combination. Zions Bank and the Bank will execute a merger agreement (the "Bank Merger Agreement") substantially in the form of Exhibit II annexed hereto. Immediately following the effectiveness of the Holding Company Merger, and subject to the provisions of the Bank Merger Agreement, the Bank will be merged with and into Zions Bank, under the charter and title of Zions Bank, and Zions Bank shall be the surviving association. The shares of common stock of the Bank shall be canceled, and those not held by Zions Bancorp shall be immediately converted into the right to receive, subject to the terms, conditions, and limitations set forth herein, such consideration as is provided in section 1.2(b)(ii) hereof. 1.2. Consideration for Mergers. (a) Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth in this Subparagraph (a). Additional terms may be defined elsewhere herein. (i) Average Closing Price. Subject to sections 1.2(a)(iii) and (viii), the average (rounded to the nearest penny) of each Daily Sales Price of Zions Bancorp Stock for the twenty consecutive trading days ending on and including the fifth trading day preceding the effective date of the Holding Company Merger (the "Effective Date"). (ii) Bank Purchase Price. The sum of: (A) Nine Million Three Hundred Thousand Dollars and No Cents ($9,300,000.00); and (B) the net undistributed income of the Bank between the opening of business on September 1, 1994 and the close of business on the Effective Date, less any undistributed income (but not net of any undistributed loss) derived from activities or transactions which are not normal and recurring banking operations (such as, without limitation, the sale of securities or loans, of capital assets, or of lines of business), all of which shall be determined in accordance with generally accepted accounting principles, it being understood that the amount calculated under this section 1.2(a)(ii)(B) may be a negative number and that the effect of summing such a negative number would be a reduction in the Bank Purchase Price. (iii) Company Fixed Closing Price Election. The election of the Company in its sole discretion, made under the circumstances described in section 10.2(e), that, notwithstanding section 1.2(a)(i), the Average Closing Price shall be $37.00. (iv) Company Purchase Price. The sum of: (A) the product of the Bank Purchase Price and a fraction, the numerator of which is the number of shares of Bank Common Stock held of record by the Company on the Effective Date, and the denominator of which is the total number of shares of Bank Common Stock that shall be issued and outstanding on the Effective Date; and (B) the book value of the net assets of the Company, determined in accordance with generally accepted accounting principles as of the close of business on the last day of the calendar month preceding the Effective Date, exclusive of (A) the equity of the Company in the Bank on such date, or (B) goodwill, core intangibles, prepayments, and other similar intangible assets held by the Company, it being understood that the amount calculated under this section 1.2(a)(iv)(B) may be a negative number and that the effect of summing such a negative number would be a reduction in the Company Purchase Price. (v) Daily Sales Price. For any trading day, the last reported sale price or, if no such reported sale takes place, the mean (unrounded) of the closing bid and asked prices of Zions Bancorp Stock in the over-the-counter market as such prices are reported by the automated quotation system of the National Association of Securities Dealers, Inc., or in the absence thereof by such other source upon which Zions Bancorp and the Company shall mutually agree. (vi) Dissenting Shares. The shares of Company Common Stock or Bank Common Stock, as the case may be, held by those shareholders of the Company or the Bank who have timely and properly exercised their dissenters' rights in accordance with all applicable laws (the "Appraisal Laws"). (vii) Zions Bancorp Stock. The common stock of Zions Bancorp, no par value. (viii) Zions Fixed Closing Price Election. The election of Zions Bancorp in its sole discretion, made under the circumstances described in section 10.2(d), that, notwithstanding section 1.2(a)(i), the Average Closing Price shall be $41.00. (b) Form of Consideration. Subject to the terms, conditions and limitations set forth herein, upon surrender of his or her certificate or certificates in accordance with Section 1.1 hereof: (i) Holding Company Merger Consideration. Each holder of shares of Company Common Stock shall be entitled to receive in the Holding Company Merger, in exchange for each share of Company Common Stock held of record by such stockholder as of the Effective Date, that number of shares of Zions Bancorp Stock calculated by dividing the Company Purchase Price by the Average Closing Price, and by further dividing the number so reached by the number of shares of Company Common Stock that shall be issued and outstanding at the Effective Date. (ii) Bank Merger Consideration. Each holder of shares of Bank Common Stock, except Zions Bancorp, shall be entitled to receive in the Bank Merger, in exchange for each share of Bank Common Stock held of record by such stockholder as of the Effective Date, that number of shares of Zions Bancorp Stock calculated by dividing the Bank Purchase Price by the Average Closing Price, and by further dividing the number so reached by the number of shares of Bank Common Stock that shall be issued and outstanding at the Effective Date, including shares held by Zions Bancorp. 1.3. No Fractional Shares. Zions Bancorp will not issue fractional shares of Zions Bancorp Stock. In lieu of fractional shares of Zions Bancorp Stock, if any, each shareholder of the Company who is entitled to a fractional share of Zions Bancorp Stock shall receive an amount of cash equal to the product of such fraction times the Average Closing Price. Such fractional share interest shall not include the right to vote or to receive dividends or any interest thereon. 1.4. Dissenting Shares. Notwithstanding anything to the contrary herein, each Dissenting Share whose holder, as of the Effective Date, has not effectively withdrawn or lost his dissenters' rights under the Appraisal Laws, shall not be converted into or represent a right to receive Zions Bancorp Stock, but the holder thereof shall be entitled only to such rights as are granted by the Appraisal Laws. Each holder of Dissenting Shares who becomes entitled to payment for his or her Company Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment therefor from Zions Bancorp, and each holder of Dissenting Shares who becomes entitled to payment for his or her Bank Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment therefor from Zions Bank (but only after the amount thereof shall have been agreed upon or finally determined pursuant to such provisions). 1.5. Dividends; Interest. No shareholder of the Company or the Bank will be entitled to receive dividends on his or her Zions Bancorp Stock until he or she exchanges his or her certificates representing Company Common Stock or Bank Common Stock, as the case may be, for Zions Bancorp Stock. Any dividends declared on Zions Bancorp Stock (which stock is to be delivered pursuant to this Agreement) to holders of record on or after the Effective Date shall be paid to the Exchange Agent (as designated in Section 1.6 of this Agreement) and, upon receipt of the certificates representing shares of Company Common Stock or Bank Common Stock, as the case may be, the Exchange Agent shall forward to the former shareholders entitled to receive Zions Bancorp Stock (i) certificates representing their shares of Zions Bancorp Stock, (ii) dividends declared thereon subsequent to the Effective Date (without interest) and (iii) the cash value of any fractional shares determined in accordance with Section 1.3 hereof. 1.6. Designation of Exchange Agent. The parties to this Agreement hereby designate Zions Bank as Exchange Agent to effect the exchange contemplated hereby. Zions Bancorp will, promptly after the Effective Date, issue and deliver to Zions Bank the share certificates representing shares of Zions Bancorp Stock and the cash in lieu of fractional shares to be paid to holders of Company Common Stock and Bank Common Stock in accordance with this Agreement. 1.7. Notice of Exchange. Promptly after the Effective Date, Zions Bank shall mail to each holder of one or more certificates formerly representing Company Common Stock or Bank Common Stock, except to Zions Bancorp and except to such holders as shall have waived the notice required by this Section 1.7, a notice specifying the Effective Date and notifying such holder to surrender his or her certificate or certificates to Zions Bank for exchange. Such notice shall be mailed to holders by regular mail at their addresses on the records of the Company or the Bank, as the case may be. 1.8. Treatment of Stock Options. Each stock option to purchase Company Common Stock or Bank Common Stock not exercised prior to the Effective Date shall be canceled. 1.9. Voting Agreements. (a) Simultaneously herewith, each person listed on Schedule 1.9 hereof shall enter into an agreement with Zions Bancorp, substantially in form and substance as that set forth as Exhibit III attached hereto, in which he, she, or it agrees to vote all shares of the Company and the Bank which may be voted, or whose vote may be directed, by him, her, or it in favor of the transactions contemplated by this Agreement at the meeting of shareholders at which such transaction shall be considered. (b) The Company agrees to vote all shares of the Bank which may be voted, or whose vote may be directed, by the Company, in favor of the transactions contemplated by this Agreement at the meeting of shareholders at which such transaction shall be considered. 2. Effective Date. The Effective Date shall be the date which is the latest of: 2.1. Company Shareholder Approval. The date following the day upon which the shareholders of the Company approve, ratify, and confirm the transactions contemplated by this Agreement; or 2.2. Bank Shareholder Approval. The date following the day upon which the shareholders of the Bank approve, ratify, and confirm the transactions contemplated by this Agreement; or 2.3. Federal Reserve Approval. The first to occur of (a) the date thirty days following the date of the order of the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of San Francisco acting pursuant to authority delegated to it by the Board of Governors of the Federal Reserve System (collectively, the "Board of Governors") approving the Holding Company Merger, or (b) if, pursuant to section 321(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (the "Riegle Act"), the Board of Governors shall have prescribed a shorter period of time with the concurrence of the Attorney General of the United States, the date on which such shorter period of time shall elapse, or (c) the date ten days following the date on which the Board of Governors indicates its waiver of jurisdiction over the Holding Company Merger; or 2.4. Comptroller Approval. The first to occur of (a) the date thirty days following the date of the order of the Comptroller of the Currency (the "Comptroller") approving the Bank Merger, or (b) if, pursuant to section 321(b) of the Riegle Act, the Comptroller shall have prescribed a shorter period of time with the concurrence of the Attorney General of the United States, the date on which such shorter period of time shall elapse; or 2.5. Commissioner Approval. If such an order shall be required by law, the date ten days following the date of the order of the Commissioner of Financial Institutions of the State of Utah (the "Commissioner") approving the transactions contemplated by this Agreement; or 2.6. Other Regulatory Approvals. The date upon which any other material order, approval, or consent of a federal or state regulator of financial institutions or financial institution holding companies authorizing consummation of the transactions contemplated by this Agreement is obtained or any waiting period mandated by such order, approval or consent has run; or 2.7. Expiration of Stays. Ten days after any stay of the approvals of any of the Comptroller, the Board of Governors, or the Commissioner of the transactions contemplated by this Agreement or any injunction against closing of said transactions is lifted, discharged, or dismissed; or 2.8. Mutual Agreement. Such other date as shall be mutually agreed to by Zions Bancorp and the Company. 3. Conditions Precedent to Performance of Obligations of the Parties. The obligations of Zions Bancorp and the Company to consummate the Holding Company Merger and the obligations of Zions Bank and the Bank to consummate the Bank Merger shall be subject to the conditions that on or before the Effective Date: 3.1. Regulatory Approvals. Orders, consents, and approvals, in form and substance reasonably satisfactory to Zions Bancorp and the Company, shall have been entered by the requisite governmental authorities, granting the authority necessary for consummation of the transactions contemplated by this Agreement and the operation by Zions Bancorp of the business of the Company and by Zions Bank of the business of the Bank and each of the branches of the Bank as branches of Zions Bank, pursuant to the provisions of applicable law; and all other requirements prescribed by law or by the rules and regulations of any other regulatory authority having jurisdiction over such transactions shall have been satisfied. 3.2. Accounting Treatment. It shall have been determined to the satisfaction of Zions Bancorp that the reorganization contemplated by this Agreement will be treated for accounting purposes as a "pooling of interests" in accordance with APB Opinion No. 16, and Zions Bancorp shall have received a letter to the above effect from KPMG Peat Marwick, certified public accountants. 3.3. Registration Statement. (a) Effectiveness. The registration statement to be filed by Zions Bancorp with the Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933 (the "Securities Act") in connection with the registration of the shares of Zions Bancorp Stock to be used as consideration in connection with the Holding Company Merger and the Bank Merger (the "Registration Statement") shall have become effective under that Act, and Zions Bancorp shall have received all required state securities laws or "blue sky" permits and other required authorizations or confirmations of the availability of exemptions from registration requirements necessary to issue Zions Bancorp Stock in the Holding Company Merger and the Bank Merger. (b) Absence of Stop-Order. Neither the Registration Statement nor any such required permit, authorization or confirmation shall be subject to a stop-order or threatened stop-order by the SEC or any state securities authority. 3.4. Federal Income Taxation. The parties to this Agreement shall have received a written opinion of Cohne, Rappaport & Segal, P.C. or of another firm mutually agreeable to Zions Bancorp and the Company, applying existing law, that the reorganization contemplated by this Agreement shall qualify as one or more tax-free reorganizations under the Code and the regulations and rulings promulgated thereunder. Each of the Company and the Bank agrees to use its best efforts to solicit such opinion in good faith and in a timely manner. 3.5. Absence of Litigation. No action, suit, or proceeding shall have been instituted or shall have been threatened before any court or other governmental body or by any public authority to restrain, enjoin, or prohibit the Mergers, or which might restrict the operation of the business of the Company or that of the Bank or the exercise of any rights with respect thereto or to subject any of the parties hereto or any of their directors or officers to any liability, fine, forfeiture, divestiture, or penalty on the ground that the transactions contemplated hereby, the parties hereto, or their directors or officers have breached or will breach any applicable law or regulation or have otherwise acted improperly in connection with the transactions contemplated hereby and with respect to which the parties hereto have been advised by counsel that, in the opinion of such counsel, such action, suit, or proceeding raises substantial questions of law or fact which could reasonably be decided adversely to any party hereto or its directors or officers. 4. Conditions Precedent to Performance of the Obligations of Zions Bancorp and Zions Bank. The obligations of Zions Bancorp and Zions Bank hereunder are subject to the satisfaction, on or prior to the Effective Date, of all the following conditions, compliance with which or the occurrence of which may be waived in whole or in part by Zions Bancorp in writing: 4.1. Approval by Shareholders of the Company and the Bank. (a) The shareholders of the Company, acting at a meeting duly and properly called for such purpose pursuant to a proxy statement in form and substance satisfactory to Zions Bancorp and its counsel, shall have approved, ratified, and confirmed the Holding Company Merger by not less than the requisite percentage of the outstanding voting stock of each class of the Company, in accordance with the applicable laws of the State of Utah, and dissenters' rights of appraisal under the Appraisal Laws shall have been effectively preserved as of the Effective Date by owners of not more than 3 percent of the outstanding shares of Company Common Stock. (b) The shareholders of the Bank, acting at a meeting duly and properly called for such purpose pursuant to a proxy statement in form and substance satisfactory to Zions Bancorp and its counsel, shall have approved, ratified, and confirmed the Bank Merger by not less than the requisite percentage of the outstanding voting stock of each class of the Bank, in accordance with the applicable laws of the United States, and dissenters' rights of appraisal under the Appraisal Laws shall have been effectively preserved as of the Effective Date by owners of not more than 3 percent of the outstanding shares of Bank Common Stock. 4.2. Representations and Warranties; Performance of Obligations. All representations and warranties of the Company and the Bank contained in this Agreement shall be true and correct in all material respects as of the Effective Date with the same effect as if such representations and warranties had been made or given at and as of such date, except that representatives and warranties of the Company and the Bank contained in this Agreement which specifically relate to an earlier date shall be true and correct in all material respects as of such earlier date. All covenants and obligations to be performed or met by the Company or the Bank on or prior to the Effective Date shall have been so performed or met. On the Effective Date, the chairman and president and the chief financial officer of each of the Company and the Bank shall deliver to Zions Bancorp a certificate to that effect. The delivery of such officers' certificate shall in no way diminish the warranties, representations, covenants, and obligations of the Company or the Bank made in this Agreement. 4.3. Opinion of Company Counsel. Zions Bancorp and Zions Bank shall have received a favorable opinion from Cohne, Rappaport & Segal, P.C., dated the Effective Date, substantially in form and substance as that set forth as Exhibit IV attached hereto. 4.4. Opinion of Company Litigation Counsel. Zions Bancorp and Zions Bank shall have received a favorable opinion dated the Effective Date, in form and substance satisfactory to its counsel, from litigation counsel to the Company and the Bank, whose identity shall be acceptable to Zions Bancorp. Such opinion shall state that the litigation to which the Company shall be or shall have become party at the Effective Date, would not have, in the aggregate, a material adverse effect on the financial condition or results of operations of the Company or the Bank. 4.5. Delivery of Branch Authorizations. The Bank shall have delivered to Zions Bank originals or certified copies of all of its regulatory authorizations entitling the Bank to operate each of its branch offices, together with a certification by the chairman and president and the chief financial officer of the Bank dated the Effective Date, certifying that such branch certificates have not been revoked or threatened to be revoked and that such certificates are in full force and effect. 4.6. No Adverse Developments. (a) During the period from June 30, 1994 to the Effective Date, (i) there shall not have been any material adverse change in the financial position or results of operations of the Company or the Bank taken as a whole, nor in the financial position or results of operations of the Bank, nor shall the Company or the Bank have sustained any material loss or damage to its properties, whether or not insured, which materially affects its ability to conduct its business; (ii) neither the Company nor the Bank shall have become a party to any litigation or been threatened to be made a party to any litigation which, in the judgment of Zions Bancorp, makes or would make either of the Mergers inadvisable or impracticable to Zions Bancorp or Zions Bank; and (iii) none of the events described in clauses (a) through (f) of Section 6.16 of this Agreement shall have occurred, and each of the practices and conditions described in clauses (x) through (z) of that section shall have been maintained. (b) As of the Effective Date, the capital structure of the Company and the capital structure of the Bank shall be as stated in section 6.9. (c) As of the Effective Date, other than liabilities incurred in the ordinary course of business subsequent to June 30, 1994, there shall be no liabilities of the Company or the Bank which were not reflected on the June 30, 1994 statement of condition of the Company. (d) Zions Bancorp shall have received a certificate dated the Effective Date, signed by the chairman and president and the chief financial officer of each of the Company and the Bank, certifying to the matters set forth in paragraphs (a), (b), and (c) of this section 4.6. The delivery of such officers' certificate shall in no way diminish the warranties and representations of the Company or the Bank made in this Agreement. 4.7. Consolidated Net Worth. On and as of the Effective Date, the net worth of the Bank as determined (subject to the next sentence) in accordance with generally accepted accounting principles shall not be less than $4.5 million, excluding all sums payable as required under Article 7.9 hereof. For purposes of determining compliance with this section 4.7, (a) any unrealized gains and losses in investment securities of the Bank incurred subsequent to August 31, 1994 which, under Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115") are or should be recorded as an unrealized valuation adjustment, net of taxes, in the net worth of the Bank shall not be taken into account, and (b) investment securities held by the Bank as available for sale under the provisions of SFAS No. 115 shall be treated as investment securities held to maturity under the provisions of SFAS No. 115. 4.8. Loan Loss Reserve Method. Prior to the Effective Date, to the reasonable satisfaction of Zions Bancorp, (a) the Bank will have conformed its loan loss reserve methodology to the methodology employed by Zions Bank, provided that the latter methodology not be inconsistent with BC-201 (Rev) dated Feb. 20, 1992 issued by the Comptroller of the Currency; (b) the Bank will have implemented such methodology by making appropriate provisions to its reserve for loan losses; and (c) the reserve for loan losses of the Bank as determined in accordance with the foregoing shall not be less than $433,000. 4.9. Adverse Legislation. No legislation shall have been enacted and no regulation or other governmental requirement shall have been adopted or imposed that has rendered or will render consummation of any of the material transactions contemplated by this Agreement impossible, or that would materially and adversely affect the economic assumptions of the material transactions contemplated hereby or the business, operations, financial condition, properties or assets of the combined enterprise of Zions Bancorp and the Company or otherwise materially impair the value of the Company to Zions Bancorp. 4.10. [reserved.] 4.11. Transactions with Related Parties. (a) The Company shall have disposed of all assets owned by it at any time between the date of this Agreement and the Closing Date which represent amounts due from any Related Party. (b) For purposes of this section 4.11: (i) "Related Party" shall include any officer or director of the Company; any officer or director of the Bank; any owner of more than 5 percent of the voting stock of the Company; any Affiliate or Associate of any such person; or any Affiliate or Associate of the Company, except that for purposes of this section 4.11 the Bank shall not be deemed a Related Person with respect to the Company; and (ii) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, and for this purpose the Company shall be deemed to be the "registrant"; except that the limiting phrase "who has the same home as such person" shall be disregarded. 5. Conditions Precedent to Performance of Obligations of the Company and the Bank. The obligations of the Company and the Bank hereunder are subject to the satisfaction, on or prior to the Effective Date, of all the following conditions, compliance with which or the occurrence of which may be waived in whole or in part by the Company in writing: 5.1. Representations and Warranties; Performance of Obligations. All representations and warranties of Zions Bancorp and Zions Bank contained in this Agreement shall be true and correct in all material respects as of the Effective Date with the same effect as if such representations and warranties had been made or given at and as of such date, except that representations and warranties of Zions Bancorp and Zions Bank contained in this Agreement which specifically relate to an earlier date shall be true and correct in all material respects as of such earlier date. All covenants and obligations to be performed or met by Zions Bancorp and Zions Bank on or prior to the Effective Date shall have been so performed or met. On the Effective Date, either the Chairman of the Board or the President of each of Zions Bancorp and Zions Bank shall deliver to the Company a certificate to that effect. The delivery of such officer's certificate shall in no way diminish the warranties, representations, covenants, and obligations of Zions Bancorp or Zions Bank made in this Agreement. 5.2. Opinion of Zions Bancorp Counsel. The Company and the Bank shall have received a favorable opinion of Metzger, Hollis, Gordon & Mortimer, dated the Effective Date, substantially in form and substance as that set forth as Exhibit V attached hereto. 5.3. No Adverse Developments. During the period from June 30, 1994 to the Effective Date, there shall not have been any material adverse change in the financial position or results of operations of Zions Bancorp nor shall Zions Bancorp have sustained any material loss or damage to its properties, whether or not insured, which materially affects its ability to conduct its business; and the Company shall have received a certificate dated the Effective Date signed by either the Chairman of the Board or the President of Zions Bancorp to the foregoing effect. The delivery of such officer's certificate shall in no way diminish the warranties and representations of Zions Bancorp or those of Zions Bank made in this Agreement. 5.4. Status of Zions Bancorp Stock. Zions Bancorp stock shall be quoted on the National Association of Securities Dealers' Automated Quotation System (or else shall become listed on a national securities exchange). 6. Representations and Warranties of the Company and the Bank. The Company and the Bank (collectively the "Warrantors" and each individually a "Warrantor") jointly and severally represent and warrant to Zions Bancorp and Zions Bank as follows: 6.1. Organization, Powers, and Qualification. The Warrantor is a corporation which is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own and operate its properties and assets, to lease properties used in its business, and to carry on its business as now conducted. The Warrantor owns or possesses in the operation of its business all franchises, licenses, permits, branch certificates, consents, approvals, waivers, and other authorizations, governmental or otherwise, which are necessary for it to conduct its business as now conducted, except for those where the failure of such ownership or possession would not adversely affect the operation and properties of the Warrantor in any material respect. The Warrantor is duly qualified and licensed to do business and is in good standing in every jurisdiction in which such qualification or license is required or with respect to which the failure to be so qualified or licensed could result in material liability or adversely affect the operation and properties of the Warrantor in any material respect. 6.2. Execution and Performance of Agreement. The Warrantor has all requisite corporate power and authority to execute and deliver this Agreement and to perform its respective terms. 6.3. Absence of Violations. (a) The Warrantor is not in violation of its respective charter documents or bylaws, or of any applicable federal, state, or local law or ordinance or any order, rule, or regulation of any federal, state, local, or other governmental agency or body, in any material respect, or in default with respect to any order, writ, injunction, or decree of any court, or in default under any order, license, regulation, or demand of any governmental agency, any of which violations or defaults might have a materially adverse effect on the business, properties, liabilities, financial position, results of operations, or prospects of the Warrantor; and the Warrantor has not received any claim or notice of violation with respect thereto. (b) Neither the Warrantor nor any member of its management is a party to any assistance agreement, supervisory agreement, memorandum of understanding, consent order, cease and desist order or condition of any regulatory order or decree with or by the Board of Governors, the Comptroller, the Federal Deposit Insurance Corporation (the "FDIC"), any other banking or securities authority of the United States or the State of Utah, or any other regulatory agency that relates to the conduct of the business of the Warrantor or its assets. Except as previously disclosed to Zions Bancorp in writing, no such agreement, memorandum, order, condition, or decree is pending or threatened. (c) The Warrantor has established policies and procedures to provide reasonable assurance of compliance in a safe and sound manner with the federal banking, credit, housing, consumer protection, and civil rights laws and with all other laws applicable to the operations of the Warrantor and the regulations adopted under each of those laws, so that transactions are executed and assets are maintained in accordance with such laws and regulations. The policies and practices of the Warrantor with respect to all such laws and regulations reasonably limit noncompliance and detect and report noncompliance to management of the Warrantor. 6.4. Compliance with Agreements. The Warrantor is not in violation of any material term of any material security agreement, mortgage, indenture, or any other contract, agreement, instrument, lease, or certificate. The capital ratios of the Warrantor comply fully with all terms of all currently outstanding supervisory and regulatory requirements and with the conditions of all regulatory orders and decrees. 6.5. Binding Obligations; Due Authorization. Subject to the approval of its shareholders, this Agreement constitutes valid, legal, and binding obligations of the Warrantor, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, moratorium or similar law, or by general principles of equity. The execution, delivery, and performance of this Agreement and the transactions contemplated thereby have been duly and validly authorized by the board of directors of the Warrantor. Subject to approval by the shareholders of the Warrantor of this Agreement, no other corporate proceedings on the part of the Warrantor are necessary to authorize this Agreement or the carrying out of the transactions contemplated hereby. 6.6. Absence of Default. None of the execution or the delivery of this Agreement, the consummation of the transactions contemplated thereby, or the compliance with or fulfillment of the terms thereof will conflict with, or result in a breach of any of the terms, conditions, or provisions of, or constitute a default under the organizational documents or bylaws of the Warrantor. None of such execution, consummation, or fulfillment will (a) conflict with, or result in a material breach of the terms, conditions, or provisions of, or constitute a material violation, conflict, or default under, or give rise to any right of termination, cancellation, or acceleration with respect to, or result in the creation of any lien, charge, or encumbrance upon, any property or assets of the Warrantor pursuant to any material agreement or instrument under which the Warrantor is obligated or by which any of its properties or assets may be bound, including without limitation any material lease, contract, mortgage, promissory note, deed of trust, loan, credit arrangement or other commitment or arrangement of the Warrantor in respect of which it is an obligor; (b) if the Holding Company Merger is approved by the Board of Governors under the Bank Holding Company Act of 1956, as amended (the "BHC Act") or if the Board of Governors waives jurisdiction under that act, and if the Bank Merger is approved by the Comptroller, and if the transactions contemplated by this Agreement are approved by the Commissioner, violate any law, statute, rule, or regulation of any government or agency to which the Warrantor is subject and which is material to its operations; or (c) violate any judgment, order, writ, injunction, decree, or ruling to which the Warrantor or any of its properties or assets is subject or bound. None of the execution or delivery of this Agreement, the consummation of the transactions contemplated thereby, or the compliance with or fulfillment of the terms thereof will require any authorization, consent, approval, or exemption by any person which has not been obtained, or any notice or filing which has not been given or done, other than approval of or waiver of jurisdiction over the transactions contemplated by this Agreement by the Board of Governors, the Comptroller, and the Commissioner. 6.7. Compliance with BHC Act. (a) The Company is registered as a bank holding company under the BHC Act. All of the activities and investments of the Company conform to the requirements applicable generally to bank holding companies under the BHC Act and the regulations of the Board of Governors adopted thereunder. (b) No corporation or other entity, other than the Company, is registered or is required to be registered as a bank holding company under the BHC Act by virtue of its control over the Bank or over any company that directly or indirectly has control over the Bank. 6.8. Subsidiaries. (a) Other than (with respect to the Company) the Bank, which is a direct subsidiary of the Company, neither of the Warrantors has any subsidiaries, since its incorporation has had any subsidiaries, directly or indirectly owns, controls, or holds with the power to vote, and since its incorporation has directly or indirectly owned, controlled, or held with the power to vote, any shares of the capital stock of any company (except shares held by the Bank for the account of others in a fiduciary or custodial capacity in the ordinary course of its business). There are no outstanding subscriptions, options, warrants, convertible securities, calls, commitments, or agreements calling for or requiring the issuance, transfer, sale, or other disposition of any shares of the capital stock of the Bank, or calling for or requiring the issuance of any securities or rights convertible into or exchangeable for shares of capital stock of the Bank. There are no other direct or indirect subsidiaries of the Company or the Bank which are required to be consolidated or accounted for on the equity method in the consolidated financial statements of the Company or the financial statements of the Bank prepared in accordance with generally accepted accounting principles. (b) Neither the Bank nor the Company has a direct or indirect equity or ownership interest which represents 5 percent or more of the aggregate equity or ownership interest of any entity (including, without limitation, corporations, partnerships, and joint ventures). 6.9. Capital Structure. (a) The authorized capital stock of the Company consists of 150,000 shares of Company Common Stock, $10.00 par value, of which, as of the date of this Agreement, 36,988 shares have been duly issued and are validly outstanding, fully paid, and held by approximately seven shareholders of record and 19,048 shares of Company Common Stock have been duly issued and are held by the Company as treasury shares; and 50,000 shares of preferred stock, $10.00 par value, of which, as of the date of this Agreement, no shares have been issued. The aforementioned shares of Company Common Stock are the only voting securities of the Company authorized, issued, or outstanding as of such date; and except as set forth as Schedule 6.9 hereof, no subscriptions, warrants, options, rights, convertible securities, or similar arrangements or commitments in respect of securities of the Company are authorized, issued, or outstanding which would enable the holder thereof to purchase or otherwise acquire shares of any class of capital stock of the Company. None of the Company Common Stock is subject to any restrictions upon the transfer thereof under the terms of the corporate charter or bylaws of the Company. (b) Schedule 6.9 hereof lists all options to purchase Company securities currently outstanding and, for each such option, the date of issuance, date of exercisability, exercise price, type of security for which exercisable, and date of expiration. (c) The authorized capital stock of the Bank consists of 60,000 shares of Bank Common Stock, $10.00 par value, of which, as of the date of this Agreement, 60,000 shares have been duly issued and are validly outstanding, fully paid, and held by approximately thirty-one shareholders of record. The aforementioned shares of Bank Common Stock are the only voting securities of the Bank authorized, issued, or outstanding as of such date; and no subscriptions, warrants, options, rights, convertible securities, or similar arrangements or commitments in respect of securities of the Bank are authorized, issued, or outstanding which would enable the holder thereof to purchase or otherwise acquire shares of any class of capital stock of the Bank. None of the Bank Common Stock is subject to any restrictions upon the transfer thereof under the terms of the corporate charter or bylaws of the Bank. (d) None of the shares of Company Common Stock or Bank Common Stock has been issued in violation of the preemptive rights of any shareholder. (e) As of the date hereof, to the best of the knowledge of the Warrantor, and except for this Agreement and Plan of Reorganization, there are no shareholder agreements, or other agreements, understandings, or commitments relating to the right of any holder or beneficial owner of more than 1 percent of the issued and outstanding shares of any class of the capital stock of either Warrantor to vote or to dispose of his or its shares of capital stock of that Warrantor. 6.10. Articles of Incorporation, Bylaws, and Minute Books. The copies of the articles of incorporation and all amendments thereto and of the bylaws, as amended, of the Warrantor that have been made available to Zions Bancorp are true, correct, and complete copies thereof. The minute books of the Warrantor which have been made or will, no later than ten business days after the date hereof, be made available to Zions Bancorp for its continuing inspection until the Effective Date contain accurate minutes of all meetings and accurate consents in lieu of meetings of the board of directors (and any committee thereof) and of the shareholders of the Warrantor since its inception. These minute books accurately reflect all transactions referred to in such minutes and consents in lieu of meetings and disclose all material corporate actions of the shareholders and boards of directors of the Warrantor and all committees thereof. Except as reflected in such minute books, there are no minutes of meetings or consents in lieu of meetings of the board of directors (or any committee thereof) or of shareholders of the Warrantor. 6.11. Books and Records. The books and records of the Warrantor fairly reflect the transactions to which it is a party or by which its properties are subject or bound. Such books and records have been properly kept and maintained and are in compliance in all material respects with all applicable legal and accounting requirements. The Warrantor follows generally accepted accounting principles applied on a consistent basis in the preparation and maintenance of its books of account and financial statements, including but not limited to the application of the accrual method of accounting for interest income on loans, leases, discounts, and investments, interest expense on deposits and all other liabilities, and all other items of income and expense. The Warrantor has made all accruals in amounts which accurately report income and expense in the proper periods in accordance with generally accepted accounting principles. The Warrantor has filed all material reports and returns required by any law or regulation to be filed by it. 6.12. Regulatory Approvals and Filings, Contracts, Commitments, etc. The Company has made or will, no later than ten business days after the date hereof, make available to Zions Bancorp or grant to Zions Bancorp continuing access until the Effective Date to originals or copies of the following documents relating to the Company and the Bank: (a) All regulatory approvals received since January 1, 1989, of the Company and the Bank relating to all bank and nonbank acquisitions or the establishment of de novo operations; (b) All employment contracts, election contracts, retention contracts, deferred compensation, non-competition, bonus, stock option, profit-sharing, pension, retirement, consultation after retirement, incentive, insurance arrangements or plans (including medical, disability, group life or other insurance plans), and any other remuneration or fringe benefit arrangements applicable to employees, officers, or directors of the Company or the Bank, accompanied by any agreements, including trust agreements, embodying such contracts, plans, or arrangements, and all employee manuals and memoranda relating to employment and benefit policies and practices of any nature whatsoever (whether or not distributed to employees or any of them), and any actuarial reports and audits relating to such plans; (c) All material contracts, agreements, leases, mortgages, and commitments, except those entered into in the ordinary course of business, to which the Company or the Bank is a party or may be bound; or, if any of the same be oral, true, accurate, and complete written summaries of all such oral contracts, agreements, leases, mortgages, and commitments; (d) All material contracts, agreements, leases, mortgages, and commitments, whether or not entered into in the ordinary course of business, to which the Company or the Bank is a party or may be bound and which require the consent or approval of third parties to the execution and delivery of this Agreement or to the consummation or performance of any of the transactions contemplated thereby, or, if any of the same be oral, true, accurate, and complete written summaries of all such oral contracts, agreements, leases, mortgages, and commitments; (e) All deeds, leases, contracts, agreements, mortgages, and commitments, whether or not entered into in the ordinary course of business, to which the Company or the Bank is a party or may be bound and which relate to land, buildings, fixtures, or other real property upon or within which the Company or the Bank operates its businesses or is authorized to operate its businesses, or with respect to which the Company or the Bank has any application pending for authorization to operate its businesses; (f) Any pending application, including any documents or materials related thereto, which has been filed by the Company or the Bank with any federal or state regulatory agency with respect to the establishment of a new office or the acquisition or establishment of any additional banking or nonbanking subsidiary; and (g) All federal and state tax returns filed by the Company or the Bank for the years 1987 through 1993, a copy of the most recent audit examination of each of the Company and the Bank by the Internal Revenue Service ("IRS"), if any, a copy of the most recent state revenue agency examination, if any, of each of the Company and the Bank, and all tax rulings with respect to the Company or the Bank received from the IRS since January 1, 1987. 6.13. Financial Statements. The Company has furnished to Zions Bancorp its consolidated statement of condition as of each of December 31, 1991, December 31, 1992, December 31, 1993, and June 30, 1994, and its related consolidated statement of income, consolidated statement of changes in financial position, and consolidated statement of changes in stockholders' equity for each of the periods then ended, and the notes thereto (collectively, the "Company Financial Statements"). All of the Company Financial Statements, including the related notes, (a) were prepared in accordance with generally accepted accounting principles applied in all material respects and as to each category of assets and liabilities and each category of income and expense on a consistent basis throughout the periods involved, and (b) are in accordance with the books and records of the Company which have been maintained in accordance with generally accepted accounting principles or the requirements of financial institution regulatory authorities, as the case may be, and (c) fairly reflect the consolidated financial position of the Company as of such dates, and the consolidated results of operations of the Company for the periods ended on such dates, and do not fail to disclose any material extraordinary or out-of-period items, and (d) reflect, in accordance with generally accepted accounting principles applied in all material respects and as to each category of assets and liabilities and each category of income and expense on a consistent basis throughout the periods involved, adequate provision for, or reserves against, the possible loan losses of the Company as of such dates. 6.14. Call Reports; Bank Holding Company Reports. (a) The Bank has furnished to Zions Bancorp its Consolidated Reports of Condition and Consolidated Reports of Income for the calendar quarters dated March 31, 1993 and thereafter. All of such Consolidated Reports of Condition and Consolidated Reports of Income, including the related schedules and memorandum items, were prepared in accordance with generally accepted accounting principles applied in all material respects and as to each category of assets and liabilities and each category of income and expense on a consistent basis throughout the periods involved. (b) No adjustments are required to be made to the equity capital account of the Bank as reported on any of the Consolidated Reports of Condition referred to in Subsection 6.14(a) hereof, in any material amount, in order to conform such equity capital account to equity capital as would be determined in accordance with generally accepted accounting principles. (c) The Company has furnished to Zions Bancorp the annual report on Form FR Y-6 as filed with the Board of Governors as of December 31, 1993 on behalf of the Company. 6.15. Absence of Undisclosed Liabilities. At June 30, 1994, the Company had no obligation or liability of any nature (whether absolute, accrued, contingent, or otherwise, and whether due or to become due) which was material, or that when combined with all similar obligations or liabilities would have been material, to the Company, except (a) as disclosed in the Company Financial Statements, or (b) as set forth on Schedule 6.15 hereof, or (c) for unfunded loan commitments made by the Company or the Bank in the ordinary course of its business consistent with past practice; nor does there exist a set of circumstances resulting from transactions effected or events occurring on or prior to June 30, 1994 or from any action omitted to be taken during such period that could reasonably be expected to result in any such material obligation or liability, except as disclosed or provided for in the Company Financial Statements. The amounts set up as current liabilities for taxes in the Company Financial Statements are sufficient for the payment of all taxes (including, without limitation, federal, state, local, and foreign excise, franchise, property, payroll, income, capital stock, and sales and use taxes) accrued in accordance with generally accepted accounting principles and unpaid at June 30, 1994. Since June 30, 1994, neither the Company nor the Bank has incurred or paid any obligation or liability that would be material (on a consolidated basis) to the Company, except (x) for obligations incurred or paid in connection with transactions by it in the ordinary course of its business consistent with past practices, or (y) as set forth on Schedule 6.15 hereof, or (z) as expressly contemplated herein. 6.16. Absence of Certain Developments. Since June 30, 1994, there has been (a) no material adverse change in the condition, financial or otherwise, or, taken as a whole, to the assets, properties, liabilities, or businesses of the Company or the Bank; (b) no material deterioration in the quality of the loan portfolio of the Bank or of any major component thereof, and no material increase in the level of nonperforming assets or non-accrual loans at the Bank or in the level of its provision for credit losses or its reserve for possible credit losses; (c) no declaration, setting aside, or payment by the Company or the Bank of any regular dividend, special dividend, or other distribution with respect to any class of capital stock of the Company or the Bank, other than customary cash dividends paid by the Bank whose amounts have not exceeded past practice and the intervals between which dividends have not been more frequent than past practice; (d) no repurchase by the Company of any of its capital stock; (e) no material loss, destruction, or damage to any material property of the Company or the Bank, which loss, destruction, or damage is not covered by insurance; and (f) no material acquisition or disposition of any asset, nor any material contract outside the ordinary course of business entered into by the Company or the Bank nor any substantial amendment or termination of any material contract outside the ordinary course of business to which the Company or the Bank is a party, nor any other transaction by the Company or the Bank involving an amount in excess of $50,000 other than for fair value in the ordinary course of its business. Since June 30, 1994, (x) the Warrantor has conducted its business only in the ordinary course of such business and consistent with past practice; (y) the Company, on a consolidated basis, has maintained the quality of its loan portfolio and that of each of its major components at approximately the same level as existed at June 30, 1994; and (z) the Company, on a consolidated basis, has administered its investment portfolio pursuant to essentially the same policies and procedures as existed during 1992 and 1993 and the first six months of 1994, and has taken no action to lengthen the average maturity of the investment portfolio, or of any significant category thereof, to any material extent. 6.17. Reserve for Possible Credit Losses. The Company's consolidated reserve for possible credit losses as of June 30, 1994 was adequate to absorb reasonably anticipated losses in the consolidated loan and lease portfolios of the Company, in view of the size and character of such portfolios, current economic conditions, and other pertinent factors. Management periodically reevaluates the adequacy of such reserve based on portfolio performance, current economic conditions, and other factors. 6.18. Tax Matters. (a) All federal, state, local, and foreign tax returns and reports (including, without limitation, all income tax, unemployment compensation, social security, payroll, sales and use, excise, privilege, property, ad valorem, franchise, license, school, and any other tax under laws of the United States or any state or municipal or political subdivision thereof) required to be filed by or on behalf of the Warrantor have been timely filed with the appropriate governmental agencies in all jurisdictions in which such returns and reports are required to be filed, or requests for extensions have been timely filed, granted, and have not expired for periods ending on or before December 31, 1993, and all returns filed are complete and accurate to the best information and belief of the management of the Warrantor and properly reflect the taxes of the Warrantor for the periods covered thereby. All taxes shown on filed returns have been paid. As of the date hereof, there is no audit examination, deficiency, or refund litigation or tax claim or any notice of assessment or proposed assessment by the IRS or any other taxing authority, or any other matter in controversy with respect to any taxes that might result in a determination adverse to the Warrantor, except as reserved against in the Company Financial Statements. All federal, state, and local taxes, assessments, interest, additions, deficiencies, fees, penalties, and other governmental charges or impositions due with respect to completed and settled examinations or concluded litigation have been properly accrued or paid. (b) The Warrantor has not executed an extension or waiver of any statute of limitations on the assessment or collection of any tax due that is currently in effect. (c) To the extent any federal, state, local, or foreign taxes are due from the Warrantor for the period or periods beginning January 1, 1994 or thereafter through and including the Effective Date, adequate provision on an estimated basis has been or will be made for the payment of such taxes by establishment of appropriate tax liability accounts on the last monthly financial statements of the Company prepared before the Effective Date. (d) Deferred taxes of the Warrantor have been provided for in accordance with generally accepted accounting principles as in effect on the date of this Agreement. (f) Other than liens arising under the laws of the State of Utah with respect to taxes assessed and not yet due and payable, there are no tax liens on any of the properties or assets of the Company or any of its subsidiaries. (g) The Company and the Bank have timely filed all information returns required by sections 6041, 6041A, 6042, 6045, 6049, 6050H, and 6050J of the Code and have exercised due diligence in obtaining certified taxpayer identification numbers as required pursuant to Treasury Regulations section 35a.9999. (h) The taxable year end of the Company for federal income tax purposes is, and since the inception of the Company has continuously been, December 31. 6.19. Consolidated Net Worth. The consolidated net worth of the Company on the date of this Agreement, as determined in accordance with generally accepted accounting principles, is not less than $4.5 million. 6.20. Examinations. To the extent consistent with law, the Company has heretofore disclosed to Zions Bancorp, and the Bank has heretofore disclosed to Zions Bank, relevant information contained in its most recent Report of Examination issued by the Board of Governors or the Comptroller, as the case may be. Such information so disclosed consists of all material information with respect to the financial condition of the Warrantor included in such reports, and does not omit or will not omit any information necessary to make the information disclosed not misleading. 6.21. Reports. Since January 1, 1990, the Warrantor has effected all registrations and filed all reports and statements, together with any amendments required to be made with respect thereto, which the Warrantor was required to effect or file with (a) the Board of Governors, (b) the Comptroller, (c) the FDIC, (d) the United States Department of the Treasury, (e) the Commissioner, and (f) any other governmental or regulatory authority or agency having jurisdiction over the operations of the Warrantor. Each of such registrations, reports, and documents, including the financial statements, exhibits, and schedules thereto, does not contain any statement which, at the time and in the light of the circumstances under which it was made, is false or misleading with respect to any material fact or which omits to state any material fact necessary in order to make the statements contained therein not false or misleading. 6.22. FIRA Compliance and Other Transactions with Affiliates. None of the officers, directors, or beneficial holders of 5 percent or more of the common stock of the Warrantor and no person "controlled" (as that term is defined in the Financial Institutions Regulatory and Interest Rate Control Act of 1978) by the Warrantor, has any ongoing material transaction with the Warrantor or any other Warrantor on the date of this Agreement. None of such officers, directors, holders, or other persons has any ownership interest in any business, corporate or otherwise, which is a party to, or in any property which is the subject of, business arrangements or relationships of any kind with the Warrantor or any other Warrantor not in the ordinary course of business. Any other extensions of credit by the Warrantor to such officers, directors, and other persons have heretofore been disclosed in writing by the Warrantor to Zions Bancorp. 6.23. [reserved.] 6.24. Legal Proceedings. Except as disclosed in the Company Financial Statements, there is no claim, action, suit, arbitration, investigation, or other proceeding pending before any court, governmental agency, authority or commission, arbitrator, or "impartial mediator" (of which the Company or any of its subsidiaries has been served with process or otherwise been given notice) or, to the best of the knowledge of the Warrantor, threatened or contemplated against or affecting it or its property, assets, interests, or rights, or any basis therefor of which notice has been given, which, if adversely determined, would have a material adverse effect (financial or otherwise) on the business, operating results, or financial condition of the Company or which otherwise could prevent, hinder, or delay consummation of the transactions contemplated by this Agreement. 6.25. Absence of Governmental Proceedings. The Warrantor is not a party defendant or respondent to any pending legal, equitable, or other proceeding commenced by any governmental agency and, to the best of its knowledge, no such proceeding is threatened. 6.26. Federal Deposit Insurance. The deposits held by the Bank are insured within statutory limits by the Bank Insurance Fund of the FDIC pursuant to the provisions of the Federal Deposit Insurance Act, as amended (12 U.S.C. section 1811 et seq.), and the Bank has paid all assessments and filed all related reports and statements required under the Federal Deposit Insurance Act. None of the deposits of the Bank are insured by the Savings Association Insurance Fund of the FDIC. 6.27. Other Insurance. The Warrantor carries insurance with reputable insurers, including blanket bond coverage, in such amounts as are reasonable to cover such risks as are customary in relation to the character and location of its properties and the nature of its businesses. All such policies of insurance are in full force and effect, and no notice of cancellation has been received. All premiums to date have been paid in full. The Warrantor is not in default with respect to any such policy which is material to the Company. 6.28. Labor Matters. The Warrantor is not a party to or bound by any collective bargaining contracts with respect to any employees of the Warrantor. Since January 1, 1985, there has not been, nor to the best of the knowledge of the Warrantor was there or is there threatened, any strike, slowdown, picketing, or work stoppage by any union or other group of employees against the Warrantor or any of its premises, or any other labor trouble or other occurrence, event, or condition of a similar character. As of the date hereof, the Warrantor is not aware of any attempts to organize a collective bargaining unit to represent any of its employee groups. 6.29. Employee Benefit Plans. (a) Schedule 6.29 hereto contains a list and brief descriptions of all pension, retirement, stock purchase, stock bonus, stock ownership, stock option, performance share, stock appreciation right, phantom stock, savings, or profit-sharing plans, any employment, deferred compensation, consultant, bonus, or collective bargaining agreement, or group insurance contract or any other incentive, welfare, life insurance, death or survivor's benefit, health insurance, sickness, disability, medical, surgical, hospital, severance, layoff or vacation plans, contracts, and arrangements or employee benefit plans or agreements sponsored, maintained, or contributed to by the Warrantor for the employees or former employees of the Warrantor. The Company has previously made available and will continue to make available to Zions Bancorp for its continuing review until the Effective Date true, complete, and accurate copies of all plans and arrangements listed on Schedule 6.29, together with (i) the most recent actuarial and financial report prepared with respect to any such plans which constitute "qualified plans" under section 401(a) of the Code, and (ii) the most recent annual reports, if any, filed with any government agency and all IRS rulings and determination letters and any open requests for such rulings and letters that pertain to any such plan. (b) Except for liabilities to the Pension Benefit Guaranty Corporation ("PBGC") pursuant to section 4007 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all of which have been fully paid, and except for liabilities to the IRS under section 4971 of the Code, all of which have been fully paid, the Warrantor has no liability with respect to any pension plan qualified under section 401 of the Code. The Warrantor does not sponsor or maintain any defined benefit plan and has never sponsored or maintained any defined benefit plan. (c) All "employee benefit plans," as defined in section 3(3) of ERISA, that cover one or more employees employed by the Warrantor (each individually a "Plan" and collectively the "Plans"), comply in all material respects with ERISA and, where applicable for tax-qualified or tax-favored treatment, with the Code. As of June 30, 1994, the Warrantor had no material liability under any Plan which is not reflected on the Company Financial Statements as of such date (other than such normally unrecorded liabilities under the Plans for sick leave, holiday, education, bonus, vacation, incentive compensation, and anniversary awards, provided that such liabilities are not in any event material). Neither the Plans, the Warrantor nor any trustee or administrator of the Plans has ever engaged in a "prohibited transaction" with respect to the Plans within the meaning of section 406 of ERISA or, where applicable, section 4975 of the Code for which no exemption is applicable, nor have there been any "reportable events" within section 4043 of ERISA for which the thirty-day notice therefor has not been waived. The Warrantor has not incurred any liability under section 4201 of ERISA for a complete or partial withdrawal from a multi-employer plan. (d) No action, claim, or demand of any kind has been brought or threatened by any potential claimant or representative of such a claimant under any plan, contract, or arrangement referred to in Subsection (a) of this section, where the Warrantor may be either (i) liable directly on such action, claim, or demand; or (ii) obligated to indemnify any person, group of persons, or entity with respect to such action, claim, or demand which is not fully covered by insurance maintained with reputable, responsible financial insurers or by a self-insured plan. 6.30. Employee Relations. As of the date hereof, the Warrantor is, to the best of its knowledge, in compliance in all material respects with all federal and state laws, regulations, and orders respecting employment and employment practices (including Title VII of the Civil Rights Act of 1964), terms and conditions of employment, and wages and hours; and the Warrantor is not engaged in any unfair labor practice. As of the date hereof, no dispute exists between the Warrantor, and any of its employee groups regarding any employee organization, wages, hours, or conditions of employment which would materially interfere with the business or operations of the Warrantor. 6.31. Fiduciary Activities. The Bank is duly qualified and registered and in good standing in accordance with the laws of each jurisdiction in which it is required to so qualify or register as a result of or in connection with its fiduciary or custodial activities as conducted as of the date hereof. The Bank is duly registered under and in compliance with all requirements of the federal Investment Advisers Act of 1940 as amended, or is exempt from registration thereunder and from compliance with the requirements thereof. Since January 1, 1991, the Bank has conducted, and currently is conducting, all fiduciary and custodial activities in all material respects in accordance with all applicable law. 6.32. Environmental Liability. (a) The Warrantor is not in violation of any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including those arising under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to health, safety or the environment ("Environmental Laws"). (b) Neither the Warrantor nor, to the best of the knowledge of the Warrantor, any borrower of the Warrantor has received notice that it has been identified by the United States Environmental Protection Agency as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B, nor has the Warrantor or, to the best of the knowledge of the Warrantor, any borrower of the Warrantor received any notification that any hazardous waste, as defined by 42 U.S.C. section 6903(5), any hazardous substances, as defined by 42 U.S.C. section 9601(14), any "pollutant or contaminant," as defined by 42 U.S.C. section 9601(33), or any toxic substance, hazardous materials, oil, or other chemicals or substances regulated by any Environmental Laws ("Hazardous Substances") that it has disposed of has been found at any site at which a federal or state agency is conducting a remedial investigation or other action pursuant to any Environmental Law. (c) Other than as set forth on Schedule 6.32(c) no portion of any real property at any time owned or leased by the Warrantor (collectively, the "Warrantor Real Estate") has been used by the Warrantor for the handling, processing, storage or disposal of Hazardous Substances in a manner which violates any Environmental Laws and, to the best of the knowledge of the Warrantor, no underground tank or other underground storage receptacle for Hazardous Substances is located on any of the Warrantor Real Estate. In the course of its activities, the Warrantor has not generated and is not generating any hazardous waste on any of the Warrantor Real Estate in a manner which violates any Environmental Laws. There has been no past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping (collectively, a "Release") of Hazardous Substances by the Warrantor on, upon, or into any of the Warrantor Real Estate. In addition, to the best of the knowledge of the Warrantor, there have been no such Releases on, upon, or into any real property in the vicinity of any of the Warrantor Real Estate that, through soil or groundwater contamination, may be located on any of such Warrantor Real Estate. (d) With respect to any real property at any time held as collateral for any outstanding loan by the Warrantor (collectively, the "Collateral Real Estate"), the Warrantor has not at any time received notice from any borrower thereof or third party and has no knowledge that such borrower has generated or is generating any hazardous waste on any of the Collateral Real Estate in a manner which violates any Environmental Laws or that there has been any Release of Hazardous Substances by such borrower on, upon, or into any of the Collateral Real Estate, or that there has been any Release on, upon, or into any real property in the vicinity of any of the Collateral Real Estate that, through soil or groundwater contamination, may be located on any of such Collateral Real Estate. (e) As used in this Section 6.32, the term "Warrantor" includes the applicable Warrantor and any partnership or joint venture in which it has an interest. 6.33. Intangible Property. To the best of its knowledge, the Warrantor owns or possesses the right, free of the claims of any third party, to use all material trademarks, service marks, trade names, copyrights, patents, and licenses currently used by it in the conduct of its business. To the best of the knowledge of the Warrantor, no material product or service offered and no material trademark, service mark, or similar right used by the Warrantor infringes any rights of any other person, and, as of the date hereof, the Warrantor has not received any written or oral notice of any claim of such infringement. 6.34. Real and Personal Property. Except for property and assets disposed of in the ordinary course of business, the Warrantor possesses good and marketable title to and owns, free and clear of any mortgage, pledge, lien, charge, or other encumbrance or other third party interest of any nature whatsoever which would materially interfere with the business or operations of the Warrantor, its real and personal property and other assets, including without limitation those properties and assets reflected in the Company Financial Statements as of June 30, 1994, or acquired by the Warrantor subsequent to the date thereof. The Warrantor leases no real property. The leases pursuant to which the Warrantor leases personal property are valid and effective in accordance with their respective terms; and there is not, under any such lease, any material existing default or any event which, with the giving of notice or lapse of time or otherwise, would constitute a default. The personal property leased by the Warrantor is free from any adverse claim which would materially interfere with the business or operation of the Company taken as a whole. The material properties and equipment owned or leased by the Warrantor are in normal operating condition, free from any known defects, except such minor defects as do not materially interfere with the continued use thereof in the conduct of the normal operations of the Warrantor. 6.35. Loans, Leases, and Discounts. To the best of the knowledge of the Warrantor, each loan, lease, and discount reflected as an asset of the Company in the Company Financial Statements as of June 30, 1994, or acquired since that date, is the legal, valid, and binding obligation of the obligor named therein, enforceable in accordance with its terms; and no loan, lease, or discount having an unpaid balance (principal and accrued interest) in excess of $50,000 is subject to any asserted defense, offset, or counterclaim known to the Warrantor. 6.36. Material Contracts. Neither the Warrantor nor any of the assets, businesses, or operations of the Warrantor is as of the date hereof a party to, or is bound or affected by, or receives benefits under any material agreement, arrangement, or commitment not cancelable by it without penalty, other than (a) the agreements set forth on Schedule 6.36 hereof, and (b) agreements, arrangements, or commitments entered into in the ordinary course of its business consistent with past practice, or, if there has been no past practice, consistent with prudent banking practices. 6.37. Employment and Severance Arrangements. (a) It is not the policy and has never been the practice of the Warrantor to grant any of its officers, directors, consultants, or other management officials or any officer, director, consultant, or management official of any other Warrantor employment contracts providing for increased or accelerated compensation in the event of a change of control with respect to the Warrantor or any other event affecting the ownership, control, or management of the Warrantor. (b) Except, in the case of the Bank, for that certain agreement described in section 7.9 of this Agreement, there are no employment or severance contracts, agreements, or arrangements between the Warrantor or any other Warrantor and any officer, director, consultant, or other management official. 6.38. Material Contract Defaults. All contracts, agreements, leases, mortgages, or commitments referred to in Section 6.12(c) hereof are valid and in full force and effect on the date hereof. The Warrantor is not in default in any material respect under any material contract, agreement, commitment, arrangement, lease, insurance policy, or other instrument to which it is a party or by which its assets, business, or operations may be bound or affected or under which it or its assets, business, or operations receive benefits; and there has not occurred any event that with the lapse of time or the giving of notice or both would constitute such a default. 6.39. Capital Expenditures. The Warrantor has no outstanding commitments in the nature of capital expenditures which in the aggregate exceed $25,000. 6.40. Repurchase Agreements. With respect to all agreements pursuant to which the Warrantor has purchased securities subject to an agreement to resell, the Warrantor has a valid, perfected first lien or security interest in the securities securing the agreement, and the value of the collateral securing each such agreement equals or exceeds the amount of the debt secured by such collateral under such agreement. 6.41. Dividends. The Warrantor has not paid any dividend to its shareholders which caused the regulatory capital of the Warrantor to be less than the amount then required by applicable law, or which exceeded any other limitation on the payment of dividends imposed by law, agreement, or regulatory policy. 6.42. Interest Rate Risk Management Instruments. Schedule 6.42 contains a true, correct, and complete list of all interest-rate swaps, caps, floors, and options agreements and other interest-rate risk management arrangements to which the Warrantor is a party or by which any of its properties or assets may be bound. 6.43. Brokers and Advisers. (a) There are no claims for brokerage commissions, finder's fees, or similar compensation arising out of or due to any act of the Warrantor in connection with the transactions contemplated by this Agreement or based upon any agreement or arrangement made by or on behalf of the Warrantor or any other Warrantor. (b) The Warrantor has not entered into any agreement or understanding with any party relating to financial advisory services provided or to be provided with respect to the transactions contemplated by this Agreement. 6.44. Disclosure. No representation or warranty hereunder and no certificate, statement, or other document delivered by the Warrantor hereunder or in connection with this Agreement or any of the transactions contemplated thereunder contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein, in light of the circumstances under which they were made, not misleading. There is no fact known to the Warrantor which reasonably might materially adversely affect the business, assets, liabilities, financial condition, results of operations, or prospects of the Warrantor which has not been disclosed in the Company Financial Statements or a certificate delivered to Zions Bancorp by the Warrantor. Copies of all documents referred to in this Agreement, unless prepared solely by Zions Bancorp or Zions Bank or solely by Zions Bancorp and Zions Bank and third parties hereto, are true, correct, and complete copies thereof and include all amendments, supplements, and modifications thereto and all waivers thereunder. 6.45. Regulatory and Other Approvals. As of the date hereof, the Warrantor is not aware of any reason why all material consents and approvals shall not be procured from all regulatory agencies having jurisdiction over the transactions contemplated by this Agreement, as shall be necessary for (a) consummation of the transactions contemplated by this Agreement, and (b) the continuation by the Warrantor after the Effective Date of the business of the Warrantor as such business is carried on immediately prior to the Effective Date, free of any conditions or requirements which, in the reasonable opinion of the Warrantor, could have a material adverse effect upon the business, operations, activities, earnings, or prospects of the Company. As of the date hereof, the Warrantor is not aware of any reason why all material consents and approvals shall not be procured from all other persons and entities whose consent or approval shall be necessary for (y) consummation of the transactions contemplated by this Agreement, or (z) the continuation by the Warrantor after the Effective Date of the business of the Warrantor as such business is carried on immediately prior to the Effective Date. 7. Covenants of the Company and the Bank. The Company and the Bank hereby jointly and severally covenant and agree as follows: 7.1. Rights of Access. In addition to and not in limitation of any other rights of access provided to Zions Bancorp and Zions Bank herein, until the Effective Date the Company and the Bank will give to Zions Bancorp and Zions Bank and to their representatives, including their certified public accountants, KPMG Peat Marwick, full access during normal business hours to all of the property, documents, contracts, books, and records of the Company and the Bank, and such information with respect to their business affairs and properties as Zions Bancorp or Zions Bank from time to time may reasonably request. 7.2. Corporate Records, Contracts, etc. (a) The Company and the Bank will make available to Zions Bancorp and Zions Bank copies of the articles of incorporation and bylaws of the Company and the Bank, and will make available minute books of the Company and the Bank, all of which shall be certified to be complete and true copies. (b) The Company and the Bank will make available copies of all contracts or agreements involving amounts in excess of $25,000 to which the Company or the Bank is a party, including but not limited to data processing contracts, service contracts, contracts to purchase or lease real property or equipment, guaranties, employment contracts, and insurance contracts pertaining to fire, accident, indemnity, fidelity, health, life, hospitalization, or other employee benefits. (c) The Company and the Bank will furnish to Zions Bancorp and Zions Bank the following information with respect to properties owned by the Company and the Bank: (i) a brief description and location of each parcel of real property owned by the Company or the Bank and (ii) a brief description of personal property covered by lease or other rental arrangements to which the Company or the Bank is a party, including a copy of the relevant leases. 7.3. Monthly and Quarterly Financial Statements; Minutes of Meetings and Other Materials. (a) Each of the Company and the Bank shall promptly provide Zions Bancorp with copies of all of its monthly and quarterly financial statements, and copies of all quarterly Consolidated Reports of Condition and Consolidated Reports of Income of the Bank for the months and quarterly periods, as the case may be, ending between the date of this Agreement and the Effective Date. Such financial statements and reports shall be verified by the chief financial officer of the reporting entity. All of such financial statements and reports, including the related notes, schedules, and memorandum items, will have been prepared in accordance with generally accepted accounting principles applied in all material respects and as to each category of assets and liabilities and each category of income and expense on a consistent basis throughout the periods involved. (b) Each of the Company and the Bank shall promptly provide Zions Bancorp with (i) copies of all of its periodic reports to directors and to shareholders, whether or not such reports were prepared or distributed in connection with a meeting of the board of directors or a meeting of the shareholders, prepared or distributed between the date of this Agreement and the Effective Date, and (ii) complete copies of all minutes of meetings of its board of directors and its shareholders which meetings take place between the date of this Agreement and the Effective Date, certified by the secretary or cashier or an assistant secretary or assistant cashier of the Company or the Bank, as the case may be. 7.4. Extraordinary Transactions. Without the prior written consent of Zions Bancorp, neither the Company nor the Bank shall, on or after the date of this Agreement: (a) declare or pay any cash dividends or property dividends with respect to any class of its capital stock, with the exception of customary periodic cash dividends paid by the Bank to holders of its common stock at such intervals and in such amounts as are in every case consistent with the amounts and intervals characteristic of the Bank; (b) declare or distribute any stock dividend, authorize a stock split, or authorize, issue, or make any distribution of its capital stock or any other securities, or grant any options to acquire such additional securities; (c) merge into, consolidate with, or (except as provided in section 4.11 hereof) sell its assets to any other corporation or person, or enter into any other transaction or agree to effect any other transaction not in the ordinary course of its business except as explicitly contemplated herein, or engage in any discussions concerning such a possible transaction except as explicitly contemplated herein; (d) convert the charter or form of entity of the Bank from that of a national banking association to any other charter or form of entity; (e) make any direct or indirect redemption, purchase, or other acquisition of any of its capital stock; (f) incur any liability or obligation, make any commitment or disbursement, acquire or dispose of any property or asset, make any contract or agreement, or engage in any transaction, except in the ordinary course of its business; (g) other than in the ordinary course of business, subject any of its properties or assets to any lien, claim, charge, option, or encumbrance; (h) except for increases in the ordinary course of business in accordance with past practices which together with all other compensation rate increases do not exceed 4 percent per annum of the aggregate payroll as of July 1, 1994, increase the rate of compensation of any employee or enter into any agreement to increase the rate of compensation of any employee; (i) create or modify any pension or profit sharing plan, bonus, deferred compensation, death benefit, or retirement plan, or the level of benefits under any such plan, nor increase or decrease any severance or termination pay benefit or any other fringe benefit; nor (j) enter into any employment or personal services contract with any person or firm, including without limitation any contract, agreement, or arrangement described in Section 6.37(a) hereof, except directly to facilitate the transactions contemplated by this Agreement. 7.5. Preservation of Business. Each of the Company and the Bank (a) will carry on its business and manage its assets and properties diligently and substantially in the same manner as heretofore; (b) will maintain the ratio of its loans to its deposits at approximately the same level as existed at June 30, 1994, as adjusted to allow for repayments of loans acquired by the Bank from third parties prior to July 1, 1994, and to further allow for seasonal fluctuations of loans and deposits of a kind and amount experienced traditionally by the Company and the Bank; (c) will manage its investment portfolio in substantially the same manner and pursuant to substantially the same investment policies as in 1992 and 1993 and the first six months of 1994, and will take no action to change the percentage which the aggregate investment portfolio of the Company or the Bank bears to the total assets of the Company or the Bank, as the case may be, or to lengthen the average maturity of the investment portfolio, or of any significant category thereof, to any material extent; (d) will continue in effect its present insurance coverage on all properties, assets, business, and personnel; (e) will use its best efforts to preserve its business organization intact; except as otherwise consented to by Zions Bancorp, to keep available its present employees; and to preserve its present relationships with customers and others having business dealings with it; (f) will not do anything nor will it fail to do anything which will cause a breach of or default in any contract, agreement, commitment, or obligation to which it is a party or by which it may be bound; and (g) will not amend its articles of incorporation or bylaws or permit any of its subsidiaries to amend its articles of incorporation or bylaws. 7.6. Comfort Letter. At the time of the effectiveness of the Registration Statement, but prior to the mailing of the proxy materials, and at the Effective Date, the Company shall furnish Zions Bancorp with a letter from Fortner, Bayens, Levkulich and Co., in form and substance acceptable to Zions Bancorp, stating that (a) they are independent accountants with respect to the Company and the Bank within the meaning of the 1933 Act and the published rules and regulations thereunder, (b) in their opinion the consolidated financial statements of the Company included in the Registration Statement and examined by them comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations thereunder, and (c) a reading of the Company's compiled consolidated financial statements and the Bank's audited financial statements and the latest available unaudited consolidated financial statements of the Company and financial statements of the Bank and inquiries of certain officials of the Company and the Bank responsible for financial and accounting matters as to transactions and events since December 31, 1993 did not cause them to believe that (i) the Company's compiled consolidated financial statements and such latest available consolidated financial statements are not stated on a basis consistent with that followed in the Company's compiled consolidated financial statements; (ii) the Bank's audited consolidated financial statements and such latest available unaudited consolidated financial statements are not stated on a basis consistent with that followed in the Bank's audited consolidated financial statements; (iii) except as disclosed in the letter, at a specified date not more than five business days prior to the date of such letter, there was any change in the Company's capital stock or any change in consolidated long-term debt or any decrease in the consolidated net assets of the Company as compared with the respective amounts shown in the most recent Company compiled consolidated financial statements; or (iv) except as disclosed in the letter, at a specified date not more than five business days prior to the date of such letter, there was any change in the Bank's capital stock or any change in consolidated long-term debt or any decrease in the consolidated net assets of the Bank as compared with the respective amounts shown in the most recent Bank audited consolidated financial statements. The letter shall also cover such other matters pertaining to the Company's and the Bank's financial data and statistical information included in the Registration Statement as may reasonably be requested by Zions Bancorp. 7.7. Affiliates' Agreements. The Company will furnish to Zions Bancorp a list of all persons known to the Company who at the date of the Company's special meeting of shareholders to vote upon the transactions contemplated by this Agreement may be deemed to be "affiliates" of the Company within the meaning of Rule 145 under the 1933 Act and for purposes of qualifying the Holding Company Merger for "pooling of interests" accounting treatment. The Company will use its best efforts to cause each such "affiliate" of the Company to deliver to Zions Bancorp not later than thirty days prior to the Effective Date a written agreement providing that such person will not sell, pledge, transfer, or otherwise dispose of (a) the shares of Company Common Stock or Bank Common Stock beneficially owned by such person, or the shares of Zions Bancorp Stock to be received by such person in the Holding Company Merger (the "Company Merger Shares") or the Bank Merger (the "Bank Merger Shares"), or any other shares of Zions Bancorp Stock held by such person, during the period commencing thirty days prior to the Effective Date and ending at such time as financial results covering at least thirty days of post-Holding Company Merger combined operations have been published within the meaning of Section 201.01 of the SEC's Codification of Financial Reporting Policies or (b) the Company Merger Shares or the Bank Merger Shares except in compliance with the applicable provisions of the 1933 Act and the rules and regulations thereunder. 7.8. Inconsistent Activities. Unless and until the Mergers have been consummated or this Agreement has been terminated in accordance with its terms, the Company and the Bank will not (a) solicit or encourage, directly or indirectly, any inquiries or proposals to acquire more than 1 percent of the Company Common Stock or any capital stock of the Bank or any significant portion of its or the Bank's assets (whether by tender offer, merger, purchase of assets or other transactions of any type); (b) afford any third party which may be considering any such transaction access to its or the Bank's properties, books or records except as required by mandatory provisions of law; (c) enter into any discussions or negotiations for, or enter into any agreement or understanding which provides for, any such transaction, or (d) authorize or permit any of its directors, officers, employees or agents to do or permit any of the foregoing. If the Company or the Bank becomes aware of any offer or proposed offer to acquire any shares of its capital stock or any significant portion of its assets (regardless of the form of the proposed transaction) or of any other matter which could adversely affect this Agreement or the Mergers or either of them, the Company and the Bank shall immediately give notice thereof to Zions Bancorp. 7.9. Agreement of September 11, 1974. Within sixty days of the date of this Agreement, the Bank shall take all necessary action to reverse its action of March 16, 1993, and any act done subsequent thereto in implementation thereof, which increased from $1,250 per month to $4,000 per month the severance payments provided for in that certain Agreement made September 11, 1974 between I.D. Nightingale and the Bank. 8. Representations and Warranties of Zions Bancorp and Zions Bank. Zions Bancorp (with respect to itself and Zions Bank) and Zions Bank (with respect to itself) represent and warrant to the Company and the Bank as follows: 8.1. Organization, Powers, and Qualification. It is a corporation which is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own and operate its properties and assets, to lease properties used in its business, and to carry on its business as now conducted. It owns or possesses in the operation of its business all franchises, licenses, permits, branch certificates, consents, approvals, waivers, and other authorizations, governmental or otherwise, which are necessary for it to conduct its business as now conducted, except for those where the failure of such ownership or possession would not adversely affect its operation and properties in any material respect. It is duly qualified and licensed to do business and is in good standing in every jurisdiction in which such qualification or license is required or with respect to which the failure to be so qualified or licensed could result in material liability or adversely affect its operation and properties in any material respect. 8.2. Execution and Performance of Agreement. It has all requisite corporate power and authority to execute and deliver this Agreement and to perform its respective terms. 8.3. Binding Obligations; Due Authorization. This Agreement constitutes its valid, legal, and binding obligations enforceable against it in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, moratorium or similar law, or by general principles of equity. The execution, delivery, and performance of this Agreement and the transactions contemplated thereby have been duly and validly authorized by its board of directors. No other corporate proceedings on its part are necessary to authorize this Agreement or the carrying out of the transactions contemplated hereby. 8.4. Absence of Default. None of the execution or the delivery of this Agreement, the consummation of the transactions contemplated thereby, or the compliance with or fulfillment of the terms thereof will conflict with, or result in a breach of any of the terms, conditions, or provisions of, or constitute a default under its organizational documents or bylaws. None of such execution, consummation, or fulfillment will (a) conflict with, or result in a material breach of the terms, conditions, or provisions of, or constitute a material violation, conflict, or default under, or give rise to any right of termination, cancellation, or acceleration with respect to, or result in the creation of any lien, charge, or encumbrance upon, any of its property or assets pursuant to any material agreement or instrument under which it is obligated or by which any of its properties or assets may be bound, including without limitation any material lease, contract, mortgage, promissory note, deed of trust, loan, credit arrangement or other commitment or arrangement of it in respect of which it is an obligor, or (b) if the Holding Company Merger is approved by the Board of Governors under the BHC Act or if the Board of Governors waives jurisdiction under that Act, and if the Bank Merger is approved by the Comptroller, and if the transactions contemplated by this Agreement are approved by the Commissioner, violate any law, statute, rule, or regulation of any government or agency to which it is subject and which is material to its operations, or (c) violate any judgment, order, writ, injunction, decree, or ruling to which it or any of its properties or assets is subject or bound. None of the execution or delivery of this Agreement, the consummation of the transactions contemplated thereby, or the compliance with or fulfillment of the terms thereof will require any authorization, consent, approval, or exemption by any person which has not been obtained, or any notice or filing which has not been given or done, other than approval of or waiver of jurisdiction over the transactions contemplated by this Agreement by the Board of Governors, the Comptroller, and the Commissioner. 8.5. Brokers and Advisers. (a) There are no claims for brokerage commissions, finder's fees, or similar compensation arising out of or due to any act of its in connection with the transactions contemplated by this Agreement or based upon any agreement or arrangement made by or on behalf of it. (b) It has not entered into any agreement or understanding with any party relating to financial advisory services provided or to be provided with respect to the transactions contemplated by this Agreement. 8.6. Books and Records. Its books and records fairly reflect the transactions to which it is a party or by which its properties are subject or bound. Such books and records have been properly kept and maintained and are in compliance in all material respects with all applicable legal and accounting requirements. It follows generally accepted accounting principles applied on a consistent basis in the preparation and maintenance of its books of account and financial statements, including but not limited to the application of the accrual method of accounting for interest income on loans, leases, discounts, and investments, interest expense on deposits and all other liabilities, and all other items of income and expense. It has made all accruals in amounts which accurately report income and expense in the proper periods in accordance with generally accepted accounting principles. It has filed all material reports and returns required by any law or regulation to be filed by it. 8.7. Financial Statements. Zions Bancorp has furnished to the Company its consolidated statement of condition as of each of December 31, 1992, December 31, 1993, and June 30, 1994, and its related consolidated statement of income, consolidated statement of changes in financial position, and consolidated statement of changes in stockholders' equity for each of the periods then ended, and the notes thereto (collectively, the "Zions Bancorp Financial Statements"). All of the Zions Bancorp Financial Statements, including the related notes, (a) were prepared in accordance with generally accepted accounting principles applied in all material respects and as to each category of assets and liabilities and each category of income and expense on a consistent basis throughout the periods involved, and (b) are in accordance with the books and records of Zions Bancorp which have been maintained in accordance with generally accepted accounting principles, and (c) fairly reflect the consolidated financial position of Zions Bancorp as of such dates, and the consolidated results of operations of Zions Bancorp for the periods ended on such dates, and do not fail to disclose any material extraordinary or out-of-period items, and (d) reflect, in accordance with generally accepted accounting principles applied in all material respects and as to each category of assets and liabilities and each category of income and expense on a consistent basis throughout the periods involved, adequate provision for, or reserves against, the possible loan losses of Zions Bancorp as of such dates. 8.8. Absence of Certain Developments. Since June 30, 1994, there has been (a) no material adverse change in the condition, financial or otherwise, assets, properties, liabilities, or businesses of Zions Bancorp, and (b) no material deterioration in the quality of the loan portfolio of Zions Bancorp or of any major component thereof, and no material increase in the level of nonperforming assets or nonaccrual loans at Zions Bancorp or in the level of its provision for credit losses or its reserve for possible credit losses. 8.9. Disclosure. No representation or warranty hereunder and no certificate, statement, or other document delivered by it hereunder or in connection with this Agreement or any of the transactions contemplated thereunder contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein, in light of the circumstances under which they were made, not misleading. There is no fact known to it which might materially adversely affect its business, assets, liabilities, financial condition, results of operations, or prospects which has not been disclosed in the Zions Bancorp Financial Statements or a certificate delivered by it to the Company or the Bank. Copies of all documents referred to in this Agreement, unless prepared solely by the Company or the Bank or solely by the Company and the Bank and third parties hereto, are true, correct, and complete copies thereof and include all amendments, supplements, and modifications thereto and all waivers thereunder. 9. Closing. 9.1. Place and Time of Closing. Closing shall take place at the offices of Zions Bancorp, 1380 Kennecott Building, Salt Lake City, Utah, or such other place as the parties choose, commencing at 10:00 a.m., local time, on the Effective Date, provided that all conditions precedent to the obligations of the parties hereto to close have then been met or waived. 9.2. Events To Take Place at Closing. At the Closing, the following actions will be taken: (a) Such certificates and other documents as are required by this Agreement to be executed and delivered on or prior to the Effective Date and have not been so executed and delivered, and such other certificates and documents as are mutually deemed by the parties to be otherwise desirable for the effectuation of the Closing, will be so executed and delivered; and then (b) The Holding Company Merger and the issuance of shares incident thereto shall be effected; provided, however, that the administrative and ministerial aspects of the issuance of shares incident to the Holding Company Merger will be settled as soon thereafter as shall be reasonable under the circumstances; and then (c) The Bank Merger shall be effected; provided, however, that the administrative and ministerial aspects of the issuance of shares incident to the Bank Merger will be settled as soon thereafter as shall be reasonable under the circumstances. 10. Termination, Damages for Breach, Waiver, and Amendment. 10.1. Termination by Reason of Lapse of Time. This Agreement may be terminated by any party on or after July 31, 1995, by instrument duly authorized and executed and delivered to the other parties, unless the Effective Date shall have occurred on or before such date. 10.2. Grounds for Termination. This Agreement may be terminated by written notice of termination at any time before the Effective Date (whether before or after action by shareholders of the Company or shareholders of the Bank): (a) by mutual consent of the parties hereto; (b) by Zions Bancorp, upon written notice to the Company given at any time (i) if any of the representations and warranties of the Company or the Bank contained in Section 6 hereof was materially incorrect when made, or (ii) in the event of a material breach or material failure by the Company or the Bank of any covenant or agreement of the Company or the Bank contained in this Agreement which has not been, or cannot be, cured within thirty days after written notice of such breach or failure is given to the Company; (c) by the Company, upon written notice to Zions Bancorp given at any time (i) if any of the representations and warranties of Zions Bancorp or Zions Bank contained in Section 8 hereof was materially incorrect when made, or (ii) in the event of a material breach or material failure by Zions Bancorp or Zions Bank of any covenant or agreement of Zions Bancorp or Zions Bank contained in this Agreement which has not been, or cannot be, cured within thirty days after written notice of such breach or failure is given to Zions Bancorp; (d) by the board of directors of the Company, upon written notice given to Zions Bancorp, if (i) the Average Closing Price shall be greater than $41.00, and (ii) the Company shall have provided to Zions Bancorp before the close of business on the fourth trading day preceding the Effective Date a written notice styled "Notice of Intent To Terminate Based Upon Price," and (c) Zions Bancorp shall not thereafter have provided written notice to the Company, before the close of business on the third trading day preceding the Effective Date, that Zions Bancorp desires to exercise the Zions Fixed Closing Price Election; (e) by Zions Bancorp, upon written notice given to the Company, if (i) the Average Closing Price shall be less than $37.00, and (ii) Zions Bancorp shall have provided to the Company before the close of business on the fourth trading day preceding the Effective Date a written notice styled "Notice of Intent To Terminate Based Upon Price," and (iii) the board of directors of the Company shall not thereafter have provided written notice to Zions Bancorp, before the close of business on the third trading day preceding the Effective Date, that the Company desires to exercise the Company Fixed Closing Price Election; or (f) by either Zions Bancorp or the Company upon written notice given to the other if the board of directors of either Zions Bancorp or the Company shall have determined in its sole judgment made in good faith, after due consideration and consultation with counsel, that the Mergers have become inadvisable or impracticable by reason of the institution of litigation by the federal government or the government of the State of Utah to restrain or invalidate the transactions contemplated by this Agreement. 10.3. Effect of Termination. In the event of the termination and abandonment hereof pursuant to the provisions of Section 10.1 or Section 10.2, this Agreement shall become void and have no force or effect, without any liability on the part of Zions Bancorp, Zions Bank, the Company, or the Bank or their respective directors or officers or shareholders in respect of this Agreement. Notwithstanding the foregoing, (a) as provided in Section 11.4 of this Agreement, the confidentiality agreement contained in that section shall survive such termination, and (b) if such termination is a result of any of the representations and warranties of a party being materially incorrect when made or a result of the material breach or material failure by a party of a covenant or agreement hereunder, such party whose representations and warranties were materially incorrect or who materially breached or failed to perform its covenant or agreement shall be liable to the other party or parties hereto solely to the extent of the actual, reasonable out-of-pocket expenses, not to exceed $250,000, incurred by the other party in connection with the negotiation and preparation of this Agreement and the carrying out of the transactions contemplated hereby. 10.4. Waiver of Terms or Conditions. Any of the terms or conditions of this Agreement may be waived at any time prior to the Effective Date by the party which is, or whose shareholders are, entitled to the benefit thereof, by action taken by the board of directors of such party, or by its president; provided, however, that such waiver shall be in writing and shall be taken only if, in the judgment of the board of directors or officer taking such action, such waiver will not have a materially adverse effect on the benefits intended hereunder to the shareholders of its or his corporation; and the other parties hereto may rely on the delivery of such a waiver as conclusive evidence of such judgment and the validity of the waiver. 10.5. Amendment. (a) Anything herein or elsewhere to the contrary notwithstanding, to the extent permitted by law, this Agreement and the exhibits hereto may be amended, supplemented, or interpreted at any time prior to the Effective Date by written instrument duly authorized and executed by each of the parties hereto; provided, however, that this Agreement may not be amended after the action by shareholders of the Company in any respect that would prejudice the economic interests of such Company shareholders, or any of them, or after the action by shareholders of the Bank in any respect that would prejudice the economic interests of such Bank shareholders, or any of them, except as specifically provided herein or by like action of such shareholders. (b) If Zions Bancorp and the Company should mutually determine (following receipt of advice of legal or other counsel) that it has become inadvisable or inexpedient to effectuate the transactions contemplated by this Agreement through means of a sequence of mergers such as is contemplated herein, then the parties hereto agree to effect such change in the form of transaction as described especially in Sections 1.1 and 9.2 of this Agreement by written instrument in amendment of this Agreement. 11. General Provisions. 11.1. Costs and Expenses. (a) Allocation of Expenses. Except as provided in Section 10.3 and this Section, each party hereto shall pay its own fees and expenses, including without limitation the fees and expenses of its own counsel and its own accountants and tax advisers, incurred in connection with this Agreement and the transactions contemplated thereby. For purposes of this Section, (i) the cost of printing and delivering the proxy statement and other material to be transmitted to shareholders of the Company shall be deemed to be incurred on behalf of the Company, (ii) the cost of printing and delivering the proxy statement and other material to be transmitted to shareholders of the Bank shall be deemed to be incurred on behalf of the Bank, and (iii) the cost of registering under federal and state securities laws the stock of zions Bancorp to be received by the shareholders of the Company and the shareholders of the Bank shall be deemed to be incurred on behalf of Zions Bancorp. 11.2. Mutual Cooperation; Access. (a) Subject to the terms and conditions herein provided, each party shall use its best efforts, and shall cooperate fully with the other party, in carrying out the provisions of this Agreement and in making all filings and obtaining all necessary governmental approvals, and shall execute and deliver, or cause to be executed and delivered, such governmental notifications and additional documents and instruments and do or cause to be done all additional things necessary, proper, or advisable under applicable law to consummate and make effective the transactions contemplated hereby. (b) Each party acknowledges to the other its understanding that further investigation of it by the other party may be necessary that such other party may more fully evaluate the merits of the transactions contemplated by this Agreement. To permit such investigation, and not in lieu or prejudice of any other right conferred hereunder, each of the parties shall afford to the other, and to the accountants, counsel, and other representatives of the other, full access during normal business hours, during the period prior to the Effective Date, to all of its properties, books, contracts, commitments and records and, during such period, each shall furnish promptly, or make available, to the other all information concerning its business, properties and personnel as the other party may reasonably request. 11.3. Form of Public Disclosures. Zions Bancorp and the Company shall mutually agree in advance upon the form and substance of all public disclosures concerning this Agreement and the transactions contemplated hereby. 11.4. Confidentiality. Zions Bancorp and its subsidiaries and the Company and the Bank shall use all information that each obtains from the other pursuant to this Agreement solely for the effectuation of the transactions contemplated by this Agreement or for other purposes consistent with the intent of this Agreement. Neither Zions Bancorp, nor its subsidiaries, nor the Company nor the Bank shall use any of such information for any other purpose, including, without limitation, the competitive detriment of any party. Each of Zions Bancorp and its subsidiaries and the Company and the Bank shall maintain as strictly confidential all information it learns from the other and shall, at any time, upon the request of the other, return promptly to it all documentation provided by it or made available to third parties. Each of the parties may disclose such information to its respective affiliates, counsel, accountants, tax advisers, and consultants. The confidentiality agreement contained in this Section 11.4 shall remain operative and in full force and effect, and shall survive the termination of this Agreement. 11.5. Claims of Brokers. (a) The Company and the Bank shall indemnify, defend, and hold Zions Bancorp and Zions Bank harmless for, from, and against any claim, suit, liability, fees or expenses (including, without limitation, attorneys' fees and costs of court) arising out of any claim for brokerage commissions, finder's fees, or similar compensation arising out of or due to any act of the Company or the Bank in connection with the transactions contemplated by this Agreement or based upon any agreement or arrangement made by or on behalf of the Company or the Bank with respect to Zions Bancorp or Zions Bank. (b) Zions Bancorp and Zions Bank shall indemnify, defend, and hold the Company and the Bank harmless for, from, and against any claim, suit, liability, fees or expenses (including, without limitation, attorneys' fees and costs of court) arising out of any claim for brokerage commissions, finder's fees, or similar compensation arising out of or due to any act of Zions Bancorp or Zions Bank in connection with any of the transactions contemplated by this Agreement or based upon any agreement or arrangement made by or on behalf of Zions Bancorp or Zions Bank with respect to the Company or the Bank. 11.6. Information for Applications and Registration Statement. (a) Each party represents and warrants that all information concerning it which is included in any statement and application (including the Registration Statement) made to any governmental agency in connection with the transactions contemplated by this Agreement shall not, with respect to such party, omit any material fact required to be stated therein or necessary to make the statements made, in light of the circumstances under which they were made, not misleading. The party so representing and warranting will indemnify, defend, and hold harmless the other, each of its directors and officers, each underwriter and each person, if any, who controls the other within the meaning of the Securities Act, for, from and against any and all losses, claims, suits, damages, expenses, or liabilities to which any of them may become subject under applicable laws (including, but not limited to, the Securities Act and the Exchange Act) and rules and regulations thereunder and will reimburse them for any legal or other expenses reasonably incurred by them in connection with investigating or defending any actions whether or not resulting in liability, insofar as such losses, claims, damages, expenses, liabilities, or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any such application or statement or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary in order to make the statements therein not misleading, but only insofar as any such statement or omission was made in reliance upon and in conformity with information furnished in writing by the representing and warranting party expressly for use therein. Each party agrees at any time upon the request of the other to furnish to the other a written letter or statement confirming the accuracy of the information contained in any proxy statement, registration statement, report, or other application or statement, and confirming that the information contained in such document was furnished expressly for use therein or, if such is not the case, indicating the inaccuracies contained in such document or draft or indicating the information not furnished expressly for use therein. The indemnity agreement contained in this Section 11.6(a) shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the other party, and shall survive the termination of this Agreement or the consummation of the transactions contemplated thereby. (b) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement contained in Section 11.6(a) of this Agreement is for any reason held by a court of competent jurisdiction to be unenforceable as to any or all parties, then the parties in such circumstances shall contribute to the aggregate losses, claims, damages and liabilities (including any investigation, legal and other expenses incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claims asserted) to which any party may be subject in such proportion as the court of law determines based on the relative fault of the parties. 11.7. Standard of Materiality. (a) For purposes of Sections 4, 6, and 7 of this Agreement, the terms "material" and "materially," when used with reference to items normally expressed in dollars, shall be deemed to refer to amounts individually 3% and in the aggregate in excess of 6 percent of the shareholders' equity of the Company as of June 30, 1994, as determined in accordance with generally accepted accounting principles. (b) For purposes of Sections 5 and 8 of this Agreement, the terms "material" and "materially," when used with reference to items normally expressed in dollars, shall be deemed to refer to amounts individually 3% and in the aggregate in excess of 6 percent of the shareholders' equity of Zions Bancorp as of June 30, 1994, as determined in accordance with generally accepted accounting principles. (c) For other purposes and, notwithstanding subsections (a) and (b) of this section 11.7, when used anywhere in this Agreement with explicit reference to any of the federal securities laws or to the Registration Statement, the terms "material" and "materially" shall be construed and understood in accordance with standards of materiality as judicially determined under the federal securities laws. 11.8. Covenant of Zions Bancorp. From the date hereof to the Effective Date, Zions Bancorp shall, contemporaneously with the filing with the SEC of any current report on Form 8-K pursuant to section 13 of the Securities Exchange Act of 1934, describing or relating to any material adverse change in Zions Bancorp, deliver a copy of such report to the Company. 11.9. Adjustments for Certain Events. Anything in this agreement to the contrary notwithstanding, all prices per share and exchange ratios referred to in this Agreement shall be appropriately adjusted to account for stock dividends, split-ups, mergers, recapitalizations, combinations, conversions, exchanges of shares or the like, but not for normal and recurring cash dividends declared or paid in a manner consistent with the established practice of the payer. 11.10. Counterparts. This Agreement may be executed in two or more counterparts each of which shall be deemed to constitute an original, but such counterparts together shall be deemed to be one and the same instrument and to become effective when one or more counterparts have been signed by each of the parties hereto. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for the other counterpart. 11.11. Entire Agreement. This Agreement sets forth the entire understanding of the parties hereto with respect to their commitments to each other and their undertakings vis-a-vis each other on the subject matter hereof. Any previous agreements or understandings between the parties regarding the subject matter hereof are merged into and superseded by this Agreement. Nothing in this Agreement express or implied is intended or shall be construed to confer upon or to give any person, other than Zions Bancorp and Zions Bank and the Company and the Bank and their respective shareholders, any rights or remedies under or by reason of this Agreement. 11.12. Survival of Representations, Warranties, and Covenants. The respective representations, warranties, and covenants of each party to this Agreement are hereby declared by the other parties to have been relied on by such other parties and shall survive the Effective Date. Each party shall be deemed to have relied upon each and every representation and warranty of the other parties regardless of any investigation heretofore or hereafter made by or on behalf of such party. 11.13. Section Headings. The section and subsection headings herein have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof. Any reference to a "person" herein shall include an individual, firm, corporation, partnership, trust, government or political subdivision or agency or instrumentality thereof, association, unincorporated organization, or any other entity. 11.14. Notices. All notices, consents, waivers, or other communications which are required or permitted hereunder shall be in writing and deemed to have been duly given if delivered personally or by messenger, transmitted by telex or telegram, by express courier, or sent by registered or certified mail, return receipt requested, postage prepaid. All communications shall be addressed to the appropriate address of each party as follows: If to Zions Bancorp or Zions Bank: Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Attention: Mr. Harris H. Simmons President and Chief Executive Officer With a required copy to: Brian D. Alprin, Esq. Metzger, Hollis, Gordon & Mortimer 1275 K Street, N.W., Suite 1000 Washington, D. C. 20005 If to the Company or the Bank: First Western Bancorporation Post Office Box 249 Moab, Utah 84532 Attention: Mr. I.D. Nightingale Chairman and President With a required copy to: Bruce G. Cohne, Esq. Cohne, Rappaport & Segal, P.C. Post Office Box 11008 Salt Lake City, Utah 84147-0008 All such notices shall be deemed to have been given on the date delivered, transmitted, or mailed in the manner provided above. 11.15. Choice of Law and Venue. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Utah, without giving effect to the principles of conflict of law thereof. The parties hereby designate Salt Lake County, Utah, to be the proper jurisdiction and venue for any suit or action arising out of this Agreement. Each of the parties consents to personal jurisdiction in such venue for such a proceeding and agrees that it may be served with process in any action with respect to this Agreement or the transactions contemplated thereby by certified or registered mail, return receipt requested, or to its registered agent for service of process in the state of Utah. Each of the parties irrevocably and unconditionally waives and agrees, to the fullest extent permitted by law, not to plead any objection that it may now or hereafter have to the laying of venue or the convenience of the forum of any action or claim with respect to this Agreement or the transactions contemplated thereby brought in the courts aforesaid. 11.16. Knowledge of a Party. References in this Agreement to the knowledge of a party shall mean the knowledge possessed by any of such parties or the present executive officers of such party including, without limitation, information which is or has been in the books and records of such party. 11.17. Binding Agreement. This Agreement shall be binding upon the parties and their respective successors and assigns. [the remainder of this page is intentionally left blank] IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. ZIONS BANCORPORATION Attest: /s/ GARY L. ANDERSON By: /s/ HARRIS H. SIMMONS --------------------------- ----------------------------- Gary L. Anderson Harris H. Simmons Secretary President and Chief Executive Officer ZIONS FIRST NATIONAL BANK Attest: /s/ GARY L. ANDERSON By: /s/ HARRIS H. SIMMONS --------------------------- ----------------------------- Gary L. Anderson Harris H. Simmons Secretary President and Chief Executive Officer FIRST WESTERN BANCORPORATION Attest: /s/ FRANKIE NIGHTINGALE By: /s/ I.D. NIGHTINGALE --------------------------- ----------------------------- I.D. Nightingale Chairman and President FIRST WESTERN NATIONAL BANK Attest: /s/ FRANKIE NIGHTINGALE By: /s/ I.D. NIGHTINGALE --------------------------- ----------------------------- Frankie Nightingale I.D. Nightingale Vice President and Chairman and President Cashier - ---------------------------------- ) State of Utah ) ) ss. County of Salt Lake ) ) - ---------------------------------- On this 31st day of October, 1994, before me personally appeared Harris H. Simmons, to me known to be the President and Chief Executive Officer of Zions Bancorporation, and to be the President and Chief Executive Officer of Zions First National Bank, and acknowledged said instrument to be the free and voluntary act and deed of each of said corporations, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written. /s/ JACQUE HAIDENTHALLER ------------------------- Notary Public - ---------------------------------- ) State of Utah ) ) ss. County of Salt Lake ) ) - ---------------------------------- On this 31st day of October, 1994, before me personally appeared I.D. Nightingale, to me known to be the Chairman and President of First Western Bancorporation, and to be the Chairman and President and First National Bank, and acknowledged said instrument to be the free and voluntary act and deed of each of said corporations, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written. /s/ JACQUE HAIDENTHALLER ------------------------ Notary Public The undersigned members of the Board of Directors of FIRST WESTERN BANCORPORATION (the "Company"), acknowledging that Zions Bancorporation ("Zions Bancorp") has relied upon the action heretofore taken by the board of directors in entering into the Agreement, and has required the same as a prerequisite to Zions Bancorp's execution of the Agreement, do individually and as a group agree, subject to their fiduciary duties to shareholders, to support the Agreement and to recommend its adoption by the other shareholders of the Company. The undersigned do hereby, individually and as a group, until the Effective Date or termination of the Agreement, further agree to refrain from soliciting or, subject to their fiduciary duties to shareholders, negotiating or accepting any offer of merger, consolidation, or acquisition of any of the shares or all or substantially all of the assets of the Company or the Bank. - ------------------------------------ -------------------------------------- - ------------------------------------ -------------------------------------- - ------------------------------------ -------------------------------------- - ------------------------------------ -------------------------------------- - ------------------------------------ -------------------------------------- - ------------------------------------ -------------------------------------- SCHEDULE 1.9 -------------------- I.D. Nightingale Frankie Nightingale SN, Ltd. SCHEDULE 6.9 ------------ SCHEDULE 6.15 ------------- SCHEDULE 6.29 ------------- SCHEDULE 6.32(c) ------------- SCHEDULE 6.36 ------------- SCHEDULE 6.42 ------------- EXHIBIT I ------------- HOLDING COMPANY MERGER AGREEMENT AGREEMENT OF MERGER This Agreement of Merger is made and entered into as of _______________, 1994, between ZIONS BANCORPORATION ("Zions Bancorp"), a corporation organized under the laws of the State of Utah, and FIRST WESTERN BANCORPORATION (the "Company"), a corporation organized under the laws of the State of Utah. Zions Bancorp and the Company are hereinafter sometimes individually called a "Constituent Corporation" and collectively called the "Constituent Corporations." RECITALS Zions Bancorp is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah. As of _______________, 1994, the authorized capital stock of Zions Bancorp consisted of _________ shares of Common Stock, no par value, of which _______ shares were issued and outstanding; no shares of capital stock were held in its treasury on such date. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah As of _______________, 1994, the authorized capital stock of the Company consisted of ___________ shares of Common Stock, $____ par value (the "Company Common Stock"), of which ___________ shares were issued and outstanding; no shares of capital stock were held in its treasury on such date. Zions Bancorp and its affiliate, ZIONS FIRST NATIONAL BANK ("Zions Bank"), and the Company and its affiliate, FIRST WESTERN NATIONAL BANK (the "Bank"), have entered into an Agreement and Plan of Reorganization, dated October 24, 1994 (the "Plan of Reorganization"), setting forth certain representations, warranties, and agreements in connection with the transactions therein and herein contemplated, which contemplates the merger of the Company with and into Zions Bancorp (the "Merger") in accordance with this Agreement of Merger (the "Agreement"). Zions Bank and the Bank are hereinafter sometimes collectively called the "Affiliated Corporations." The Boards of Directors of each of Zions Bancorp, the Company, and the Affiliated Corporations deem the Merger advisable and in the best interests of each corporation and its stockholders. The Boards of Directors of each of Zions Bancorp, the Company, and the Affiliated Corporations, by resolutions duly adopted, have approved the Plan of Reorganization. The Boards of Directors of each of Zions Bancorp and the Company, by resolutions duly adopted, have approved this Agreement. The Board of Directors of the Company has directed that this Agreement, and authorization for the transactions contemplated hereby, be submitted to stockholders of the Company for approval. Pursuant to section 16- 10a-1103 of the Utah Business Corporation Act, approval by the shareholders of Zions Bancorp is not required. At the Effective Date (as defined in Section 1.1 below) shares of Company Common Stock shall be converted into the right to receive shares of the common stock of Zions Bancorp, no par value (the "Zions Bancorp Stock"), as provided herein. In consideration of the premises and the mutual covenants and agreements herein contained and subject to the terms and conditions of the Agreement, the parties hereto hereby covenant and agree as follows: ARTICLE I 1.1. Merger of the Company into Zions Bancorp. The Company shall be merged with and into Zions Bancorp on the date and at the time to be specified in the Articles of Merger to be filed with the Secretary of State of the State of Utah pursuant to section 16-10a-1105 of the Utah Business Corporation Act (such date and time being referred to herein as the "Effective Date"). 1.2. Effect of the Merger. At the Effective Date: (a) The Company and Zions Bancorp shall be a single corporation, which shall be Zions Bancorp. Zions Bancorp is hereby designated as the surviving corporation in the Merger and is hereinafter sometimes called the "Surviving Corporation." (b) The separate existence of the Company shall cease. (c) The Surviving Corporation shall have all the rights, privileges, immunities and powers and shall assume and be subject to all the duties and liabilities of a corporation organized under the Utah Business Corporation Act. (d) The Surviving Corporation shall thereupon and thereafter possess all of the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of the Constituent Corporations; and all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares and all other choses in action, and all and every other interest of and belonging to or due to each of the Constituent Corporations shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; and the title to any real estate, or any interest therein, vested in either of the Constituent Corporations shall not revert or be in any way impaired by reason of the Merger. (e) The Surviving Corporation shall thenceforth be responsible and liable for all the liabilities and obligations of each of the Constituent Corporations; and any claim existing or action or proceeding pending by or against either of the Constituent Corporations may be prosecuted as if the Merger had not taken place, or the Surviving Corporation may be substituted in its place. The Surviving Corporation expressly assumes and agrees to perform all of the Company's liabilities and obligations. Neither the rights of creditors nor any liens upon the property of either Constituent Corporation shall be impaired by the Merger. (f) The Articles of Incorporation of Zions Bancorp as they exist immediately prior to the Effective Date shall be the Articles of Incorporation of the Surviving Corporation until later amended pursuant to Utah law. (g) At the Effective Date and until surrendered for exchange and payment, each outstanding stock certificate which, prior to the Effective Date, represents shares of Company Common Stock shall, without further action, cease to be an issued and existing share and, subject to the rights any holder may have under Sections 16-10a-1301 et seq. of the Utah Business Corporation Act, shall be converted into a right to receive from Zions Bancorp stock, and shall, for all purposes represent the right to receive, upon surrender of the certificate representing such shares, the number of shares of Zions Bancorp Stock specified in Article III; provided that, with respect to any matters relating to stock certificates representing Company Stock, Zions Bancorp may rely conclusively upon the record of stockholders maintained by the Company containing the names and addresses of the holders of record of the Company's Common Stock at the Effective Date. 1.3. Acts to Carry Out This Merger Plan. (a) The Company and its proper officers and directors shall and will do all such acts and things as may be necessary or proper to vest, perfect or confirm title to such property or rights in Zions Bancorp and otherwise to carry out the purposes of this Agreement. (b) If, at any time after the Effective Date, Zions Bancorp shall consider or be advised that any further assignments or assurances in law or any other acts are necessary or desirable to (i) vest, perfect or confirm, of record or otherwise, in Zions Bancorp its right, title, or interest in or under any of the rights, properties or assets of the Company acquired or to be acquired by Zions Bancorp as a result of, or in connection with, the Merger, or (ii) otherwise carry out the purposes of this Agreement, the Company and its proper officers and directors shall be deemed to have granted to Zions Bancorp an irrevocable power of attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such rights, properties or assets in Zions Bancorp and otherwise to carry out the purposes of this Agreement; and the proper officers and directors of Zions Bancorp are fully authorized in the name of the Company or otherwise to take any and all such action. ARTICLE II 2.1. Capitalization. The authorized shares of capital stock of Zions Bancorp as of the Effective Date shall be _________ shares of Common Stock, no par value. 2.2. By-Laws. The By-Laws of Zions Bancorp as they exist immediately prior to the Effective Date shall be the By-Laws of Zions Bancorp until later amended pursuant to Utah law. ARTICLE III 3.1. Manner of Converting Shares. (a) Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth in this Subparagraph (a). Additional terms may be defined elsewhere herein. (i) Average Closing Price. Subject to sections 3.1(a)(iii) and (viii), the average (rounded to the nearest penny) of each Daily Sales Price of Zions Bancorp Stock for the twenty consecutive trading days ending on and including the fifth trading day preceding the Effective Date. (ii) Bank Purchase Price. The sum of: (A) Nine Million Three Hundred Thousand Dollars and No Cents ($9,300,000.00); and (B) the net undistributed income of the Bank between the opening of business on September 1, 1994 and the close of business on the last day of the calendar month preceding the Effective Date, less any undistributed income (but not net of any undistributed loss) derived from activities or transactions which are not normal and recurring banking operations (such as, without limitation, the sale of securities or loans, of capital assets, or of lines of business), all of which shall be determined in accordance with generally accepted accounting principles, it being understood that the amount calculated under this section 3.1(a)(ii)(B) may be a negative number and that the effect of summing such a negative number would be a reduction in the Bank Purchase Price. (iii) Company Fixed Closing Price Election. The election of the Company in its sole discretion, made under the circumstances described in section 10.2(e) of the Plan of Reorganization, that, notwithstanding section 3.1(a)(i), the Average Closing Price shall be $37.00. (iv) Company Purchase Price. The sum of: (A) the product of the Bank Purchase Price and a fraction, the numerator of which is the number of shares of Bank Common Stock held of record by the Company on the Effective Date, and the denominator of which is the total number of shares of Bank Common Stock that shall be issued and outstanding on the Effective Date; and (B) the book value of the net assets of the Company, determined in accordance with generally accepted accounting principles as of the close of business on the last day of the calendar month preceding the Effective Date, exclusive of (A) the equity of the Company in the Bank on such date, or (B) goodwill, core intangibles, prepayments, and other similar intangible assets held by the Company, it being understood that the amount calculated under this section 3.1(a)(iv)(B) may be a negative number and that the effect of summing such a negative number would be a reduction in the Company Purchase Price. (v) Daily Sales Price. For any trading day, the last reported sale price or, if no such reported sale takes place, the mean (unrounded) of the closing bid and asked prices of Zions Bancorp Stock in the over-the-counter market as such prices are reported by the automated quotation system of the National Association of Securities Dealers, Inc., or in the absence thereof by such other source upon which Zions Bancorp and the Company shall mutually agree. (vi) Dissenting Shares. The shares of Company Common Stock held by those shareholders of the Company who have timely and properly exercised their dissenters' rights in accordance with all applicable laws (the "Appraisal Laws"). (vii) Zions Bancorp Stock. The common stock of Zions Bancorp, no par value. (viii) Zions Fixed Closing Price Election. The election of Zions Bancorp in its sole discretion, made under the circumstances described in section 10.2(d) of the Plan of Reorganization, that, notwithstanding section 3.1(a)(i), the Average Closing Price shall be $41.00. (b) Form of Consideration. Subject to the terms, conditions and limitations set forth herein, upon surrender of his or her certificate or certificates, each holder of shares of Company Common Stock shall be entitled to receive in the Merger, in exchange for each share of Company Common Stock held of record by such stockholder as of the Effective Date, that number of shares of Zions Bancorp Stock calculated by dividing the Company Purchase Price by the Average Closing Price, and by further dividing the number so reached by the number of shares of Company Common Stock that shall be issued and outstanding at the Effective Date. 3.2. No Fractional Shares. Zions Bancorp will not issue fractional shares of Zions Bancorp Stock. In lieu of fractional shares of Zions Bancorp Stock, if any, each shareholder of the Company who is entitled to a fractional share of Zions Bancorp Stock shall receive an amount of cash equal to the product of such fraction times the Average Closing Price. Such fractional share interest shall not include the right to vote or to receive dividends or any interest thereon. 3.3. Dissenting Shares. Notwithstanding anything to the contrary herein, each Dissenting Share whose holder, as of the Effective Date, has not effectively withdrawn or lost his or her dissenters' rights under the Appraisal Laws, shall not be converted into or represent a right to receive Zions Bancorp Stock, but the holder thereof shall be entitled only to such rights as are granted by the Appraisal Laws. Each holder of Dissenting Shares who becomes entitled to payment for his or her Company Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment therefor from Zions Bancorp (but only after the amount thereof shall have been agreed upon or finally determined pursuant to such provisions). 3.4. Dividends; Interest. No shareholder of the Company will be entitled to receive dividends on his or her Zions Bancorp Stock until he or she exchanges his or her certificates representing Company Common Stock for Zions Bancorp Stock. Any dividends declared on Zions Bancorp Stock (which stock is to be delivered pursuant to this Agreement) to holders of record on or after the Effective Date shall be paid to the Exchange Agent (as designated in Section 3.5) and, upon receipt of the certificates representing shares of Company Common Stock, the Exchange Agent shall forward to the former shareholders entitled to receive Zions Bancorp Stock (i) certificates representing their shares of Zions Bancorp Stock, (ii) dividends declared thereon subsequent to the Effective Date (without interest) and (iii) the cash value of any fractional shares determined in accordance with Section 3.2 hereof. 3.5. Designation of Exchange Agent. The Company and Zions Bancorp hereby designate Zions Bank as Exchange Agent to effect the exchange contemplated hereby. Zions Bancorp will, promptly after the Effective Date, issue and deliver to Zions Bank the share certificates representing shares of Zions Bancorp Stock and the cash in lieu of fractional shares to be paid to holders of Company Common Stock in accordance with this Agreement. 3.6. Notice of Exchange. Promptly after the Effective Date, Zions Bank shall mail to each holder of one or more certificates formerly representing Company Common Stock, except to such holders as shall have waived the notice required by this Section 3.6, a notice specifying the Effective Date and notifying such holder to surrender his certificate or certificates to Zions Bank for exchange. Such notice shall be mailed to holders by regular mail at their addresses on the records of the Company. ARTICLE IV 4.1. Counterparts. This Agreement may be executed in two or more counterparts each of which shall be deemed to constitute an original, but such counterparts together shall be deemed to be one and the same instrument and to become effective when one or more counterparts have been signed by each of the parties hereto. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for the other counterpart. 4.2. Section Headings. The section and subsection headings herein have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof. Any reference to a "person" herein shall include an individual, firm, corporation, partnership, trust, government or political subdivision or agency or instrumentality thereof, association, unincorporated organization, or any other entity. 4.3. Choice of Law and Venue. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Utah, without giving effect to the principles of conflict of law thereof. The parties hereby designate Salt Lake County, Utah, to be the proper jurisdiction and venue for any suit or action arising out of this Agreement. Each of the parties consents to personal jurisdiction in such venue for such a proceeding and agrees that it may be served with process in any action with respect to this Agreement or the transactions contemplated thereby by certified or registered mail, return receipt requested, or to its registered agent for service of process in the state of Utah. Each of the parties irrevocably and unconditionally waives and agrees, to the fullest extent permitted by law, not to plead any objection that it may now or hereafter have to the laying of venue or the convenience of the forum of any action or claim with respect to this Agreement or the transactions contemplated thereby brought in the courts aforesaid. 4.4. Binding Agreement. This Agreement shall be binding upon the parties and their respective successors and assigns. 4.5. Amendment. Anything herein or elsewhere to the contrary notwithstanding, to the extent permitted by law, this Agreement may be amended, supplemented, or interpreted at any time prior to the Effective Date by written instrument duly authorized and executed by each of the parties hereto; provided, however, that this Agreement may not be amended after the action by shareholders of the Company in any respect that would prejudice the economic interests of such Company shareholders, or any of them, except as specifically provided herein or by like action of such shareholders. 4.6. Termination. This Agreement shall terminate and be abandoned upon (i) termination of the Plan of Reorganization or (ii) the mutual consent of Zions Bancorp and the Company at any time prior to the Effective Date, and there shall be no liability on the part of either of the parties hereto (or any of their respective officers or directors) except to the extent provided in the Plan of Reorganization. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. ZIONS BANCORPORATION Attest: By: -------------------------- -------------------------- Gary L. Anderson Harris H. Simmons Secretary President and Chief Executive Officer FIRST WESTERN BANCORPORATION Attest: By: -------------------------- -------------------------- - ----------------------------------- ) State of Utah ) ) ss. ) County of Salt Lake ) ) - ----------------------------------- On this ________ day of _______, 1994, before me personally appeared Harris H. Simmons, to me known to be the President and Chief Executive Officer of Zions Bancorporation, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written. -------------------------- Notary Public - ----------------------------------- ) State of Utah ) ) ss. ) County of Grand ) ) - ----------------------------------- On this ________ day of _______, 1994, before me personally appeared I.D. Nightingale, to me known to be the Chairman and President of First Western Bancorporation, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written. -------------------------- Notary Public EXHIBIT II BANK MERGER AGREEMENT AGREEMENT TO MERGE FIRST WESTERN NATIONAL BANK with and into ZIONS FIRST NATIONAL BANK under the charter and title of ZIONS FIRST NATIONAL BANK THIS AGREEMENT made between First Western National Bank (hereinafter referred to as the "Bank"), a national banking association organized under the laws of the United States of America, being located in the County of Grand, in the State of Utah, with a Capital of $_________, divided into _______ shares of common stock, each of $_____ par value, Surplus of $_________, and Undivided Profits of $_________, as of ______________, 1994, and Zions First National Bank (herein referred to as "Zions Bank"), a national banking association organized under the laws of the United States of America, being located in the County of Salt Lake, in the State of Utah, with a Capital of $_______, divided into _______ shares of common stock, each of $____ par value, Surplus of $_________, and Undivided Profits of $_________, as of ___________, 1994, each acting pursuant to a resolution of its Board of Directors, adopted by the vote of a majority of its directors, pursuant to the authority given by and in accordance with the provisions of the Act of November 7, 1918, as amended (12 U.S.C. section 215a) witnesseth as follows: SECTION 1 The Bank shall be merged into Zions Bank under the charter of the latter (the "Merger"). SECTION 2 The name of the resulting association (hereinafter referred to as the "Association") shall be Zions First National Bank. SECTION 3 The business of the Association shall be that of a national banking association. This business shall be conducted by the Association at its main office which shall be located at One South Main Street, Salt Lake City, Utah and at its legally established branches. SECTION 4 The amount of capital stock of the Association shall be $_________, divided into _________ shares of common stock, each of $____ par value, and at the time the Merger shall become effective (the "Effective Date"), the Association shall have _______ shares issued and outstanding for capital of $_________. Surplus of the Association will be $_________, and undivided profits, including capital reserves, when combined with the capital and surplus, will be equal to the combined capital structures of the merging banks as stated in the preamble to this Agreement, adjusted, however, for normal earnings and expenses between ___________, 1994, and the Effective Date. SECTION 5 (a) At the Effective Date, the corporate existence of the Bank and Zions Bank shall be merged into and continued in the Association as provided in 12 U.S.C. section 215a; and the Association shall be deemed to be the same corporation as the Bank and Zions Bank. All assets, rights, franchises and interests of the Bank and Zions Bank respectively, in and to every type of property (real, personal and mixed) and choses in action, as they exist at the Effective Date, shall be transferred to and vested in the Association by virtue of the Merger without any deed or other transfer. At the Effective Date and without any order or other action on the part of any court or otherwise, the Association shall hold and enjoy all rights of property, franchises and interests, including appointments, powers, designations and nominations, and all other rights and interests as trustee, executor, administrator, agent, transfer agent, and registrar of stocks and bonds, guardian of estates, assignee, receiver and conservator, and in every other fiduciary capacity, and every agency capacity, in the same manner and to the same extent as such rights, franchises and interests were held or enjoyed by the Bank and Zions Bank, respectively, immediately prior to the Effective Date. (b) At the Effective Date, the Association shall be liable for all liabilities of the Bank and Zions Bank, including liabilities arising out of the operation of a Trust Department, and (except as so provided) all deposits, debts, liabilities, obligations and contracts of the Bank and Zions Bank, respectively, matured or unmatured, whether accrued, absolute, contingent or otherwise, and whether or not reflected or reserved against on balance sheets, books of account or records of the Bank or Zions Bank, as the case may be, shall be those of and are hereby expressly assumed by the Association and shall not be released or impaired by the Merger; and all rights of creditors and other obligees and all liens on property of either the Bank or Zions Bank shall be preserved unimpaired. At the Effective Date, the Association shall be liable for all then existing indemnification obligations of the Bank and Zions Bank under their respective Articles of Association or By-Laws or under any other agreement. At the Effective Date, the Association shall have all rights, and shall be liable for all obligations of the Bank and Zions Bank under all employee compensation and benefit plans and arrangements of the Bank and Zions Bank, and such plans and related trusts, if any, shall continue in effect without any interruption or termination. SECTION 6 (a) At the Effective Date, the currently outstanding _______ shares of common stock of Zions Bank, each of $____ par value, will remain outstanding as shares of the $____ par value common stock of the Association, and the holders of such stock shall retain their present rights. (b) No other capital stock of Zions Bank will be issued in the Merger. (c) The shares of common stock of the Bank shall be canceled, and those not held by Zions Bancorporation, which is (except for directors' qualifying shares) the sole shareholder of Zions Bank ("Zions Bancorp"), shall be immediately converted into the right to receive, subject to the terms, conditions, and limitations set forth herein, such consideration as is provided in section 7 hereof. SECTION 7 (a) Definitions. For the purposes of this Merger Agreement, the following terms shall have the meanings set forth in this Subparagraph (a). Additional terms may be defined elsewhere herein. (i) Average Closing Price. Subject to sections 7(a)(iii) and (vii), the average (rounded to the nearest penny) of each Daily Sales Price of Zions Bancorp Stock for the twenty consecutive trading days ending on and including the fifth trading day preceding the Effective Date. (ii) Bank Purchase Price. The sum of: (A) Nine Million Three Hundred Thousand Dollars and No Cents ($9,300,000.00); and (B) the net undistributed income of the Bank between the opening of business on September 1, 1994 and the close of business on the last day of the calendar month preceding the Effective Date, less any undistributed income (but not net of any undistributed loss) derived from activities or transactions which are not normal and recurring banking operations (such as, without limitation, the sale of securities or loans, of capital assets, or of lines of business), all of which shall be determined in accordance with generally accepted accounting principles, it being understood that the amount calculated under this section 7(a)(ii)(B) may be a negative number and that the effect of summing such a negative number would be a reduction in the Bank Purchase Price. (iii) Company Fixed Closing Price Election. The election of First Western Bancorporation, the majority shareholder of the Bank (the "Company") in its sole discretion, made under the circumstances described in section 10.2(e) of the Agreement and Plan of Reorganization dated October 24, 1994 between Zions Bancorp, Zions Bank, the Company, and the Bank (the "Plan of Reorganization") that, notwithstanding section 1.2(a)(i) of the Plan of Reorganization, the Average Closing Price shall be $37.00. (iv) Daily Sales Price. For any trading day, the last reported sale price or, if no such reported sale takes place, the mean (unrounded) of the closing bid and asked prices of Zions Bancorp Stock in the over-the-counter market as such prices are reported by the automated quotation system of the National Association of Securities Dealers, Inc., or in the absence thereof by such other source upon which Zions Bancorp and the Company shall mutually agree. (v) Dissenting Shares. The shares of Company Common Stock or Bank Common Stock, as the case may be, held by those shareholders of the Company or the Bank who have timely and properly exercised their dissenters' rights in accordance with all applicable laws (the "Appraisal Laws"). (vi) Zions Bancorp Stock. The common stock of Zions Bancorp, no par value. (vii) Zions Fixed Closing Price Election. The election of Zions Bancorp in its sole discretion, made under the circumstances described in section 10.2(d) of the Plan of Reorganization, that, notwithstanding section 1.2(a)(i) of the Plan of Reorganization, the Average Closing Price shall be $41.00. (b) Form of Consideration. Subject to the terms, conditions and limitations set forth herein, upon surrender of his or her certificate or certificates, each holder of shares of Bank Common Stock, except Zions Bancorp, shall be entitled to receive in the Merger, in exchange for each share of Bank Common Stock held of record by such stockholder as of the Effective Date, that number of shares of Zions Bancorp Stock calculated by dividing the Bank Purchase Price by the Average Closing Price, and by further dividing the number so reached by the number of shares of Bank Common Stock that shall be issued and outstanding at the Effective Date, including shares held by Zions Bancorp. SECTION 8 Zions Bancorp will not issue fractional shares of Zions Bancorp Stock. In lieu of fractional shares of Zions Bancorp Stock, if any, each shareholder of the Bank who is entitled to a fractional share of Zions Bancorp Stock shall receive an amount of cash equal to the product of such fraction times the Average Closing Price. Such fractional share interest shall not include the right to vote or to receive dividends or any interest thereon. SECTION 9 Notwithstanding anything to the contrary herein, each Dissenting Share whose holder, as of the Effective Date, has not effectively withdrawn or lost his or her dissenters' rights under the Appraisal Laws, shall not be converted into or represent a right to receive Zions Bancorp Stock, but the holder thereof shall be entitled only to such rights as are granted by the Appraisal Laws. Each holder of Dissenting Shares who becomes entitled to payment for his or her Bank Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment therefor from Zions Bank (but only after the amount thereof shall have been agreed upon or finally determined pursuant to such provisions). SECTION 10 No shareholder of the Bank will be entitled to receive dividends on his or her Zions Bancorp Stock until he or she exchanges his or her certificates representing Bank Common Stock for Zions Bancorp Stock. Any dividends declared on Zions Bancorp Stock (which stock is to be delivered pursuant to this Agreement) to holders of record on or after the Effective Date shall be paid to the Exchange Agent (as designated in Section 1.6 of the Plan of Reorganization) and, upon receipt of the certificates representing shares of Bank Common Stock, the Exchange Agent shall forward to the former shareholders entitled to receive Zions Bancorp Stock (i) certificates representing their shares of Zions Bancorp Stock, (ii) dividends declared thereon subsequent to the Effective Date (without interest) and (iii) the cash value of any fractional shares determined in accordance with Section 8 hereof. SECTION 11 Between the date of this Merger Agreement and the Effective Date, without the written consent of Zions Bank, the Bank will not declare or distribute any stock dividend, authorize a stock split or issue or authorize or make any distribution of its capital stock, or merge with, consolidate with or sell its assets to any other corporation or person, or permit any other corporation to be merged or consolidated with it, to acquire all the assets of any other corporation or person, or to enter into any other transaction not in the ordinary course of the business of banking, or to dispose of any of its assets in any other manner except in the ordinary course of business and for adequate value. SECTION 12 At and after the Effective Date, the Board of Directors of the Association will be composed of the following persons: The Board of Directors of the Association as so constituted shall serve until the next annual meeting or until such time as their successors have been elected and have qualified. SECTION 13 The Effective Date shall be the date upon which the last of the following events shall occur: (a) The first to occur of (a) the date thirty days following the date of the order of the Comptroller of the Currency (the "Comptroller") approving the Merger, or (b) if, pursuant to section 321(b) of the Riegle Community Development and Regulatory Improvement Act of 1994, the Comptroller shall have prescribed a shorter period of time with the concurrence of the Attorney General of the United States, the date on which such shorter period of time shall elapse; (b) The date as of which this Agreement shall have been ratified and confirmed by the affirmative vote of the owners of at least two-thirds of the outstanding shares of each of the Bank and Zions Bank; or (c) Such later date as mutually agreed upon by the Presidents of the Bank and Zions Bank. SECTION 14 This Agreement may be terminated by the unilateral action of the Board of Directors of any participant prior to the approval of the shareholders of said participant or by the mutual consent of the Boards of Directors of both participants after any shareholder group has taken affirmative action. SECTION 15 This Agreement shall be ratified and confirmed by the affirmative vote of the shareholders of each of the banks owning at least two-thirds of its capital stock outstanding, at a meeting held on the call of the Directors, or by a consent in lieu of such a meeting; and the merger shall become effective at the time specified in a certificate to be issued by the Comptroller, under the seal of his office, approving the Merger. [The remainder of this page is intentionally left blank.] WITNESS the signatures and seals of said merging banks this _____ day of __________, 1994, each hereunto set by its President and attested by its Cashier or Secretary or Assistant Secretary, pursuant to a resolution of the Board of Directors, acting by a majority thereof, and witness the signatures hereto of a majority of each of said Boards of Directors. FIRST WESTERN NATIONAL BANK Attest: ____________________ By: ___________________________ _____________________________ __________________________ _____________________________ __________________________ _____________________________ __________________________ _____________________________ __________________________ _____________________________ Directors of First Western National Bank STATE OF UTAH ) ) ss. COUNTY OF GRAND ) On this _____ day of __________, 1994, before me, a Notary Public for the State and County aforesaid, personally came I.D. Nightingale, as Chairman and President, and Frankie Nightingale, as Vice President and Cashier, of First Western National Bank, and each in his or her said capacity acknowledged the foregoing instrument to be the act and deed of said bank and the seal affixed thereto to be its seal; and came also: being a majority of the Board of Directors of said bank, and each of them acknowledged said instrument to be the act and deed of said bank and of himself or herself as director thereof. WITNESS my official seal and signature this day and year aforesaid. (SEAL OF NOTARY) ___________________________________ Notary Public, Grand County My commission expires: ZIONS FIRST NATIONAL BANK Attest:_______________________ By:____________________________ Gary L. Anderson Harris H. Simmons Secretary President and Chief Executive Officer _____________________________ __________________________ _____________________________ __________________________ _____________________________ __________________________ _____________________________ Directors of Zions First National Bank STATE OF UTAH ) ) ss: COUNTY OF SALT LAKE ) On this _____ day of _____, 1994, before me, a Notary Public for the State and County aforesaid, personally came Harris H. Simmons as President and Chief Executive Officer, and Gary L. Anderson, as Secretary, of Zions First National Bank, and each in his said capacity acknowledged the foregoing instrument to be the act and deed of said association and the seal affixed thereto to be its seal; and came also: being a majority of the Board of Directors of said association, and each of them acknowledged said instrument to be the act and deed of said association and of himself as director thereof. WITNESS my official seal and signature this day and year aforesaid. (SEAL OF NOTARY) ___________________________________ Notary Public, Salt Lake County My commission expires: EXHIBIT III ----------- VOTING AGREEMENT October 24, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Ladies and Gentlemen: The undersigned understands that Zions Bancorporation ("Zions Bancorp") and its subsidiary, Zions First National Bank ("Zions Bank"), are about to enter into an Agreement and Plan of Reorganization (the "Agreement") with First Western Bancorporation (the "Company") and First Western National Bank (the "Bank"). The Agreement provides for the merger of the Company with and into Zions Bancorp (the "Holding Company Merger"), and the merger of the Bank into Zions Bank (the "Bank Merger"), and the conversion of outstanding shares of Company Common Stock and Bank Common Stock into Zions Bancorp Common Stock in accordance with the formula therein set forth. In order to induce Zions Bancorp to enter into the Agreement, and intending to be legally bound hereby, the undersigned, subject to the conditions hereinafter stated, represents, warrants and agrees that at the [Company] [Bank] Shareholders' Meeting contemplated by Section [4.1(a)] [4.1(b)] of the Agreement (the "Meeting"), and any adjournment thereof, the undersigned will, in person or by proxy, vote or cause to be voted in favor of the Agreement and the merger agreement entered into thereunder and the [Holding Company Merger] [Bank Merger] the shares of [Company] [Bank] Common Stock beneficially owned by the undersigned individually or, to the extent of the undersigned's proportionate voting interest, jointly with other persons, as well as, to the extent of the undersigned's proportionate voting interest, any other shares of [Company] [Bank] Common Stock over which the undersigned may hereafter acquire beneficial ownership in such capacities (collectively, the "Shares"). Subject to the final paragraph of this agreement, the undersigned further agrees that he will use his best efforts to cause any other shares of [Company] [Bank] Common Stock over which he has or shares voting power to be voted in favor of the Agreement and the merger agreement entered into thereunder and the [Holding Company Merger] [Bank Merger]. The undersigned further represents, warrants and agrees that beginning upon the authorization and execution of the Agreement by the Company and the Bank until the earlier of (i) the consummation of the [Holding Company Merger] [Bank Merger] or (ii) the termination of the Agreement in accordance with its terms, the undersigned will not, directly or indirectly: (a) vote any of the Shares, or cause or permit any of the Shares to be voted, in favor of any other sale of control, merger, consolidation, plan of liquidation, sale of assets, reclassification or other transaction involving the Company or the Bank or any of its subsidiaries which would have the effect of assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate thereof over the Company or the Bank or any substantial portion of the assets of either of them or assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate, or the Company or a wholly-owned subsidiary of the Company, of any subsidiary of the Company or the Bank or any substantial portion of its assets. As used herein, the term "control" means (1) the ability to direct the voting of 10% or more of the outstanding voting securities of a person having ordinary voting power in the election of directors or in the election of any other body having Zions Bancorporation October 24, 1994 Page 2 similar functions or (2) the ability to direct the management and policies of a person, whether through ownership of securities, through any contract, arrangement or understanding or otherwise. (b) voluntarily sell or otherwise transfer any of the Shares, or cause or permit any of the Shares to be sold or otherwise transferred (i) pursuant to any tender offer, exchange offer or similar proposal made by any person other than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain control (as the term "control" is defined in paragraph (a), above) of the Company or the Bank, any of the subsidiaries of either of them or any substantial portion of its assets or those of any subsidiary thereof or to any other person (other than Zions Bancorp or an affiliate thereof) under circumstances where such sale or transfer may reasonably be expected to assist a person seeking to obtain such control, (iii) for the purpose of avoiding the obligations of the undersigned under this agreement, or (iv) to any transferee unless such transferee expressly agrees in writing to be bound by the terms of this agreement in all events. It is understood and agreed that this agreement relates solely to the capacity of the undersigned as a shareholder or other beneficial owner of the Shares and does not prohibit the undersigned, if a member of the Board of Directors of the Company or the Bank, from acting, in his or her capacity as a director, as the undersigned may determine to be appropriate in light of the obligations of the undersigned as a director. It is further understood and agreed that the term "Shares" shall not include any securities beneficially owned by the undersigned as a trustee or fiduciary for another, and that this agreement is not in any way intended to affect the exercise by the undersigned of the under-signed's fiduciary responsibility in respect of any such securities. [The undersigned further agrees to consent to any action taken by the Bank, and to do any other act necessary to enable the Bank, to comply with its obligations under section 7.9 of the Agreement, entitled "Agreement of September 11, 1974."] Very truly yours, ------------------------- Accepted and Agreed to: ZIONS BANCORPORATION By: ----------------------- Title: --------------------- Zions Bancorporation October 24, 1994 Page 3 Name of Shareholder: Shares of Common Stock of First Western [Bancorporation] [National Bank] Beneficially Owned As of October 24, 1994 Name(s) of Number of Record Owner(s) Beneficial Ownership 1 Shares - -------------- -------------------- --------- ______________ 1 For purposes of this Agreement, shares are beneficially owned by the shareholder named above if held in any capacity other than a fiduciary capacity (other than a revocable living trust) and if the shareholder named above has the power (alone or, in the case of shares held jointly with his spouse, together with his spouse) to direct the voting of such shares. EXHIBIT IV OPINION OF COHNE, RAPPAPORT & SEGAL, P.C. _______________, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Zions First National Bank 1380 Kennecott Building Salt Lake City, Utah 84133 Re: Merger of First Western Bancorporation With and Into Zions Bancorporation, and of First Western National Bank With and Into Zions First National Bank, In Exchange for Stock of Zions Bancorporation Ladies and Gentlemen: We are special counsel to First Western Bancorporation, a Utah corporation (the "Company"), and its subsidiary, First Western National Bank, a national banking association organized under the laws of the United States with its head office located at Moab, County of Grand, State of Utah (the "Bank"), in connection with the merger (the "Holding Company Merger") of the Company with and into Zions Bancorporation, a Utah corporation ("Zions Bancorp"), pursuant to the provisions of section 16-10a-1101 et seq. of the Utah Business Corporation Act, and the merger (the "Bank Merger") of the Bank with and into Zions First National Bank, a national banking association organized under the laws of the United States with its head office located at Salt Lake City, County of Salt Lake, State of Utah ("Zions Bank"), pursuant to the provisions of section 215a of the National Bank Act (12 U.S.C. section 215a), in exchange for which shareholders of the Company and shareholders of the Bank will receive shares of the common stock of Zions Bancorp pursuant to an Agreement and Plan of Reorganization dated October 24, 1994 (the "Agreement") and certain additional agreements whose execution is contemplated in the Agreement, including the Agreement of Merger by and between Zions Bancorp and the Company (the "Holding Company Merger Agreement"), and the Agreement of Merger by and between Zions Bank and the Bank (the "Bank Merger Agreement") (the Agreement, the Holding Company Merger Agreement, and the Bank Merger Agreement to be referred to collectively as the "Agreements"). This opinion is provided to you pursuant to Section 4.3 of the Agreement. In our capacity as special counsel, we have participated in the preparation of a Registration Statement filed with the Securities and Exchange Commission on Form S-4 covering the shares of Zions Bancorp stock to be issued in connection with the Holding Company Merger and the Bank Merger (the "Registration Statement") including the Joint Prospectus/Proxy Statement for the shareholders of the Company and shareholders of the Bank (the "Prospectus/Proxy Statement"). In addition, in rendering the opinions that follow, we have examined the Agreements and the exhibits and schedules appended thereto; the articles of Zions Bancorporation Zions First National Bank _______________, 1994 Page 2 incorporation and by-laws of the Company and the articles of association and by-laws of the Bank; the minutes of certain meetings of the respective boards of directors of the Company and the Bank, and such other corporate documents and corporate records of the Company and the Bank as we have deemed necessary or appropriate for the purpose of rendering the following opinions. In addition, we have interviewed officers of the Company and the Bank and undertaken and performed such other procedures as we have deemed necessary or appropriate for the purpose of rendering the following opinions. In these regards, we have examined and relied upon representations of Zions Bancorp and Zions Bank contained in the Agreements, and, where we have deemed appropriate, representations or certifications of officers or public officials. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons, and the conformity to the originals of all documents submitted to us as copies. In making our examination of any documents, we have assumed that all parties other than the Company and the Bank had the corporate power and authority to enter into and perform all obligations thereunder and, as to such parties other than the Company and the Bank, we have also assumed the execution and delivery of such documents and the validity and binding effect and enforceability thereof. We have also assumed that the Agreements have not been otherwise amended by oral or written agreement or by conduct of the parties thereto. We have assumed that the certifications and representations dated earlier than the date hereof on which we have expressed reliance herein continue to remain accurate, insofar as material to our opinions, from such earlier date through the date hereof. On the foregoing basis, and as otherwise described herein, we are of the opinion that: (a) Organization, Powers and Qualifications. (i) The Company is a corporation which is duly organized, validly existing and in good standing under the laws of the State of Utah and has all requisite corporate power and authority to own and operate its properties and assets, to lease properties used in its business and to carry on its business as now conducted. The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. All outstanding shares of capital stock of the Company have been duly and validly authorized and issued, and are fully paid and non-assessable. (ii) The Bank is a national banking association which is duly organized, validly existing and in good standing under the laws of the United States, and has all requisite corporate power and authority to own and operate its properties and assets, to lease properties used in its business and to carry on its business as now conducted. The deposit accounts of the Bank are insured by the Bank Insurance Fund of the Federal Deposit Insurance Corporation and, to the best of our knowledge, no proceedings for the termination of such insurance are pending or threatened. All outstanding shares of capital stock of the Bank have been duly and validly authorized and issued and, subject to section 5205 of the Revised Statutes (12 U.S.C. section 55), are fully paid and non-assessable. Subject to section 5205 of the Revised Statutes, all shares of the Bank held of record by the Company are owned directly by the Company free and clear of any adverse claims. (b) Execution and Performance of Agreements. Each of the Company and the Bank has all requisite corporate power and authority to execute, deliver and Zions Bancorporation Zions First National Bank _______________, 1994 Page 3 perform each of the Agreements to which it is a party and to carry out the terms thereof and the transactions contemplated thereby. (c) Absence of Violations. To the best of our knowledge, neither the Company nor the Bank is in violation of its articles of incorporation or association or its bylaws, or any law, regulation, ordinance, order or restriction imposed by the United States, any state, municipality, or other political subdivision or agency thereof, or any order of any court or other competent tribunal having jurisdiction over the Company in respect of the conduct of its business or the ownership of its properties, or over the Bank in respect of the conduct of its business or the ownership of its properties, which, either individually or in the aggregate with all such other violations, would materially and adversely affect the business, operations, or condition (financial or otherwise) of the Company or the Bank or its observance or performance of the terms of any of the Agreements to which it is a party. (d) Compliance with Corporate Documents and Agreements. Neither the execution, delivery, or performance by the Company or the Bank of the Agreements to which it is a party nor the consummation of the transactions contemplated therein will violate, conflict with, constitute a breach of or default under the articles of incorporation or by-laws of the Company, or the articles of association or by-laws of the Bank, or any agreement or instrument to which the Company or the Bank is a party (or which is binding on them or their assets) or by which the Company or the Bank is bound, and will not result in the creation of any lien on, or security interest in, any of their respective assets. (e) Binding Obligations; Due Authorization. Each of the Agreements to which the Company or the Bank is a party has been duly authorized by all necessary corporate action on the part of each of the Company and the Bank, has been duly executed and delivered by each of the Company and the Bank, and constitutes a valid, legal and binding obligation of each of the Company and the Bank, as appropriate, enforceable against each in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws or judicial decisions relating to or affecting creditors' rights and remedies generally or the rights of creditors, or of the FDIC as insurer, regulator, conservator or receiver, of banks the accounts of which are insured by the FDIC in particular, or by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) as to whose availability we express no opinion. No other corporate proceedings on the part of the Company or the Bank are necessary to authorize each of the Agreements to which either is a party or the carrying out of the transactions contemplated hereby. (f) Absence of Default. Except for those consents (including, but not limited to, approvals, licenses, registrations or declarations) that have been obtained, the execution and delivery by each of the Company and the Bank of each of the Agreements to which it is a party and consummation of the transactions contemplated thereby do not require the approval or consent of any governmental authority or third party. The execution and delivery by each of the Company and the Bank of each of the Agreements to which it is a party, the consummation of the transactions contemplated thereby and the compliance with and fulfillment of the terms thereof by each of the Company and the Bank, respectively, will not require any authorization, consent, approval or exemption by any person which has not been obtained or any notice or filing which has not been given or done. (g) Compliance with Securities Laws. The Prospectus/Proxy Statement complies as to form in all material respects with the requirements of the Zions Bancorporation Zions First National Bank _______________, 1994 Page 4 federal securities laws and published rules and regulations of the Securities and Exchange Commission as of the date thereof. In connection with our participation in the preparation of the Prospectus/Proxy Statement, we have not independently verified the accuracy, completeness or fairness of the statements contained therein or of documents incorporated by reference therein, and we cannot make any representation to you as to the accuracy or completeness of statements of fact contained or incorporated by reference in the Prospectus/Proxy Statement or Registration Statement. Nothing, however, has come to our attention that would lead us to believe that the Prospectus/Proxy Statement as of its issue date or the date hereof, or the Registration Statement as of the effective date or the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which we make no statement) and that no event has occurred which should have been set forth in an amendment or supplement to the Prospectus/Proxy Statement or Registration Statement which has not been set forth in such amendment or supplement. This opinion is given solely for your benefit in connection with the transactions contemplated by the Agreements, and no other person or entity is entitled to rely thereon, nor may copies be delivered or furnished to any other party, nor may all or portions of this opinion be quoted, circulated, or referred to in any other document without our prior consent. Respectfully submitted, EXHIBIT V OPINION OF METZGER, HOLLIS, GORDON & MORTIMER _______________, 1994 First Western Bancorporation Post Office Box 249 Moab, Utah 84532 First Western National Bank Post Office Box 249 Moab, Utah 84532 Re: Merger of First Western Bancorporation With and Into Zions Bancorporation, and of First Western National Bank With and Into Zions First National Bank, In Exchange for Stock of Zions Bancorporation Ladies and Gentlemen: We are special counsel to Zions Bancorporation, a Utah corporation ("Zions Bancorp"), and its wholly-owned subsidiary (except for directors' qualifying shares), Zions First National Bank, a national banking association organized under the laws of the United States with its head office located at Salt Lake City, County of Salt Lake, State of Utah ("Zions Bank"), in connection with the merger (the "Holding Company Merger") of First Western Bancorporation, a Utah corporation (the "Company"), with and into Zions Bancorp, pursuant to the provisions of section 16-10a-1101 et seq. of the Utah Business Corporation Act, and the merger (the "Bank Merger") of First Western National Bank, a national banking association organized under the laws of the United States with its head office located at Moab, County of Grand, State of Utah (the "Bank"), with and into Zions Bank, pursuant to the provisions of section 215a of the National Bank Act (12 U.S.C. section 215a), in exchange for which shareholders of the Company and shareholders of the Bank will receive shares of the common stock of Zions Bancorp pursuant to an Agreement and Plan of Reorganization dated October 24, 1994 (the "Agreement") and certain additional agreements whose execution is contemplated in the Agreement, including the Agreement of Merger by and between Zions Bancorp and the Company (the "Holding Company Merger Agreement"), and the Agreement of Merger by and between Zions Bank and the Bank (the "Bank Merger Agreement") (the Agreement, the Holding Company Merger Agreement, and the Bank Merger Agreement to be referred to collectively as the "Agreements"). This opinion is provided to you pursuant to Section 5.2 of the Agreement. In our capacity as special counsel, we have participated in the preparation of a Registration Statement filed with the Securities and Exchange Commission on Form S-4 covering the shares of Zions Bancorp stock to be issued in connection with the Holding Company Merger and the Bank Merger (the "Registration Statement") including the Joint Prospectus/Proxy Statement for the shareholders of the Company and shareholders of the Bank (the "Prospectus/Proxy Statement"). First Western Bancorporation First Western National Bank _______________, 1994 Page 2 In addition, in rendering the opinions that follow, we have examined the Agreements and the exhibits and schedules appended thereto; the articles of incorporation and by-laws of Zions Bancorp and the articles of association and by-laws of Zions Bank; the minutes of certain meetings of the respective boards of directors of Zions Bancorp and Zions Bank, and such other corporate documents and corporate records of Zions Bancorp and Zions Bank as we have deemed necessary or appropriate for the purpose of rendering the following opinions. We have also examined a document dated _______________, 1994 of the Comptroller of the Currency (the "Comptroller") approving the application of Zions Bank and the Bank to merge pursuant to Section 18(c) of the Federal Deposit Insurance Act, as amended, the document dated _______________, 1994 of the Federal Reserve Bank of San Francisco waiving the requirement to submit an application under the Bank Holding Company Act of 1956, as amended, and the document dated ________________, 1994 of the Commissioner of Financial Institutions of the State of Washington (the "Commissioner") approving the transactions contemplated by the Agreements. In addition, we have interviewed officers of Zions Bancorp and Zions Bank and undertaken and performed such other procedures as we have deemed necessary or appropriate for the purpose of rendering the following opinions. In these regards, we have examined and relied upon representations of the Company and the Bank contained in the Agreements, and, where we have deemed appropriate, representations or certifications of officers or public officials. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons, and the conformity to the originals of all documents submitted to us as copies. In making our examination of any documents, we have assumed that all parties other than Zions Bancorp and Zions Bank had the corporate power and authority to enter into and perform all obligations thereunder and, as to such parties other than Zions Bancorp and Zions Bank, we have also assumed the execution and delivery of such documents and the validity and binding effect and enforceability thereof. We have also assumed that the Agreements have not been otherwise amended by oral or written agreement or by conduct of the parties thereto. We have assumed that the certifications and representations dated earlier than the date hereof on which we have expressed reliance herein continue to remain accurate, insofar as material to our opinions, from such earlier date through the date hereof. Based on the foregoing, and as otherwise described herein, we are of the opinion that: (a) Organization, Powers and Qualifications. (i) Zions Bancorp is a corporation which is duly organized, validly existing and in good standing under the laws of the State of Utah and has all requisite corporate power and authority to own and operate its properties and assets, to lease properties used in its business, and to carry on its business as now conducted. (ii) Zions Bank is a national banking association which is duly organized, validly existing, and in good standing under the laws of the United States and has all requisite corporate power and authority to own and operate its properties and assets, to lease properties used in its business and to carry on its business as now conducted. The deposit accounts of Zions Bank are insured by the Bank Insurance Fund of the Federal Deposit Insurance Corporation and, to the best of our knowledge, no proceedings for the termination of such insurance are pending or threatened. First Western Bancorporation First Western National Bank _______________, 1994 Page 3 (b) Execution and Performance of Agreements. Each of Zions Bancorp and Zions Bank has all requisite corporate power and authority to execute, deliver, and perform each of the Agreements to which it is a party and to carry out the terms thereof and the transactions contemplated thereby. (c) Compliance with Corporate Documents. Neither the execution, delivery, or performance by Zions Bancorp or Zions Bank of the Agreements to which it is a party nor the consummation of the transactions contemplated therein will violate, conflict with, or constitute a breach of or default under the articles of incorporation or by-laws of Zions Bancorp or the articles of association or by-laws of Zions Bank. (d) Binding Obligations; Due Authorization. Each of the Agreements to which Zions Bancorp and Zions Bank is a party has been duly authorized by all necessary corporate action on the part of each of Zions Bancorp and Zions Bank, has been duly executed and delivered by each of Zions Bancorp and Zions Bank, and constitutes a valid, legal and binding obligation of each of Zions Bancorp and Zions Bank, as appropriate, enforceable against each in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or similar laws or judicial decisions relating to or affecting creditors' rights generally or the rights of creditors, or of the FDIC as insurer, regulator, conservator or receiver, of banks the accounts of which are insured by the FDIC in particular, or by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) as to whose availability we express no opinion. No other corporate proceedings on the part of Zions Bancorp and Zions Bank are necessary to authorize each of the Agreements to which either is a party or the carrying out of the transactions contemplated hereby. (e) Regulatory Approvals. All approvals required to be obtained from the Comptroller, the Board of Governors of the Federal Reserve System, and the Commissioner to consummate the transactions contemplated by the Agreement and Plan of Reorganization have been obtained. Except for those approvals, the execution and delivery by each of Zions Bancorp and Zions Bank of each of the Agreements to which it is a party and consummation of the transactions contemplated thereby do not require the approval or consent of any bank regulatory authority. (f) Issuance of Zions Bancorp Common Stock. The shares of the common stock of Zions Bancorp, no par value per share, to be issued by Zions Bancorp pursuant to the Agreement, the Holding Company Merger Agreement, and the Bank Merger Agreement, when issued pursuant to and in accordance with the Agreement, the Holding Company Merger Agreement, and the Bank Merger Agreement, will be, when issued in exchange for the assets of the Company or the assets of the Bank, as the case may be, duly authorized and legally issued, fully paid, and non-assessable. (g) Compliance with Securities Laws. (i) The Registration Statement has become effective under the Securities Act of 1933 (the "Act") and, to the best of our knowledge, no stop order proceedings with respect thereto have been instituted or are pending or threatened under the Act with respect to the Registration Statement. (ii) The Registration Statement complies as to form in all material respects with the requirements of the federal securities laws and published rules and regulations of the Securities and Exchange Commission as of the date First Western Bancorporation First Western National Bank _______________, 1994 Page 4 thereof. In connection with our participation in the preparation of the Registration Statement, we have not independently verified the accuracy, completeness or fairness of the statements contained therein or of documents incorporated by reference therein, and we cannot make any representation to you as to the accuracy or completeness of statements of fact contained or incorporated by reference in the Registration Statement or the Prospectus/Proxy Statement. Nothing, however, has come to our attention that would lead us to believe that the Registration Statement as of the effective date or the date hereof, or the Prospectus/Proxy Statement as of the issue date or the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (other than the financial statements and schedules and other financial and statistical data included or incorporated by reference therein, as to which we make no statement) or that any event has occurred which should have been set forth in an amendment or supplement to the Registration Statement or Prospectus/Proxy Statement and which has not been set forth in such amendment or supplement. This opinion is given to you for your sole benefit in connection with the transactions contemplated in the Agreements, and no other person or entity is entitled to rely thereon, nor may copies be delivered or furnished to any other party, nor may all or portions of this opinion be quoted, circulated, or referred to in any other document without our prior written consent. Very truly yours, METZGER, HOLLIS, GORDON & MORTIMER By:_______________________________ Brian D. Alprin BDA/ccj EX-2.2 3 EXHIBIT 2.2 EXHIBIT 2.2 FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION This FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION ("First Amendment") made as of the 4th day of January, 1995, between ZIONS BANCORPORATION ("Zions Bancorp"), a Utah corporation having its principal office in Salt Lake City, Utah, ZIONS FIRST NATIONAL BANK ("Zions Bank") a national banking association having its head office in Salt Lake City, Utah, FIRST WESTERN BANCORPORATION (the "Company"), a Utah corporation having its principal office in Moab, Utah, and FIRST WESTERN NATIONAL BANK, a national banking association, having its head office in Moab, Utah (the "Bank"). W I T N E S S E T H T H A T : WHEREAS, Zions Bancorp, Zions Bank, the Company, and the Bank (collectively, the "Parties") entered into an Agreement and Plan of Reorganization dated as of October 24, 1994 (the "Reorganization Agreement"), pursuant to which the Parties agreed to the affiliation of the Company and the Bank with Zions Bancorp and Zions Bank, and WHEREAS, the Reorganization Agreement contemplated the merger (the "Holding Company Merger") of the Company with and into Zions Bancorp, and the merger (the "Bank Merger") of the Bank with and into Zions Bank, all in a transaction to be accounted for as a pooling of interests; and WHEREAS, Zions Bancorp has concluded that the transaction cannot be accounted for as a pooling of interests; and WHEREAS, the Parties have determined that they wish to pursue the transactions contemplated by the Reorganization Agreement even if they are accounted for as a purchase; NOW, THEREFORE, in consideration of these premises and the mutual agreements hereinafter set forth and those set forth in the Reorganization Agreement, the Parties agree to amend the Reorganization Agreement in the manner set forth below: A. Section 3.2 of the Reorganization Agreement, "Accounting Treatment," is deleted and replaced by the following place marker: 3.2. [reserved.] B. Section 7.7 of the Reorganization Agreement, "Affiliates' Agreements," is amended to read as follows: 7.7. Affiliates' Agreements. The Company will furnish to Zions Bancorp a list of all persons known to the Company who at the date of the Company's special meeting of shareholders to vote upon the transactions contemplated by this Agreement may be deemed to be "affiliates" of the Company within the meaning of Rule 145 under the 1933 Act. The Company will use its best efforts to cause each such "affiliate" of the Company to deliver to Zions Bancorp not later than thirty days prior to the Effective Date a written agreement providing that such person will not sell, pledge, transfer or otherwise dispose of the shares of Company Common Stock or Bank Common Stock beneficially owned by such person, or the shares of Zions Bancorp Stock to be received by such person in the Holding Company Merger or the Bank Merger, or any other shares of Zions Bancorp Stock held by such person, except in compliance with the applicable provisions of the 1933 Act and the rules and regulations thereunder. C. Section 9.1 of the Reorganization Agreement, "Place and Time of Closing," is amended to read as follows: 9.1 Place and Time of Closing. Closing shall take place at the offices of Zions Bancorp, 1380 Kennecott Building, Salt Lake City, Utah, or such other place as the parties choose, commencing at 4:00 p.m., local time, on the Effective Date, provided that all conditions precedent to the obligations of the parties hereto to close have then been met or waived. D. This First Amendment may be executed in two or more counterparts each of which shall be deemed to constitute an original, but such counterparts together shall be deemed to be one and the same instrument and to become effective when one or more counterparts have been signed by each of the Parties. It shall not be necessary in making proof of this First Amendment or any counterpart hereof to produce or account for the other counterpart. E. This First Amendment shall be governed by, construed, and enforced in accordance with the laws of the State of Utah, without giving effect to the principles of conflict of law thereof. F. This First Amendment shall be binding upon the parties and their respective successors and assigns. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first above written. ZIONS BANCORPORATION Attest: /S/Gary L. Anderson By: /S/Harris H. Simmons ----------------------- -------------------- Gary L. Anderson Harris H. Simmons Secretary President and Chief Executive Officer ZIONS FIRST NATIONAL BANK Attest: /S/Gary L. Anderson By: /S/Harris H. Simmons ----------------------- -------------------- Gary L. Anderson Harris H. Simmons Secretary President and Chief Executive Officer FIRST WESTERN BANCORPORATION Attest: /S/Frankie Nightingale By: /S/I.D. Nightingale ----------------------- I.D. Nightingale Chairman and President FIRST WESTERN NATIONAL BANK Attest: /S/Frankie Nightingale By: /S/I.D. Nightingale ----------------------- I.D. Nightingale Chairman and President - -------------------------------- ) State of Utah ) ) ss. County of Grand ) ) - -------------------------------- On this 3rd day of January, 1995, before me personally appeared I.D. Nightingale, to me known to be the Chairman and President of First Western Bancorporation, and to be the Chairman and President and First Western National Bank, and acknowledged said instrument to be the free and voluntary act and deed of each of said corporations, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written. /S/Jacque Haidenthaller -------------------------------- Notary Public - -------------------------------- ) State of Utah ) ) ss. County of Grand ) ) - -------------------------------- On this 11th day of January 1995, before me personally appeared Harris H. Simmons, to me known to be the President and Chief Executive Officer of Zions Bancorporation, and to be the President and Chief Executive Officer of Zions First National Bank, and acknowledged said instrument to be the free and voluntary act and deed of each of said corporations, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written. /S/ Robin Failor -------------------------- Notary Public EX-5 4 EXHIBIT 5 EXHIBIT 5 Metzger, Hollis, Gordon & Mortimer 1275 K Street, N.W., Suite 1000 Washington, D.C. 20005 (202) 842-1600 April 10, 1995 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Gentlemen: We have acted as counsel to Zions Bancorporation ("Zions") in connection with the Agreement and Plan of Reorganization among First Western Bancorporation ("First Western"), First Western National Bank (the "Bank"), Zions, and Zions First National Bank ("Zions Bank"), dated October 24, 1994 as amended as of January __, 1995, and a related Agreement of Merger between First Western and Zions, and a related Agreement to Merge between the Bank and Zions Bank (collectively, the "Plan of Reorganization"), whereby First Western will be merged into Zions, with Zions being the surviving corporation, and, following the First Western-Zions merger, whereby the Bank will be merged into Zions Bank, with Zions Bank being the surviving corporation (collectively, the "Mergers"). At the time the Mergers become effective, all of the issued and outstanding shares of common stock, $10 par value, of First Western ("First Western Common Stock") and all of the issued and outstanding shares (except for shares held by Zions) of common stock, $10 par value, of the Bank ("Bank Common Stock"), in each case other than shares as to which the holders exercise and perfect dissenters' rights, will be exchanged for shares of common stock, no par value, of Zions ("Zions Common Stock"). We are also acting as counsel to Zions in connection with the Registration Statement on Form S-4 (the "Registration Statement") to be filed by Zions with the Securities and Exchange Commission for the purpose of registering under the Securities Act of 1933, as amended, the aggregate maximum of 325,000 shares of Zions Common Stock into which outstanding First Western Common Stock and Bank Common Stock may be converted upon effectiveness of the Mergers. This opinion is being furnished for the purpose of being filed as an exhibit to the Registration Statement. In connection with this opinion, we have examined, among other things: (1) an executed copy of the Plan of Reorganization; (2) a copy certified to our satisfaction of the Restated Articles of Incorporation of Zions as in effect on the date hereof; (3) copies certified to our satisfaction of resolutions adopted by the Board of Directors of Zions on September 16, 1994, including resolutions approving the Plan of Reorganization; and (4) such other documents, corporate proceedings, and statutes as we considered necessary to enable us to furnish this opinion. We have assumed for the purpose of this opinion that: (1) the Plan of Reorganization has been duly and validly authorized, executed, and delivered by First Western and the Bank; and (2) the Mergers will be consummated in accordance with the terms of the Plan of Reorganization. Based upon the foregoing, we are of the opinion that the shares of Zions Common Stock into which the outstanding First Western Common Stock and Bank Common Stock will be converted in the Mergers in accordance with the Plan of Reorganization will, at the time such Mergers become effective, be duly authorized, validly issued, fully paid and nonassessable shares of Zions Common Stock. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Opinions" in Joint Proxy Statement/Prospectus forming a part of the Registration Statement. Very truly yours, METZGER, HOLLIS, GORDON & MORTIMER By /s/ Laurence S. Lese --------------------------------- Laurence S. Lese LSL/kbl EX-23.1 5 EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors Zions Bancorporation: We consent to the use of our reports dated January 24, 1995 and March 28, 1995, with respect to the consolidated financial statements and financial statement schedule, respectively, of Zions Bancorporation as of December 31, 1994 and 1993 and for each of the years in the three-year period ended December 31, 1994 incorporated herein by reference, and to the reference to our firm under the heading "Experts" in the prospectus. Our reports refer to changes in accounting principles relating to the adoption of the Financial Accounting Standards Board's Statements of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, No. 109 Accounting for Income Taxes, and No. 115, Accounting for Certain Investments in Debt and Equity Securities. /s/ KPMG PEAT MARWICK LLP ---------------------------- KPMG PEAT MARWICK LLP Salt Lake City, Utah April 12, 1995 EX-23.2 6 EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors Zions Bancorporation: We consent to the use of our reports dated February 23, 1995 with respect to the consolidated financial statements of First Western Bancorporation as of December 31, 1994 and 1993, and for each of the years in the three-year period ended December 31, 1994, included herein, and to the reference to our firm under the heading "Experts" in the prospectus. Our report refers to the change in accounting principles relating to the adopting of the Financial Accounting Standards Board's Statements of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. /s/ FORTNER, BAYENS, LEVKULICH AND CO., P.C. Denver, Colorado April 13, 1995 EX-23.4 7 EXHIBIT 23.4 EXHIBIT 23.4 CONSENT OF TAX COUNSEL We hereby consent to the use of our tax opinion attached as Appendix C in the prospectus and to the reference to our firm under the heading "Legal Opinions" in the prospectus. DATED this 11th day of April, 1995. COHNE, RAPPAPORT & SEGAL, P.C. By: /s/ Bruce G. Cohne -------------------------- Bruce G. Cohne EX-99.1 8 EXHIBIT 99.1 EXHIBIT 99.1 ____________, 1995 Shareholders of First Western Bancorporation Dear Shareholder: A Special Meeting of the Shareholders of First Western Bancorporation ("First Western") has been called for _____ a.m., Mountain Standard Time, on _________, 1995, at the offices of First Western located at Main and Third South Streets, Moab, Utah. The purpose of the Special Meeting is to consider and act upon an Agreement and Plan of Reorganization (the "Plan of Reorganization") among First Western, Zions Bancorporation ("Zions"), Zions First National Bank ("Zions Bank") and First Western National Bank (the "Bank"). If the Plan of Reorganization is approved and all conditions are met, the Plan of Reorganization will result in the merger of First Western into Zions with Zions being the surviving entity and the subsequent merger of the Bank into Zions Bank with Zions Bank being the surviving entity. Upon consummation of the Plan of Reorganization, each holder of First Western Common Stock will, upon surrender of the shareholder's stock certificate, be entitled to receive in exchange for each share held as of the effective date of the Plan of Reorganization, that number of shares of Zions Common Stock calculated by dividing the Holding Company Purchase Price (as defined in the Plan of Reorganization) by the average closing price (as defined in the Plan of Reorganization) of Zions Common Stock and by further dividing the number so reached by the number of shares of First Western Common Stock issued and outstanding as of the effective date of the merger. No fractional shares of Zions Common Stock will be issued. Instead, cash in an amount equal to the fractional part of a share multiplied by the average closing price of Zions Common Stock will be paid to First Western shareholders. For example, assuming that the Plan of Reorganization had been consummated as of April 3, 1995, that the average closing price of Zions Common Stock had been $39.48, that the net undistributed income of the Bank had been $636,189, and that the book value of First Western's net assets had been $654,894, the merger would have resulted in an exchange ratio of 6.229 shares of Zions Common Stock for each share of First Western Common Stock, or an equivalent consideration to holders of First Western Common Stock of $248.69 per share. The accompanying Proxy Statement details the terms of the proposed Plan of Reorganization and merger and provides information concerning First Western, Zions, Zions Bank, and the Bank and the Plan of Reorganization. The Proxy Statement contains important information necessary for you to make a decision about how to vote at the Special Meeting. Please read it carefully. The affirmative vote of the holders of two-thirds of the issued and outstanding shares of First Western is required for approval of the Plan of Reorganization. Therefore, it is important that you vote. The failure to vote will have the same effect as a vote against the merger. Consequently, please mark, sign, date and return the enclosed proxy as soon as possible. Any shareholder may attend the Special Meeting and vote in person if desired. Consummation of the Plan of Reorganization and merger is subject to approval by federal and state bank regulatory agencies and to certain other conditions. If approved, the Plan of Reorganization will most likely be consummated during the second quarter of 1995, assuming that all banking regulatory approvals are received timely. The Board of Directors has unanimously approved the Plan of Reorganization and determined that the merger is in the best interests of First Western, its shareholders, employees and the community it serves and is fair to shareholders of First Western from a financial point of view. The Board of Directors unanimously recommends that you vote to approve the Plan of Reorganization. If the Plan of Reorganization is approved by the shareholders, Zions on or shortly after the effective date of the Plan of Reorganization will send you instructions describing the procedure to be followed to exchange your First Western stock certificate for common stock of Zions. Please do not send your certificates to the Zions or Zions Bank prior to receiving these instructions. Sincerely, I.D. Nightingale Chairman of the Board EX-99.2 9 EXHIBIT 99.2 EXHIBIT 99.2 ____________, 1995 Shareholders of First Western National Bank Dear Shareholder: A Special Meeting of the Shareholders of First Western National Bank (the "Bank") has been called for _____ a.m., Mountain Standard Time, on _________, 1995, at the offices of the Bank located at Main and Third South Streets, Moab, Utah. The purpose of the Special Meeting is to consider and act upon an Agreement and Plan of Reorganization (the "Plan of Reorganization") among First Western Bancorporation ("First Western"), Zions Bancorporation ("Zions"), Zions First National Bank ("Zions Bank") and the Bank. If the Plan of Reorganization is approved and all conditions are met, the Plan of Reorganization will result in the merger of the Bank into Zions Bank with Zions Bank being the surviving entity and the merger of First Western into Zions with Zions being the surviving entity. Upon consummation of the Plan of Reorganization, each holder (other than Zions) of Bank Common Stock will, upon surrender of the shareholder's stock certificate, be entitled to receive in exchange for each share held as of the effective date of the Plan of Reorganization, that number of shares of Zions Common Stock calculated by dividing the $9,300,000 purchase price plus certain accretions (as described in the Plan of Reorganization) by the average closing price (as defined in the Plan of Reorganization) of Zions Common Stock and by further dividing the number so reached by the number of shares of Bank Common Stock issued and outstanding as of the effective date of the merger. No fractional shares of Zions Common Stock will be issued. Instead, cash in an amount equal to the fractional part of a share multiplied by the average closing price of Zions Common Stock will be paid to Bank shareholders. For example, assuming that the Plan of Reorganization had been consummated as of April 3, 1995, that the average closing price of Zions Common Stock had been $39.48, and that the net undistributed income of the Bank had been $636,189, the merger would have resulted in an exchange ratio of 4.195 shares of Zions Common Stock for each share of Bank Common Stock (other than shares held by Zions), or an equivalent consideration to holders of Bank Common Stock (other than Zions) of $165.60 per share. The accompanying Proxy Statement details the terms of the proposed Plan of Reorganization and merger and provides information concerning the Bank, First Western, Zions Bank, and Zions, and the Plan of Reorganization. The Proxy Statement contains important information necessary for you to make a decision about how to vote at the Special Meeting. Please read it carefully. The affirmative vote of the holders of two-thirds of the issued and outstanding shares of the Bank is required for approval of the Plan of Reorganization. Therefore, it is important that you vote. The failure to vote will have the same effect as a vote against the merger. Consequently, please mark, sign, date and return the enclosed proxy as soon as possible. Any shareholder may attend the Special Meeting and vote in person if desired. Shareholders of First Western National Bank ____________, 1995 Page 2 Consummation of the Plan of Reorganization and merger is subject to approval by federal and state bank regulatory agencies and to certain other conditions. If approved, the Plan of Reorganization will most likely be consummated during the second quarter of 1995, assuming that all banking regulatory approvals are received timely. The Board of Directors has unanimously approved the Plan of Reorganization and determined that the merger is in the best interests of the Bank, its shareholders, employees and the community it serves and is fair to shareholders of the Bank from a financial point of view. The Board of Directors unanimously recommends that you vote to approve the Plan of Reorganization. If the Plan of Reorganization is approved by the shareholders, Zions on or shortly after the effective date of the Plan of Reorganization will send you instructions describing the procedure to be followed to exchange your Bank stock certificate for common stock of Zions. Please do not send your certificates to Zions or Zions Bank prior to receiving these instructions. Sincerely, I.D. Nightingale Chairman of the Board EX-99.3 10 EXHIBIT 99.3 EXHIBIT 99.3 FIRST WESTERN BANCORPORATION NOTICE OF SPECIAL MEETING OF SHAREHOLDERS A Special Meeting of shareholders of First Western Bancorporation ("First Western") will be held at _____ a.m., Mountain Standard Time, on _________, 1995, at First Western's offices at Main and Third South Streets, Moab, Utah, to consider and act upon an Agreement and Plan of Reorganization dated as of October 24, 1994 as amended as of January 4, 1995 (the "Plan of Reorganization"), among Zions Bancorporation ("Zions"), Zions First National Bank ("Zions Bank"), First Western and First Western National Bank (the "Bank"), which agreement provides for the merger of First Western into Zions with Zions being the surviving entity, followed by the merger of the Bank into Zions Bank with Zions Bank being the surviving entity. Upon the consummation of the Plan of Reorganization, each holder of shares of First Western Common Stock will be entitled to receive, in exchange for each share held as of the effective date of the Plan of Reorganization, that number of shares of Zions Common Stock calculated by dividing the Holding Company Purchase Price (as defined in the Plan of Reorganization) by the average closing price (as defined in the Plan of Reorganization) of Zions Common Stock and by further dividing the number so reached by the number of shares of First Western Common Stock that are issued and outstanding as of the effective date of the merger. The Board of Directors has set ____________, 1995, as the record date for determining shareholders entitled to notice of and to vote at the Special Meeting. First Western shareholders are entitled to assert dissenters' rights under Utah law. Pursuant to Section 16-10a-1301 et seq. of the Utah Revised Business Corporation Act, dissenting shareholders are entitled to payment in cash of the value of those shares for which dissenters' rights are perfected in accordance with the procedures established by the Utah Revised Business Corporation Act. By order of the Board of Directors Dated: _______________, 1995. ----------------------------------------- I.D. Nightingale, Chairman of the Board Please mark, sign and return the enclosed proxy in the envelope provided. EX-99.4 11 EXHIBIT 99.4 EXHIBIT 99.4 FIRST WESTERN NATIONAL BANK NOTICE OF SPECIAL MEETING OF SHAREHOLDERS A Special Meeting of shareholders of First Western National Bank (the "Bank") will be held at _____ a.m., Mountain Standard Time, on _________, 1995, at the Bank's offices at Main and Third South Streets, Moab, Utah, to consider and act upon an Agreement and Plan of Reorganization dated as of October 24, 1994 as amended as of January 4, 1995 (the "Plan of Reorganization"), among Zions Bancorporation ("Zions"), Zions First National Bank ("Zions Bank"), First Western Bancorporation ("First Western") and the Bank, which agreement provides for the merger of the Bank into Zions Bank with Zions Bank being the surviving entity and the merger of First Western into Zions with Zions being the surviving entity. Upon the consummation of the Plan of Reorganization, each holder (other than Zions) of shares of Bank Common Stock will be entitled to receive, in exchange for each share held as of the effective date of the Plan of Reorganization, that number of shares of Zions Common Stock calculated by dividing the $9,300,000 purchase price plus certain accretions (as described in the Plan of Reorganization) by the average closing price (as defined in the Plan of Reorganization) of Zions Common Stock and by further dividing the number so reached by the number of shares of Bank Common Stock that are issued and outstanding as of the effective date of the merger. The Board of Directors has set ____________, 1995, as the record date for determining shareholders entitled to notice of and to vote at the Special Meeting. Bank shareholders are entitled to assert dissenters' rights under Federal law. Pursuant to the National Bank Act, 12 U.S.C. section 215a(b), dissenting shareholders are entitled to payment in cash of the value of those shares for which dissenters' rights are perfected in accordance with the procedures established by the National Bank Act. By order of the Board of Directors Dated: _______________, 1995. ---------------------------------------- I.D. Nightingale, Chairman of the Board Please mark, sign and return the enclosed proxy in the envelope provided. EX-99.5 12 EXHIBIT 99.5 EXHIBIT 99.5 PROXY SPECIAL MEETING OF SHAREHOLDERS OF FIRST WESTERN BANCORPORATION _____________, 1995 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints I.G. Nightingale and __________________, and each of them, as proxies of the undersigned to vote as designated below all shares of the common capital stock of First Western Bancorporation (the "First Western Common Stock") that the undersigned held of record on ____________, 1995, which the undersigned is entitled to vote, at the special meeting of shareholders of First Western Bancorporation ("First Western") to be held _________, 1995, or at any adjournment thereof, for the purpose of considering and acting on the proposal to approve the Agreement and Plan of Reorganization dated October 24, 1994, as amended as of January 4, 1995 (the "Plan of Reorganization"), among Zions Bancorporation ("Zions"), Zions First National Bank ("Zions Bank"), First Western, and First Western National Bank (the "Bank") which provides for the merger of First Western into Zions and the subsequent merger of the Bank into Zions Bank, and the conversion of each outstanding share of First Western Common Stock into the right to receive that number of shares of Zions Common Stock calculated by dividing the Holding Company Purchase Price (as defined in the Plan of Reorganization) by the average closing price of Zions (as defined in the Plan of Reorganization) and by further dividing the number so reached by the total number of shares of First Western Common Stock issued and outstanding as of the Effective Date of the Plan of Reorganization. Each Proxy shall have full power of substitution. The act by a majority of the Proxies or their substitutes present at the meeting shall control; however, if only one Proxy be present, that one shall have all powers hereunder. The Directors recommend a vote FOR Proposal 1: 1. The Proxies are instructed to vote the First Western Common Stock as follows with regard to the approval of the Plan of Reorganization. ----- ----- ----- | | FOR | | AGAINST | | ABSTAIN ----- ----- ----- 2. The Proxies, in their discretion, are authorized to vote on such other business as may properly come before the meeting. When properly completed, this proxy will be voted in the manner directed herein by the undersigned. If no direction is given, this proxy will be voted FOR the approval of the Plan of Reorganization. (Each person whose name is on the First Western Common Stock certificate should sign below in the same manner in which such person's name appears. If signing as a fiduciary, give title.) -------------------------- Signature -------------------------- Printed Name Dated: -------------------- Please date, sign, and return promptly EX-99.6 13 EXHIBIT 99.6 EXHIBIT 99.6 PROXY SPECIAL MEETING OF SHAREHOLDERS OF FIRST WESTERN NATIONAL BANK _____________, 1995 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints _______________________ and ____________________, and each of them, as proxies of the undersigned to vote as designated below all shares of the common capital stock of First Western National Bank (the "Bank Common Stock") that the undersigned held of record on ____________, 1995, which the undersigned is entitled to vote, at the special meeting of shareholders of First Western National Bank (the "Bank") to be held _________, 1995, or at any adjournment thereof, for the purpose of considering and acting on the proposal to approve the Agreement and Plan of Reorganization dated October 24, 1994, as amended as of January 4, 1995 (the "Plan of Reorganization"), among Zions Bancorporation ("Zions"), Zions First National Bank ("Zions Bank"), First Western Bancorporation ("First Western") and the Bank which provides for the merger of First Western into Zions and the subsequent merger of the Bank into Zions Bank, and the conversion of each outstanding share of Bank Common Stock (excluding shares of Bank Common Stock held by Zions) into the right to receive that number of shares of Zions Common Stock calculated by dividing the Bank Purchase Price of $9.3 million plus certain accretions (as described in the Plan of Reorganization) by the average closing price of Zions (as defined in the Plan of Reorganization) and by further dividing the number so reached by the total number of shares of Bank Common Stock issued and outstanding as of the Effective Date of the Plan of Reorganization. Each Proxy shall have full power of substitution. The act by a majority of the Proxies or their substitutes present at the meeting shall control; however, if only one Proxy be present, that one shall have all powers hereunder. The Directors recommend a vote FOR Proposal 1: 1. The Proxies are instructed to vote the Bank Common Stock as follows with regard to the approval of the Plan of Reorganization. ----- ----- ----- | | FOR | | AGAINST | | ABSTAIN ----- ----- ----- 2. The Proxies, in their discretion, are authorized to vote on such other business as may properly come before the meeting. When properly completed, this proxy will be voted in the manner directed herein by the undersigned. If no direction is given, this proxy will be voted FOR the approval of the Plan of Reorganization. (Each person whose name is on the Bank Common Stock certificate should sign below in the same manner in which such person's name appears. If signing as a fiduciary, give title.) -------------------------- Signature -------------------------- Printed Name Dated: -------------------- Please date, sign, and return promptly EX-99.8 14 EXHIBIT 99.8 EXHIBIT 99.8 October 24, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Ladies and Gentlemen: The undersigned understands that Zions Bancorporation ("Zions Bancorp") and its subsidiary, Zions First National Bank ("Zions Bank"), are about to enter into an Agreement and Plan of Reorganization (the "Agreement") with First Western Bancorporation (the "Company") and First Western National Bank (the "Bank"). The Agreement provides for the merger of the Company with and into Zions Bancorp (the "Holding Company Merger"), and the merger of the Bank into Zions Bank (the "Bank Merger"), and the conversion of outstanding shares of Company Common Stock and Bank Common Stock into Zions Bancorp Common Stock in accordance with the formula therein set forth. In order to induce Zions Bancorp to enter into the Agreement, and intending to be legally bound hereby, the undersigned, subject to the conditions hereinafter stated, represents, warrants and agrees that at the Company Shareholders' Meeting contemplated by Section 4.1(a) of the Agreement (the "Meeting"), and any adjournment thereof, the undersigned will, in person or by proxy, vote or cause to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Holding Company Merger the shares of Company Common Stock beneficially owned by the undersigned individually or, to the extent of the undersigned's proportionate voting interest, jointly with other persons, as well as, to the extent of the undersigned's proportionate voting interest, any other shares of Company Common Stock over which the undersigned may hereafter acquire beneficial ownership in such capacities (collectively, the "Shares"). Subject to the final paragraph of this agreement, the undersigned further agrees that he will use his best efforts to cause any other shares of Company Common Stock over which he has or shares voting power to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Holding Company Merger. The undersigned further represents, warrants and agrees that beginning upon the authorization and execution of the Agreement by the Company and the Bank until the earlier of (i) the consummation of the Holding Company Merger or (ii) the termination of the Agreement in accordance with its terms, the undersigned will not, directly or indirectly: (a) vote any of the Shares, or cause or permit any of the Shares to be voted, in favor of any other sale of control, merger, consolidation, plan of liquidation, sale of assets, reclassification or other transaction involving the Company or the Bank or any of its subsidiaries which would have the effect of assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate thereof over the Company or the Bank or any substantial portion of the assets of either of them or assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate, or the Company or a wholly-owned subsidiary of the Company, of any subsidiary of the Company or the Bank or any substantial portion of its assets. As used herein, the term "control" means (1) the ability to direct the voting of 10% or more of the outstanding voting securities of a person having ordinary voting power in Zions Bancorporation October 24, 1994 Page 4 the election of directors or in the election of any other body having similar functions or (2) the ability to direct the management and policies of a person, whether through ownership of securities, through any contract, arrangement or understanding or otherwise. (b) voluntarily sell or otherwise transfer any of the Shares, or cause or permit any of the Shares to be sold or otherwise transferred (i) pursuant to any tender offer, exchange offer or similar proposal made by any person other than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain control (as the term "control" is defined in paragraph (a), above) of the Company or the Bank, any of the subsidiaries of either of them or any substantial portion of its assets or those of any subsidiary thereof or to any other person (other than Zions Bancorp or an affiliate thereof) under circumstances where such sale or transfer may reasonably be expected to assist a person seeking to obtain such control, (iii) for the purpose of avoiding the obligations of the undersigned under this agreement, or (iv) to any transferee unless such transferee expressly agrees in writing to be bound by the terms of this agreement in all events. It is understood and agreed that this agreement relates solely to the capacity of the undersigned as a shareholder or other beneficial owner of the Shares and does not prohibit the undersigned, if a member of the Board of Directors of the Company or the Bank, from acting, in his capacity as a director, as the undersigned may determine to be appropriate in light of the obligations of the undersigned as a director. It is further understood and agreed that the term "Shares" shall not include any securities beneficially owned by the undersigned as a trustee or fiduciary for another, and that this agreement is not in any way intended to affect the exercise by the undersigned of the undersigned's fiduciary responsibility in respect of any such securities. The undersigned further agrees to consent to any action taken by the Bank, and to do any other act necessary to enable the Bank, to comply with its obligations under section 7.9 of the Agreement, entitled "Agreement of September 11, 1974." Very truly yours, /s/ I.D. Nightingale -------------------------- I.D. Nightingale Accepted and Agreed to: ZIONS BANCORPORATION By: Gary L. Anderson Title: Senior Vice President Zions Bancorporation October 24, 1994 Page 5 Name of Shareholder: I.D. NIGHTINGALE Shares of Common Stock of First Western Bancorporation Beneficially Owned As of October 24, 1994 Name(s) of Number of Record Owner(s) Beneficial Ownership 1 Shares - --------------- ----------------------- --------- First Western I.D. Nightingale 12599 Bancorporation - ------------------ 1 For purposes of this Agreement, shares are beneficially owned by the shareholder named above if held in any capacity other than a fiduciary capacity (other than a revocable living trust) and if the shareholder named above has the power (alone or, in the case of shares held jointly with his spouse, together with his spouse) to direct the voting of such shares. EX-99.9 15 EXHIBIT 99.9 EXHIBIT 99.9 October 24, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Ladies and Gentlemen: The undersigned understands that Zions Bancorporation ("Zions Bancorp") and its subsidiary, Zions First National Bank ("Zions Bank"), are about to enter into an Agreement and Plan of Reorganization (the "Agreement") with First Western Bancorporation (the "Company") and First Western National Bank (the "Bank"). The Agreement provides for the merger of the Company with and into Zions Bancorp (the "Holding Company Merger"), and the merger of the Bank into Zions Bank (the "Bank Merger"), and the conversion of outstanding shares of Company Common Stock and Bank Common Stock into Zions Bancorp Common Stock in accordance with the formula therein set forth. In order to induce Zions Bancorp to enter into the Agreement, and intending to be legally bound hereby, the undersigned, subject to the conditions hereinafter stated, represents, warrants and agrees that at the Company Shareholders' Meeting contemplated by Section 4.1(a) of the Agreement (the "Meeting"), and any adjournment thereof, the undersigned will, in person or by proxy, vote or cause to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Holding Company Merger the shares of Company Common Stock beneficially owned by the undersigned individually or, to the extent of the undersigned's proportionate voting interest, jointly with other persons, as well as, to the extent of the undersigned's proportionate voting interest, any other shares of Company Common Stock over which the undersigned may hereafter acquire beneficial ownership in such capacities (collectively, the "Shares"). Subject to the final paragraph of this agreement, the undersigned further agrees that she will use her best efforts to cause any other shares of Company Common Stock over which she has or shares voting power to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Holding Company Merger. The undersigned further represents, warrants and agrees that beginning upon the authorization and execution of the Agreement by the Company and the Bank until the earlier of (i) the consummation of the Holding Company Merger or (ii) the termination of the Agreement in accordance with its terms, the undersigned will not, directly or indirectly: (a) vote any of the Shares, or cause or permit any of the Shares to be voted, in favor of any other sale of control, merger, consolidation, plan of liquidation, sale of assets, reclassification or other transaction involving the Company or the Bank or any of its subsidiaries which would have the effect of assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate thereof over the Company or the Bank or any substantial portion of the assets of either of them or assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate, or the Company or a wholly-owned subsidiary of the Company, of any subsidiary of the Company or the Bank or any substantial portion of its assets. As used herein, the term "control" means (1) the ability to direct the voting of 10% or more of the outstanding voting securities of a person having ordinary voting power in Zions Bancorporation October 24, 1994 Page 2 the election of directors or in the election of any other body having similar functions or (2) the ability to direct the management and policies of a person, whether through ownership of securities, through any contract, arrangement or understanding or otherwise. (b) voluntarily sell or otherwise transfer any of the Shares, or cause or permit any of the Shares to be sold or otherwise transferred (i) pursuant to any tender offer, exchange offer or similar proposal made by any person other than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain control (as the term "control" is defined in paragraph (a), above) of the Company or the Bank, any of the subsidiaries of either of them or any substantial portion of its assets or those of any subsidiary thereof or to any other person (other than Zions Bancorp or an affiliate thereof) under circumstances where such sale or transfer may reasonably be expected to assist a person seeking to obtain such control, (iii) for the purpose of avoiding the obligations of the undersigned under this agreement, or (iv) to any transferee unless such transferee expressly agrees in writing to be bound by the terms of this agreement in all events. It is understood and agreed that this agreement relates solely to the capacity of the undersigned as a shareholder or other beneficial owner of the Shares and does not prohibit the undersigned, if a member of the Board of Directors of the Company or the Bank, from acting, in her capacity as a director, as the undersigned may determine to be appropriate in light of the obligations of the undersigned as a director. It is further understood and agreed that the term "Shares" shall not include any securities beneficially owned by the undersigned as a trustee or fiduciary for another, and that this agreement is not in any way intended to affect the exercise by the undersigned of the undersigned's fiduciary responsibility in respect of any such securities. Very truly yours, /s/ Frankie Nightingale ----------------------- Frankie Nightingale Accepted and Agreed to: ZIONS BANCORPORATION By: /s/ Gary L. Anderson -------------------- Title: Senior Vice President --------------------- Zions Bancorporation October 24, 1994 Page 3 Name of Shareholder: FRANKIE NIGHTINGALE Shares of Common Stock of First Western Bancorporation Beneficially Owned As of October 24, 1994 Name(s) of Number of Record Owner(s) Beneficial Ownership 1 Shares - --------------- ---------------------- --------- First Western Bancorporation Frankie Nightingale 12820 - ------------- 1 For purposes of this Agreement, shares are beneficially owned by the shareholder named above if held in any capacity other than a fiduciary capacity (other than a revocable living trust) and if the shareholder named above has the power (alone or, in the case of shares held jointly with his spouse, together with his spouse) to direct the voting of such shares. EX-99.10 16 EXHIBIT 99.10 EXHIBIT 99.10 October 24, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Ladies and Gentlemen: The undersigned understands that Zions Bancorporation ("Zions Bancorp") and its subsidiary, Zions First National Bank ("Zions Bank"), are about to enter into an Agreement and Plan of Reorganization (the "Agreement") with First Western Bancorporation (the "Company") and First Western National Bank (the "Bank"). The Agreement provides for the merger of the Company with and into Zions Bancorp (the "Holding Company Merger"), and the merger of the Bank into Zions Bank (the "Bank Merger"), and the conversion of outstanding shares of Company Common Stock and Bank Common Stock into Zions Bancorp Common Stock in accordance with the formula therein set forth. In order to induce Zions Bancorp to enter into the Agreement, and intending to be legally bound hereby, the undersigned, subject to the conditions hereinafter stated, represents, warrants and agrees that at the Company Shareholders' Meeting contemplated by Section 4.1(a) of the Agreement (the "Meeting"), and any adjournment thereof, the undersigned will, in person or by proxy, vote or cause to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Holding Company Merger the shares of Company Common Stock beneficially owned by the undersigned individually or, to the extent of the undersigned's proportionate voting interest, jointly with other persons, as well as, to the extent of the undersigned's proportionate voting interest, any other shares of Company Common Stock over which the undersigned may hereafter acquire beneficial ownership in such capacities (collectively, the "Shares"). Subject to the final paragraph of this agreement, the undersigned further agrees that she will use her best efforts to cause any other shares of Company Common Stock over which she has or shares voting power to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Holding Company Merger. The undersigned further represents, warrants and agrees that beginning upon the authorization and execution of the Agreement by the Company and the Bank until the earlier of (i) the consummation of the Holding Company Merger or (ii) the termination of the Agreement in accordance with its terms, the undersigned will not, directly or indirectly: (a) vote any of the Shares, or cause or permit any of the Shares to be voted, in favor of any other sale of control, merger, consolidation, plan of liquidation, sale of assets, reclassification or other transaction involving the Company or the Bank or any of its subsidiaries which would have the effect of assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate thereof over the Company or the Bank or any substantial portion of the assets of either of them or assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate, or the Company or a wholly-owned subsidiary of the Company, of any subsidiary of the Company or the Bank or any substantial portion of its assets. As used herein, the term "control" means (1) the ability to direct the voting of 10% or more of the outstanding voting securities of a person having ordinary voting power in Zions Bancorporation October 24, 1994 Page 2 the election of directors or in the election of any other body having similar functions or (2) the ability to direct the management and policies of a person, whether through ownership of securities, through any contract, arrangement or understanding or otherwise. (b) voluntarily sell or otherwise transfer any of the Shares, or cause or permit any of the Shares to be sold or otherwise transferred (i) pursuant to any tender offer, exchange offer or similar proposal made by any person other than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain control (as the term "control" is defined in paragraph (a), above) of the Company or the Bank, any of the subsidiaries of either of them or any substantial portion of its assets or those of any subsidiary thereof or to any other person (other than Zions Bancorp or an affiliate thereof) under circumstances where such sale or transfer may reasonably be expected to assist a person seeking to obtain such control, (iii) for the purpose of avoiding the obligations of the undersigned under this agreement, or (iv) to any transferee unless such transferee expressly agrees in writing to be bound by the terms of this agreement in all events. It is understood and agreed that this agreement relates solely to the capacity of the undersigned as a shareholder or other beneficial owner of the Shares and does not prohibit the undersigned, if a member of the Board of Directors of the Company or the Bank, from acting, in her capacity as a director, as the undersigned may determine to be appropriate in light of the obligations of the undersigned as a director. It is further understood and agreed that the term "Shares" shall not include any securities beneficially owned by the undersigned as a trustee or fiduciary for another, and that this agreement is not in any way intended to affect the exercise by the undersigned of the undersigned's fiduciary responsibility in respect of any such securities. Very truly yours, SN, LTD. By: /s/ I.D. Nightingale ------------------------ Its: General Partner Accepted and Agreed to: ZIONS BANCORPORATION By: /s/ Gary L. Anderson Title: Senior Vice President Zions Bancorporation October 24, 1994 Page 3 Name of Shareholder: SN, LTD. Shares of Common Stock of First Western Bancorporation Beneficially Owned As of October 24, 1994 Name(s) of Number of Record Owner(s) Beneficial Ownership 1 Shares - --------------- ---------------------- --------- SN, LTD. I.D. Nightingale 10893 - ------------ 1 For purposes of this Agreement, shares are beneficially owned by the shareholder named above if held in any capacity other than a fiduciary capacity (other than a revocable living trust) and if the shareholder named above has the power (alone or, in the case of shares held jointly with his spouse, together with his spouse) to direct the voting of such shares. EX-99.11 17 EXHIBIT 99.11 EXHIBIT 99.11 October 24, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Ladies and Gentlemen: The undersigned understands that Zions Bancorporation ("Zions Bancorp") and its subsidiary, Zions First National Bank ("Zions Bank"), are about to enter into an Agreement and Plan of Reorganization (the "Agreement") with First Western Bancorporation (the "Company") and First Western National Bank (the "Bank"). The Agreement provides for the merger of the Company with and into Zions Bancorp (the "Holding Company Merger"), and the merger of the Bank into Zions Bank (the "Bank Merger"), and the conversion of outstanding shares of Company Common Stock and Bank Common Stock into Zions Bancorp Common Stock in accordance with the formula therein set forth. In order to induce Zions Bancorp to enter into the Agreement, and intending to be legally bound hereby, the undersigned, subject to the conditions hereinafter stated, represents, warrants and agrees that at the Bank Shareholders' Meeting contemplated by Section 4.1(b) of the Agreement (the "Meeting"), and any adjournment thereof, the undersigned will, in person or by proxy, vote or cause to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Bank Merger the shares of Bank Common Stock beneficially owned by the undersigned individually or, to the extent of the undersigned's proportionate voting interest, jointly with other persons, as well as, to the extent of the undersigned's proportionate voting interest, any other shares of Bank Common Stock over which the undersigned may hereafter acquire beneficial ownership in such capacities (collectively, the "Shares"). Subject to the final paragraph of this agreement, the undersigned further agrees that he will use his best efforts to cause any other shares of Bank Common Stock over which he has or shares voting power to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Bank Merger. The undersigned further represents, warrants and agrees that beginning upon the authorization and execution of the Agreement by the Company and the Bank until the earlier of (i) the consummation of the Bank Merger or (ii) the termination of the Agreement in accordance with its terms, the undersigned will not, directly or indirectly: (a) vote any of the Shares, or cause or permit any of the Shares to be voted, in favor of any other sale of control, merger, consolidation, plan of liquidation, sale of assets, reclassification or other transaction involving the Company or the Bank or any of its subsidiaries which would have the effect of assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate thereof over the Company or the Bank or any substantial portion of the assets of either of them or assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate, or the Company or a wholly-owned subsidiary of the Company, of any subsidiary of the Company or the Bank or any substantial portion of its assets. As used herein, the term "control" means (1) the ability to direct the voting of 10% or more of the outstanding voting securities of a person having ordinary voting power in the election of directors or in the election of any other body having Zions Bancorporation October 24, 1994 Page 2 similar functions or (2) the ability to direct the management and policies of a person, whether through ownership of securities, through any contract, arrangement or understanding or otherwise. (b) voluntarily sell or otherwise transfer any of the Shares, or cause or permit any of the Shares to be sold or otherwise transferred (i) pursuant to any tender offer, exchange offer or similar proposal made by any person other than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain control (as the term "control" is defined in paragraph (a), above) of the Company or the Bank, any of the subsidiaries of either of them or any substantial portion of its assets or those of any subsidiary thereof or to any other person (other than Zions Bancorp or an affiliate thereof) under circumstances where such sale or transfer may reasonably be expected to assist a person seeking to obtain such control, (iii) for the purpose of avoiding the obligations of the undersigned under this agreement, or (iv) to any transferee unless such transferee expressly agrees in writing to be bound by the terms of this agreement in all events. It is understood and agreed that this agreement relates solely to the capacity of the undersigned as a shareholder or other beneficial owner of the Shares and does not prohibit the undersigned, if a member of the Board of Directors of the Company or the Bank, from acting, in his capacity as a director, as the undersigned may determine to be appropriate in light of the obligations of the undersigned as a director. It is further understood and agreed that the term "Shares" shall not include any securities beneficially owned by the undersigned as a trustee or fiduciary for another, and that this agreement is not in any way intended to affect the exercise by the undersigned of the undersigned's fiduciary responsibility in respect of any such securities. The undersigned further agrees to consent to any action taken by the Bank, and to do any other act necessary to enable the Bank, to comply with its obligations under section 7.9 of the Agreement, entitled "Agreement of September 11, 1974." Very truly yours, /s/ I.D. Nightingale ----------------------- I.D. Nightingale Accepted and Agreed to: ZIONS BANCORPORATION By: /s/ Gary L. Anderson --------------------------- Title: Senior Vice President -------------------------- Zions Bancorporation October 24, 1994 Page 3 Name of Shareholder: I.D. NIGHTINGALE Shares of Common Stock of First Western National Bank Beneficially Owned As of October 24, 1994 Name(s) of Number of Record Owner(s) Beneficial Ownership 1 Shares - --------------- ---------------------- --------- First Western National Bank I.D. Nightingale 300 - -------------- 1 For purposes of this Agreement, shares are beneficially owned by the shareholder named above if held in any capacity other than a fiduciary capacity (other than a revocable living trust) and if the shareholder named above has the power (alone or, in the case of shares held jointly with his spouse, together with his spouse) to direct the voting of such shares. EX-99.12 18 EXHIBIT 99.12 EXHIBIT 99.12 October 24, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Ladies and Gentlemen: The undersigned understands that Zions Bancorporation ("Zions Bancorp") and its subsidiary, Zions First National Bank ("Zions Bank"), are about to enter into an Agreement and Plan of Reorganization (the "Agreement") with First Western Bancorporation (the "Company") and First Western National Bank (the "Bank"). The Agreement provides for the merger of the Company with and into Zions Bancorp (the "Holding Company Merger"), and the merger of the Bank into Zions Bank (the "Bank Merger"), and the conversion of outstanding shares of Company Common Stock and Bank Common Stock into Zions Bancorp Common Stock in accordance with the formula therein set forth. In order to induce Zions Bancorp to enter into the Agreement, and intending to be legally bound hereby, the undersigned, subject to the conditions hereinafter stated, represents, warrants and agrees that at the Bank Shareholders' Meeting contemplated by Section 4.1(b) of the Agreement (the "Meeting"), and any adjournment thereof, the undersigned will, in person or by proxy, vote or cause to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Bank Merger the shares of Bank Common Stock beneficially owned by the undersigned individually or, to the extent of the undersigned's proportionate voting interest, jointly with other persons, as well as, to the extent of the undersigned's proportionate voting interest, any other shares of Bank Common Stock over which the undersigned may hereafter acquire beneficial ownership in such capacities (collectively, the "Shares"). Subject to the final paragraph of this agreement, the undersigned further agrees that she will use her best efforts to cause any other shares of Bank Common Stock over which she has or shares voting power to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Bank Merger. The undersigned further represents, warrants and agrees that beginning upon the authorization and execution of the Agreement by the Company and the Bank until the earlier of (i) the consummation of the Bank Merger or (ii) the termination of the Agreement in accordance with its terms, the undersigned will not, directly or indirectly: (a) vote any of the Shares, or cause or permit any of the Shares to be voted, in favor of any other sale of control, merger, consolidation, plan of liquidation, sale of assets, reclassification or other transaction involving the Company or the Bank or any of its subsidiaries which would have the effect of assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate thereof over the Company or the Bank or any substantial portion of the assets of either of them or assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate, or the Company or a wholly-owned subsidiary of the Company, of any subsidiary of the Company or the Bank or any substantial portion of its assets. As used herein, the term "control" means (1) the ability to direct the voting of 10% or more of the outstanding voting securities of a person having ordinary voting power in the election of directors or in the election of any other body having Zions Bancorporation October 24, 1994 Page 2 similar functions or (2) the ability to direct the management and policies of a person, whether through ownership of securities, through any contract, arrangement or understanding or otherwise. (b) voluntarily sell or otherwise transfer any of the Shares, or cause or permit any of the Shares to be sold or otherwise transferred (i) pursuant to any tender offer, exchange offer or similar proposal made by any person other than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain control (as the term "control" is defined in paragraph (a), above) of the Company or the Bank, any of the subsidiaries of either of them or any substantial portion of its assets or those of any subsidiary thereof or to any other person (other than Zions Bancorp or an affiliate thereof) under circumstances where such sale or transfer may reasonably be expected to assist a person seeking to obtain such control, (iii) for the purpose of avoiding the obligations of the undersigned under this agreement, or (iv) to any transferee unless such transferee expressly agrees in writing to be bound by the terms of this agreement in all events. It is understood and agreed that this agreement relates solely to the capacity of the undersigned as a shareholder or other beneficial owner of the Shares and does not prohibit the undersigned, if a member of the Board of Directors of the Company or the Bank, from acting, in her capacity as a director, as the undersigned may determine to be appropriate in light of the obligations of the undersigned as a director. It is further understood and agreed that the term "Shares" shall not include any securities beneficially owned by the undersigned as a trustee or fiduciary for another, and that this agreement is not in any way intended to affect the exercise by the undersigned of the undersigned's fiduciary responsibility in respect of any such securities. Very truly yours, /s/ Frankie Nightingale -------------------------- Frankie Nightingale Accepted and Agreed to: ZIONS BANCORPORATION By: /s/ Gary L. Anderson -------------------------------- Title: Senior Vice President ------------------------------- Zions Bancorporation October 24, 1994 Page 3 Name of Shareholder: FRANKIE NIGHTINGALE Shares of Common Stock of First Western National Bank Beneficially Owned As of October 24, 1994 Name(s) of Number of Record Owner(s) Beneficial Ownership 1 Shares - --------------- ----------------------- ----------- First Western National Bank Frankie Nightingale 200 - --------------- 1 For purposes of this Agreement, shares are beneficially owned by the shareholder named above if held in any capacity other than a fiduciary capacity (other than a revocable living trust) and if the shareholder named above has the power (alone or, in the case of shares held jointly with his spouse, together with his spouse) to direct the voting of such shares. EX-99.13 19 EXHIBIT 99.13 EXHIBIT 99.13 October 24, 1994 Zions Bancorporation 1380 Kennecott Building Salt Lake City, Utah 84133 Ladies and Gentlemen: The undersigned understands that Zions Bancorporation ("Zions Bancorp") and its subsidiary, Zions First National Bank ("Zions Bank"), are about to enter into an Agreement and Plan of Reorganization (the "Agreement") with First Western Bancorporation (the "Company") and First Western National Bank (the "Bank"). The Agreement provides for the merger of the Company with and into Zions Bancorp (the "Holding Company Merger"), and the merger of the Bank into Zions Bank (the "Bank Merger"), and the conversion of outstanding shares of Company Common Stock and Bank Common Stock into Zions Bancorp Common Stock in accordance with the formula therein set forth. In order to induce Zions Bancorp to enter into the Agreement, and intending to be legally bound hereby, the undersigned, subject to the conditions hereinafter stated, represents, warrants and agrees that at the Bank Shareholders' Meeting contemplated by Section 4.1(b) of the Agreement (the "Meeting"), and any adjournment thereof, the undersigned will, in person or by proxy, vote or cause to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Bank Merger the shares of Bank Common Stock beneficially owned by the undersigned individually or, to the extent of the undersigned's proportionate voting interest, jointly with other persons, as well as, to the extent of the undersigned's proportionate voting interest, any other shares of Bank Common Stock over which the undersigned may hereafter acquire beneficial ownership in such capacities (collectively, the "Shares"). Subject to the final paragraph of this agreement, the undersigned further agrees that it will use its best efforts to cause any other shares of Bank Common Stock over which it has or shares voting power to be voted in favor of the Agreement and the merger agreement entered into thereunder and the Bank Merger. The undersigned further represents, warrants and agrees that beginning upon the authorization and execution of the Agreement by the Company and the Bank until the earlier of (i) the consummation of the Bank Merger or (ii) the termination of the Agreement in accordance with its terms, the undersigned will not, directly or indirectly: Zions Bancorporation October 24, 1994 Page 2 (a) vote any of the Shares, or cause or permit any of the Shares to be voted, in favor of any other sale of control, merger, consolidation, plan of liquidation, sale of assets, reclassification or other transaction involving the Company or the Bank or any of its subsidiaries which would have the effect of assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate thereof over the Company or the Bank or any substantial portion of the assets of either of them or assisting or facilitating the acquisition of control by any person other than Zions Bancorp or an affiliate, or the Company or a wholly-owned subsidiary of the Company, of any subsidiary of the Company or the Bank or any substantial portion of its assets. As used herein, the term "control" means (1) the ability to direct the voting of 10% or more of the outstanding voting securities of a person having ordinary voting power in the election of directors or in the election of any other body having similar functions or (2) the ability to direct the management and policies of a person, whether through ownership of securities, through any contract, arrangement or understanding or otherwise. (b) voluntarily sell or otherwise transfer any of the Shares, or cause or permit any of the Shares to be sold or otherwise transferred (i) pursuant to any tender offer, exchange offer or similar proposal made by any person other than Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain control (as the term "control" is defined in paragraph (a), above) of the Company or the Bank, any of the subsidiaries of either of them or any substantial portion of its assets or those of any subsidiary thereof or to any other person (other than Zions Bancorp or an affiliate thereof) under circumstances where such sale or transfer may reasonably be expected to assist a person seeking to obtain such control, (iii) for the purpose of avoiding the obligations of the undersigned under this agreement, or (iv) to any transferee unless such transferee expressly agrees in writing to be bound by the terms of this agreement in all events. It is understood and agreed that this agreement relates solely to the capacity of the undersigned as a shareholder or other beneficial owner of the Shares and does not prohibit the undersigned, if a member of the Board of Directors of the Company or the Bank, from acting, in its capacity as a director, as the undersigned may determine to be appropriate in light of the obligations of the undersigned as a director. It is further understood and agreed that the term "Shares" shall not include any Zions Bancorporation October 24, 1994 Page 3 securities beneficially owned by the undersigned as a trustee or fiduciary for another, and that this agreement is not in any way intended to affect the exercise by the undersigned of the undersigned's fiduciary responsibility in respect of any such securities. Very truly yours, SN, LTD. By: /s/ I.D. Nightingale ------------------------------ Its: General Partner Accepted and Agreed to: ZIONS BANCORPORATION By: /s/ Gary L. Anderson ---------------------------- Title: Senior Vice President -------------------------- Zions Bancorporation October 24, 1994 Page 4 Name of Shareholder: SN, LTD. Shares of Common Stock of First Western National Bank Beneficially Owned As of October 24, 1994 Name(s) of Number of Record Owner(s) Beneficial Ownership 1 Shares - -------------- ---------------------- ------------- SN, LTD I.D. Nightingale 56097 - -------- 1 For purposes of this Agreement, shares are beneficially owned by the shareholder named above if held in any capacity other than a fiduciary capacity (other than a revocable living trust) and if the shareholder named above has the power (alone or, in the case of shares held jointly with his spouse, together with his spouse) to direct the voting of such shares. -----END PRIVACY-ENHANCED MESSAGE-----