EXHIBIT 2.2
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VAIL BANKS, INC.
AND
INDEPENDENT BANKSHARES, INC.
MERGER AGREEMENT
AND
PLAN OF REORGANIZATION
March 10, 1998
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TABLE OF CONTENTS
ARTICLE I................................................................. 6
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1.1 Merger.............................................................. 6
1.2 Consideration....................................................... 6
1.3 Restrictions on Transfer of Vail Banks Common Stock................. 7
1.4 Due Diligence....................................................... 8
ARTICLE II CLOSING........................................................ 8
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ARTICLE III OTHER AGREEMENTS.............................................. 8
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3.1 Meetings of Shareholders............................................. 8
3.1.1 The Company...................................................... 8
3.1.2 Banks............................................................ 8
3.2 Brokers; Finders' Fees; Commissions.................................. 9
3.3 Access, Information and Documents.................................... 9
3.4 Confidentiality...................................................... 9
3.5 Full Cooperation..................................................... 10
3.6 Expenses............................................................. 10
3.7 Approvals and Consents............................................... 10
3.8 Publicity............................................................ 10
3.9 Preservation of Goodwill............................................. 10
3.10 Agreement as to Efforts to Consummate............................... 11
3.11 Dividends........................................................... 11
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY....... 11
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4.1 Disclosure Memorandum................................................ 11
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4.2 Corporate and Financial............................................. 11
4.2.1 Authority....................................................... 11
4.2.2 Corporate Status................................................ 12
4.2.3 Capital Structure............................................... 13
4.2.4 Corporate Records............................................... 14
4.2.5 Tax Returns, Taxes.............................................. 15
4.2.6 Financial Statements............................................ 16
4.2.7 Regulatory Reports.............................................. 16
4.2.11 Accounts....................................................... 16
4.2.9 Notes and Obligations........................................... 16
4.2.10 Liabilities.................................................... 17
4.2.11 Absence of Changes............................................. 17
4.2.12 Litigation and Proceedings..................................... 19
4.1.13 Cash Items..................................................... 19
4.3 Business Operations................................................. 20
4.3.1 Customers....................................................... 20
4.3.2 Permits; Compliance with Law.................................... 20
4.3.3 Environmental................................................... 21
4.3.4 Insurance....................................................... 22
4.4 Properties and Assets............................................... 22
4.4.1 Contracts and Commitments....................................... 22
4.4.2 Licenses; Intellectual Property................................. 23
4.4.3 Personal Property............................................... 23
4.4.4 Leases.......................................................... 23
4.4.5 Real Property................................................... 24
4.5 Employees and Benefits.............................................. 24
4.5.1 Compensation Structure.......................................... 24
4.5.2 Directors or Officers of Other Corporations..................... 25
4.5.3 Employee Benefits............................................... 25
4.5.4 Labor-Related Matters........................................... 26
4.5.5 Related-Party Transactions...................................... 27
4.6 Other Matters....................................................... 27
4.6.1 Approvals, Consents and Filings................................. 27
4.6.2 Default......................................................... 28
4.6.3 Bank of Telluride............................................... 28
4.6.5 Representations and Warranties.................................. 28
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
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SHAREHOLDERS............................................................. 28
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ARTICLE V CONDUCT OF BUSINESS OF THE COMPANY OR THE BANKS PENDING
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CLOSING.................................................................. 29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF VAIL BANKS................... 32
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7.1 Good Standing Vail Banks........................................... 32
7.2 Authority.......................................................... 32
7.3 Default............................................................ 32
7.4 Applications....................................................... 32
7.5 Documents Received from Company and Glenwood....................... 32
7.6 Representations and Warranties..................................... 32
ARTICLE VII CONDITIONS TO OBLIGATIONS OF VAIL BANKS..................... 33
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7.1 Representations and Warranties...................................... 33
7.2 Performance of Conditions and Agreements............................ 33
7.3 Certificates, Resolutions, Opinion.................................. 33
7.4 Accountants' Letter Vail............................................ 33
7.5 Regulatory Approvals................................................ 34
7.6 Certificates........................................................ 34
7.7 Employment.......................................................... 34
7.8 Consents to the Holding Company Merger.............................. 34
7.9 Board Approval...................................................... 35
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF THE COMPANY..................... 35
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8.1 Representations and Warranties....................................... 35
8.2 PERFORMANCE OF AGREEMENTS \F C \L..................................... 35
8.3 Certificates, Resolutions, Opinions.................................. 35
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8.4 Shareholder Approval The............................................. 36
8.5 Regulatory Approvals Any............................................. 36
ARTICLE IX WARRANTIES, NOTICES, ETC....................................... 36
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9.1 Warranties........................................................... 36
9.2 Survival of Representations.......................................... 36
9.3 Notice............................................................... 37
9.4 Entire Agreement..................................................... 38
9.5 Waiver; Amendment.................................................... 38
ARTICLE X TERMINATION..................................................... 39
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10.1 Material Adverse Change of the Company or the Banks................. 39
10.2 Noncompliance of the Company........................................ 39
10.4 Noncompliance of Vail Banks......................................... 39
10.5 Failure to Disclose................................................. 39
10.6 Environmental Liability............................................. 39
10.7 Adverse Proceedings................................................. 40
10.8 Termination Date.................................................... 40
ARTICLE XI COUNTERPARTS, HEADINGS, ETC.................................... 40
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ARTICLE XII BINDING EFFECT................................................ 40
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ARTICLE XIII.............................................................. 40
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iv
MERGER AGREEMENT AND PLAN OF REORGANIZATION
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THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made and entered into this 10th day of March, 1998 by and between VAIL BANKS,
INC., a Colorado corporation (hereinafter "Vail Banks"), WESTSTAR BANK, a
Colorado bank (hereinafter "WestStar") [and unless the context otherwise owned
requires, the term "Vail Banks" shall include both Vail Banks and its wholly-
owned subsidiary, WestStar], INDEPENDENT BANKSHARES, INC., a Colorado
corporation (hereinafter the "Company"), GLENWOOD INDEPENDENT BANK, a Colorado
bank (hereinafter "Glenwood") [and unless the context otherwise requires, the
term the "Company" shall include Independent Bankshares, Inc. and its wholly-
owned subsidiary Glenwood], and XXX XXXXXXXXXX, XXXX XXXXXXXXXX, XXXXX
XXXXXXXXXX, XXXX XXXXXXX, XXXXXX XXXXXX, XXXX XXXXX, XXXXXXXX XXXXXXX, XXX
XXXXXX AND XXXX XXXXX, the shareholders of the Company (hereinafter the "Company
Shareholders").
W I T N E S S E T H:
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WHEREAS, in order to effect the Mergers the Boards of Directors of
the parties hereto deem it advisable and in the best interests of each such
corporation and their respective shareholders that Vail Banks acquire one
hundred percent (100%) of the ownership of the Company pursuant to the merger
of the Company with and into Vail Banks for cash and shares of Vail Banks
Common Stock and that Vail Banks shall be the surviving corporation of such
merger (the "Holding Company Merger"), upon the terms and conditions
hereinafter set forth and as set forth in the Agreement and Plan of Merger
attached hereto as Exhibit A (the "Holding Company Merger Agreement"); and
WHEREAS, WestStar is a wholly-owned subsidiary of Vail Banks and
Glenwood is a wholly-owned subsidiary of the Company; and
WHEREAS, it is contemplated that Glenwood will merge with and into
WestStar with WestStar being the Surviving Bank in the merger (the "Bank
Merger"), upon the terms and conditions herein set forth and as set forth in
the Agreement and Plan of Merger attached hereto as Exhibit B (the "Bank
Merger Agreement"), the closing of the Bank Merger occurring simultaneously
with the closing of the Holding Company Merger (the Holding Company Merger and
Bank Merger being sometimes hereinafter collectively referred to as the
"Mergers").
NOW, THEREFORE, in consideration of the premises and the mutual and
reciprocal representations, warranties, promises and covenants herein
contained, the parties hereto agree as follows:
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ARTICLE I
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TERMS OF THE BUSINESS ARRANGEMENT
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1.1 MERGER. Pursuant to the terms and conditions provided
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herein, on the Closing Date (hereinafter defined) the Company shall be merged
with and into Vail Banks in accordance with and in the manner set forth in the
Holding Company Merger Agreement, and Glenwood shall be merged with and into
WestStar in accordance with the Bank Merger Agreement.
1.2 CONSIDERATION. For purposes of determining the amount of
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cash and the number of shares of Vail Banks Common Stock that will be
delivered to the Company Shareholders:
(a) The value of the Company shall be assumed to be (i) three
hundred percent (300%) of the Company's Shareholder Equity (as that term is
defined in paragraph (c) below) immediately prior to the Closing, or (ii) if
the amount determined under Clause (i) above exceeds $7,500,000, then the
value shall be assumed to be the greater of (A) $7,500,000 plus one hundred
percent (100%) of the amount by which the Company's Shareholder Equity exceeds
$2,500,000 or (B) $7,500,000 plus three hundred percent (300%) of the product
of 8.9% multiplied by the amount by which the customer deposits of Glenwood
immediately prior to Closing exceed $28,150,000 (the "Company's Assumed
Value").
(b) The value of one share of Vail Banks Common Stock shall be equal
to Vail Banks' Shareholder Equity (as that term is defined in paragraph (c)
below) immediately prior to Closing divided by the total number of shares of
Vail Banks Common Stock outstanding immediately prior to Closing multiplied by
one hundred seventy-five percent (175%) (the "Vail Banks Assumed Per Share
Value"); provided, however, that for purposes of determining the Vail Banks
Assumed Per Share Value, every share of stock in Vail Banks which is not Vail
Banks Common Stock and every debt instrument issued by Vail Banks which
provides for the conversion into Vail Banks Common Stock shall be treated as
though such conversion occurred the day immediately prior to Closing.
(c) For purposes of this Section 1.2, Shareholder Equity shall be
the value of the shareholder equity of the Company or Vail Banks, as the case
may be, as shown on unaudited, consolidated financial statements dated the day
immediately preceding Closing and prepared in accordance with the standards
set forth in Section 4.2.6.; provided, however, that Shareholder Equity of the
Company shall be increased by the lesser of (i) an amount equal to any
adjustment resulting from the conversion to audited financial statements that
is attributable to accounting for any capital lease asset and note payable
related to such capital lease asset; and (ii) $50,000.
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(d) The number of shares of Vail Banks Common Stock to be delivered
at the Closing shall be that number of shares equal to fifty percent (50%) of
the Company's Assumed Value divided by the Vail Banks Assumed Per Share Value.
(e) The amount of cash to be delivered to the Company Shareholders
at Closing shall be fifty percent (50%) of the Company's Assumed Value (the
"Cash Portion").
Upon the terms and conditions of this Agreement and the Holding
Company Merger Agreement, Vail Banks shall make available on or before the
Effective Date of the Holding Company Merger (as defined in the Holding
Company Merger Agreement) for delivery to (or to the order of) the Company
Shareholders sufficient funds to provide for cash payments to the Company
Shareholders as provided in the Holding Company Merger Agreement.
1.3 RESTRICTIONS ON TRANSFER OF VAIL BANKS COMMON STOCK. The
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Company shall cause each Company Shareholder, severally and not jointly with
any other person, (i) to acknowledge that the shares of Vail Banks Common
Stock to be delivered to that Company Shareholder pursuant to Section 1.2 have
not been, and will not be, registered under the Securities Act, and therefore
may not be resold by that Company Shareholder without being in compliance with
the Securities Act or an exemption thereof, and (ii) covenant that none of the
shares of Vail Banks Common Stock issued to that Company Shareholder pursuant
to Section 1.2 will be offered, sold, assigned, transferred or otherwise
disposed of except upon full compliance with all the applicable provisions of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission and applicable state securities laws and regulations, and
(iii) to execute and be bound by the provisions of that Shareholders'
Agreement between Vail Banks and each owner of the capital stock of Vail
Banks, dated February 26, 1997, as thereafter or hereafter amended. All
certificates evidencing shares of Vail Banks Common Stock issued pursuant to
Section 1.2 will bear substantially the following legend:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, HAVE BEEN
ISSUED PURSUANT TO AND UNDER ONE OR MORE EXEMPTIONS THERETO, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, OR DISPOSED OF UNLESS AND UNTIL
REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS,
UNLESS THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
TRANSFER OF ANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED BY AND ENTITLED TO THE
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BENEFITS OF THAT CERTAIN SHAREHOLDERS' AGREEMENT, DATED AS OF FEBRUARY 26,
1997, BY AND AMONG VAIL BANKS, INC. AND ITS SHAREHOLDERS, A COPY OF WHICH
MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF VAIL BANKS, INC.
In addition, certificates evidencing shares of Vail Banks Common Stock issued
pursuant to Section 1.2 to each Company Shareholder will bear any legend
required by the securities or blue sky laws of the state in which that Company
Shareholder resides.
1.4 DUE DILIGENCE. Vail Banks and the Company shall have until May
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1, 1998 to conduct reasonable due diligence activities with respect to the
other party and its wholly-owned subsidiaries. Immediately upon the
expiration of the thirty (30) day period beginning on the date of this
Agreement the Company shall provide to Vail Banks the Disclosure Memorandum
described in Section 4.1 below.
ARTICLE II
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CLOSING
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The transactions contemplated herein shall be consummated (the
"Closing") at such place as mutually agreed to by the parties hereto, on or
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before the thirtieth (30th) day, which day shall be by mutual agreement of the
parties (and if no mutual agreement can be reached then on the thirtieth
(30th) day, but in no event earlier than June 30, 1998), following receipt of,
and compliance with the terms of, all approvals from any and all governmental
authorities or regulatory bodies having jurisdiction over the transactions
contemplated by this Agreement and the expiration of any waiting or similar
period required by applicable law, or at such other time and place as may be
mutually satisfactory to the parties hereto (the "Closing Date").
ARTICLE III
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OTHER AGREEMENTS
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3.1 MEETINGS OF SHAREHOLDERS.
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3.1.1 THE COMPANY. The Company shall cause a majority of the
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shareholders of the Company Common Stock to vote within thirty (30) days
following the date of this Agreement to ratify and authorize the Company's
entry into this Agreement and the Holding Company Merger Agreement.
3.1.2 GLENWOOD. Entry into this Agreement by the Company
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shall constitute consent of the Company as sole shareholder of Glenwood to the
Bank Merger.
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3.2 BROKERS; FINDERS' FEES; COMMISSIONS. Each party hereto
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represents and warrants to the other that no broker or finder has acted on its
behalf in connection with this Agreement or the transactions contemplated
hereby. Notwithstanding the preceding sentence, Vail Banks has entered into
an agreement with The Xxxxxxx Company pursuant to which Vail Banks will pay to
The Xxxxxxx Company a percentage fee based upon the value of assets purchased
by Vail Banks pursuant to this Agreement. Each party agrees to indemnify the
other and hold and save the other harmless from any claim or demand for
commissions or other compensation by any broker, finder or similar agent
claiming to have been employed by or on behalf of such party.
3.3 ACCESS, INFORMATION AND DOCUMENTS. The Company shall permit,
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and shall cause Glenwood, to permit, Vail Banks and its authorized
representatives full access during normal business hours from and after the
date hereof and prior to the Closing Date to all of the Company's and
Glenwood's properties, books, contracts, commitments and records and the
Company shall furnish, and shall cause Glenwood to furnish, Vail Banks and its
authorized representatives such information concerning the Company's and
Glenwood's affairs as Vail Banks may reasonably request. The Company shall
require, and shall cause Glenwood to require, its personnel to assist Vail
Banks in making any such investigation of the Company or Glenwood and shall
cause the counsel, accountants, employees and other representatives of the
Company and Glenwood to be available to Vail Banks for such purposes. During
such investigation, Vail Banks and its authorized representatives shall have
the right to make copies of such records, files, tax returns and other
materials as they may deem advisable and shall advise the Company or Glenwood
of those items of which copies are made. No investigation made heretofore or
hereafter by Vail Banks shall affect the representations and warranties of the
Company hereunder. Vail Banks and WestStar agree to allow the Company access
to information and documentation on the same terms as set forth above.
3.4 CONFIDENTIALITY. Prior to consummation of the Holding Company
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Merger, the parties to this Agreement will provide each other with information
which may be deemed by the party providing the information to be confidential
or proprietary. Each party agrees that it will hold confidential and protect
all information provided to it by the other party to this Agreement and use
such information only in connection with the of the Mergers, except that the
obligations contained in this Section 3.4 shall not in any way restrict the
rights of any party or person to use information that (i) was known to such
party prior to the disclosure by the other party; (ii) is or becomes generally
available to the public other than by breach of this Agreement; (iii)
otherwise becomes lawfully available to a party to this Agreement on a non-
confidential basis from a third party who is not under an obligation of
confidence to the other party to this Agreement or (iv) is required to be
disclosed pursuant to any state or federal law. If this Agreement is
terminated prior to consummation of the Holding Company Merger, each party
agrees to return all documents and other material, and any copies thereof,
whether or not confidential, provided to it by or on behalf of the other party
to this Agreement. Each party shall insure that its officers, directors,
investment advisors, attorneys and other representatives who are given access
to such information are bound by and will use the
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information only in accordance with the foregoing restrictions. The provisions
of this Section 3.4 shall survive any termination of this Agreement.
3.5 FULL COOPERATION. The parties shall cooperate fully with each
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other and with their respective agents, representatives, counsel and
accountants in connection with any acts or actions required to be taken as
part of their respective obligations under this Agreement, including
cooperation in the filing of all applications and other requests for consents
and approvals with respect to the transactions contemplated hereby and by the
Holding Company Merger Agreement and the Bank Merger Agreement.
3.6 EXPENSES. All of the expenses incurred by Vail Banks in
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connection with the authorization, preparation, execution and performance of
this Agreement, including, without limitation, all fees and expenses of its
agents, representatives, counsel and accountants and the fees and expenses
related to filing regulatory applications with state and federal authorities
in connection with the transactions contemplated hereby, shall be paid by Vail
Banks. All expenses incurred by the Company in connection with the
authorization, preparation, execution and performance of this Agreement,
including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants for the Company shall be paid by the
Company.
3.7 APPROVALS AND CONSENTS. Each party hereto represents and
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warrants to and covenants with the others that it will, and will cause its
officers, directors, employees and agents to, use its and their best efforts
to obtain as soon as is reasonably practicable all approvals and consents of
state and federal departments or agencies required or deemed necessary for
consummation of the transactions contemplated by this Agreement. Provided,
however, that Vail Banks shall have primary responsibility for preparation,
filing and prosecution of all applications associated with such approvals and
consents.
3.8 PUBLICITY. All press releases and other announcements
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respecting the subject matter of this Agreement to any person shall be made
jointly by Vail Banks and the Company; provided, however, that any press
release, publication or other announcement respecting any public offering of
Vail Banks Common Stock or complying with any requirement of the Securities
and Exchange Commission shall be made only at the discretion of Vail Banks.
3.9 PRESERVATION OF GOODWILL. Each party hereto shall use its
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reasonable best efforts to preserve its business organization and the business
organization of its subsidiaries, to keep available the services of its
present employees and of the present employees of its subsidiaries, and to
preserve the goodwill of customers and others having business relations with
such party or its subsidiaries.
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3.10 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
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and conditions of this Agreement, the parties agree to use all reasonable
efforts to take, or cause to be taken, all actions, and to do or cause to be
done all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective on a timely basis the
transactions contemplated by this Agreement, the Holding Company Merger
Agreement and the Bank Merger Agreement.
3.11 DIVIDENDS. The Company and Glenwood may prior to Closing
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declare dividends or other distributions on its Common Stock. Except with
prior written consent of Vail Banks, neither the Company nor Glenwood may
issue, sell, repurchase, acquire or redeem any of its Common Stock.
ARTICLE IV
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
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To induce Vail Banks to enter into and perform this Agreement, the
Company, represents, warrants, covenants and agrees as follows, which
representations, warranties, covenants and agreements are being made as of the
date hereof and shall be deemed to be made again as of the Closing:
4.1 DISCLOSURE MEMORANDUM. The Company shall deliver to Vail Banks
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on or before the expiration of the thirty (30) day period beginning on the
date of this Agreement a memorandum (the "Disclosure Memorandum") containing
certain information regarding the Company and Glenwood as indicated at various
places in this Agreement. All information set forth in the Disclosure
Memorandum or in documents incorporated by reference in the Disclosure
Memorandum is true, correct and complete, does not omit to state any fact
necessary in order to make the statements therein not misleading, and shall be
deemed for all purposes of this Agreement to constitute part of the
representations and warranties of the Company under this Article IV. The
information contained in the Disclosure Memorandum shall be deemed to be part
of and qualify only those representations and warranties contained in this
Article IV which make specific reference to the Disclosure Memorandum. All
information in each of the documents and other writings furnished to Vail
Banks pursuant to this Agreement or the Disclosure Memorandum is or will be
true, correct and complete in all material respects and does not and will not
omit to state any fact necessary in order to make the statements therein not
misleading. The Company shall promptly provide Vail Banks with written
notification of any event, occurrence or other information necessary to
maintain the Disclosure Memorandum and all other documents and writings
furnished to Vail Banks pursuant to this Agreement as true, correct and
complete in all material respects at all times prior to and including the
Closing.
4.2 CORPORATE AND FINANCIAL.
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4.2.1 AUTHORITY. (a) Subject to the approval of various state
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and federal regulatory authorities, the Company has full power and authority
to make, execute and perform this Agreement and the Holding Company Merger
Agreement and to
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consummate the transactions contemplated hereby and thereby, and no further
action is necessary on the part of the Company to authorize its consummation
of the transactions contemplated hereby and thereby. Other than such
regulatory approvals, no further corporate action is necessary on the part of
the Company to consummate the transactions contemplated hereby and by the
Holding Company Merger Agreement. This Agreement constitutes the valid and
binding obligation of the Company, and the Holding Company Merger Agreement
constitutes the consent of the Company to the Holding Company Merger, and each
is enforceable in accordance with its terms, except as limited by the laws
affecting creditors' rights generally and by the discretion of courts to
compel specific performance.
(b) Subject to the approval of the various
state and federal regulators, the execution, delivery and performance of this
Agreement and the other transactions contemplated or required in connection
herewith will not, with or without the giving of notice or the passage of
time, or both, (i) violate any provision of federal or state law applicable to
the Company or Glenwood, the violation of which could be expected to have an
adverse effect on the business, operations, properties, assets, financial
condition or prospects of the Company or Glenwood; (ii) violate any provision
of the articles of incorporation or charter, as the case may be, or bylaws of
the Company or Glenwood; (iii) conflict with or result in a breach of any
provision of, or termination of, or constitute a default under any instrument,
license, agreement or commitment to which the Company or Glenwood is a party,
which, singly or in the aggregate, could be expected to have an adverse effect
on the business, operations, properties, assets, financial condition or
prospects of the Company or Glenwood; or (iv) constitute a violation of any
order, judgment or decree to which the Company or Glenwood is a party, or by
which the Company or Glenwood or any of their respective assets or properties
are bound.
4.2.2 CORPORATE STATUS.
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(a) THE COMPANY. The Company is a corporation
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duly organized, validly existing and in good standing under the laws of the
state of Colorado and has no direct or indirect subsidiaries other than
Glenwood. The Company has all requisite corporate power and authority and is
entitled to own or lease its properties and assets and to carry on its
business as and in the places where such properties or assets are now owned,
leased or operated and such business is conducted. The Company is duly
licensed, qualified or domesticated as a foreign corporation in the
jurisdictions listed in Section 4.2.2(a) of the Disclosure Memorandum, which
are all jurisdictions where the character of the property owned by it or the
nature of the business transacted by it make such license, qualification or
domestication necessary.
(b) GLENWOOD. Glenwood is a bank duly
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organized, validly existing and in good standing under the laws of the State
of Colorado. Glenwood has all requisite corporate power and authority and is
entitled to own and lease its properties and assets and to carry on its
business as and in the places where such properties or assets are now owned,
leased or operated and such business is conducted.
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4.2.3 CAPITAL STRUCTURE.
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(a) THE COMPANY. (i) The Company has an
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authorized capital stock consisting solely of 1,000,000 shares, $2.00 par
value, common stock, of which 10,000 shares of common stock are issued and
outstanding as of the date hereof (a list of the Company Shareholders and the
number of shares of Company Common Stock owned by each is attached hereto as
Exhibit C). All of the outstanding capital stock of the Company is duly and
validly issued, fully paid and non-assessable and was offered, issued and sold
in compliance with all applicable federal and state securities laws. No person
has any right of rescission or claim for damages under federal or state
securities laws with respect to the issuance of any shares of capital stock of
the Company previously issued. None of the capital stock of the Company has
been issued in violation of any preemptive or other rights of its
shareholders.
(ii) The Company does not have outstanding
any securities which are either by their terms or by contract convertible or
exchangeable into capital stock of the Company, or any other securities or
debt of the Company, or any preemptive or similar rights to subscribe for or
to purchase, or any options or warrants or agreements or understandings for
the purchase or the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock or
securities convertible into its capital stock. The Company is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(iii) There is no agreement, arrangement
or understanding to which the Company is a party restricting or otherwise
relating to the transfer of any shares of capital stock of the Company.
(iv) All shares of Company Common Stock or
other capital stock, or any other securities or debt, of the Company, which
have been purchased or redeemed by the Company have been purchased or redeemed
in accordance with all applicable federal, state and local laws, rules, and
regulations, including, without limitation, all federal and state securities
laws and rules and regulations of any securities exchange or system on which
such stock, securities or debt are, or at such time were, traded, and no such
purchase or redemption has resulted or will with the giving of notice or lapse
of time, or both, result in a default or acceleration of the maturity of, or
otherwise modify, any agreement, note, mortgage, bond, security agreement,
loan agreement or other contract or commitment of the Company.
(b) GLENWOOD. (i) Glenwood has an authorized
capital stock consisting solely of 10,000 shares, $100.00 par value, common
stock, of which 2,363 shares of common stock are issued and outstanding as of
the date hereof and of which the Company owns 2,363 shares, or 100% of the
issued and outstanding common stock. All of the outstanding capital stock of
Glenwood is duly and validly issued, fully
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paid and non-assessable and was offered, issued and sold in compliance with
all applicable federal and state securities laws. No person has any right of
rescission or claim for damages under federal or state securities laws with
respect to the issuance of any shares of capital stock of Glenwood previously
issued. None of the capital stock of Glenwood has been issued in violation of
any preemptive or other rights of its shareholders.
(ii) Glenwood does not have outstanding
any securities which are either by their terms or by contract convertible or
exchangeable into capital stock of Glenwood, or any other securities or debt
of Glenwood, or any preemptive or similar rights to subscribe for or to
purchase, or any options or warrants or agreements or understandings for the
purchase or the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock or
securities convertible into its capital stock. Glenwood is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire, or to register, any shares of its capital stock.
(iii) There is no agreement, arrangement
or understanding to which either Glenwood or the Company is a party
restricting or otherwise relating to the transfer of any shares of capital
stock of Glenwood.
(iv) All shares of Glenwood Common Stock
or other capital stock, or any other securities or debt, of Glenwood, which
have been purchased or redeemed by Glenwood have been purchased or redeemed in
accordance with all applicable federal, state and local laws, rules, and
regulations, including, without limitation, all federal and state securities
laws and rules and regulations of any securities exchange or system on which
such stock, securities or debt are, or at such time were, traded, and no such
purchase or redemption has resulted or will, with the giving of notice or
lapse of time, or both, result in a default or acceleration of the maturity
of, or otherwise modify, any agreement, note, mortgage, bond, security
agreement, loan agreement or other contract or commitment of Glenwood.
4.2.4 CORPORATE RECORDS. The stock records and minute
-----------------
books of the Company and Glenwood, as applicable, whether previously or in the
future furnished or made available to Vail Banks by the Company and Glenwood,
fully and accurately reflect all issuances, transfers and redemptions of the
common stock of the Company or Glenwood, as applicable, correctly show the
record addresses and the number of shares of such stock issued and outstanding
on the date hereof held by the shareholders of the Company or Glenwood,
correctly show all corporate action taken by the directors and shareholders of
the Company or Glenwood (including actions taken by consent without a
meeting), and contain true and correct copies or originals of their respective
articles of incorporation or charter, as the case may be, and all amendments
thereto, bylaws, as amended and currently in force, and the minutes of all
meetings or consent actions of their respective directors and shareholders. No
resolutions, regulations or bylaws have been passed, enacted, consented to or
adopted by the respective directors or shareholders of the Company or Glenwood
except those contained in the minute books. All corporate records
10
of the Company and Glenwood have been maintained in accordance with all
applicable statutory requirements and are complete and accurate.
4.2.5 TAX RETURNS, TAXES. (a) The Company and Glenwood have duly
------------------
filed or will file when due (i) all required federal and state tax returns and
reports, and (ii) all required returns and reports of other governmental units
having jurisdiction with respect to taxes imposed upon their respective
incomes, properties, revenues, franchises, operations or other assets or taxes
imposed which might create a lien or encumbrance on any of such assets or
affect adversely their respective businesses or operations. Such returns or
reports are, and when filed will be, true, complete and correct, and the
Company and Glenwood have paid, or will pay with respect to returns or reports
related to their respective businesses not yet filed because not yet due, to
the extent such taxes or other governmental charges have become due, all taxes
and other governmental charges including all applicable interest and
penalties, set forth in such returns or reports related to their respective
businesses. All federal, state and local taxes and other governmental charges
paid or payable by the Company or Glenwood have been paid, or have been
accrued or reserved on their respective books in accordance with generally
accepted accounting principles applied on a basis consistent with prior
periods. Adequate reserves for the payment of taxes have been established on
the books of the Company and Glenwood for all periods through the date hereof,
whether or not due and payable and whether or not disputed. Until the Closing
Date, the Company and Glenwood shall continue to reserve sufficient funds for
the payment of expected tax liabilities in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods.
Neither the Company nor Glenwood has received any notice of a tax deficiency
or assessment of additional taxes of any kind and, to the knowledge of
officers of the Company or Glenwood (collectively "Management"), there is no
threatened claim against either the Company or Glenwood, or any basis for any
such claim, for payment of any additional federal, state, local or foreign
taxes for any period prior to the date of this Agreement in excess of the
accruals or reserves with respect to any such claim shown in the 1997
Financial Statements (as defined below) or disclosed in the notes with respect
thereto. There are no waivers or agreements by either the Company or Glenwood
for the extension of time for the assessment of any taxes. The federal income
tax returns of the Company or Glenwood have not been examined by the Internal
Revenue Service for any period since 1970.
(b) Except as set forth in Section 4.2.5(b) of the
Disclosure Memorandum, proper and accurate amounts have been withheld by the
Company and Glenwood from their employees for all periods in full and complete
compliance with the tax withholding provisions of applicable federal, state
and local tax laws, and proper and accurate federal, state and local tax
returns have been filed by the Company and Glenwood for all periods for which
returns were due with respect to withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full.
11
4.2.6 FINANCIAL STATEMENTS. The Company has delivered to Vail
--------------------
Banks true, correct and complete copies of (i) the unaudited, consolidated
financial statements of the Company and Glenwood for the year ended December
31, 1995, including balance sheets, statements of income, statements of
shareholders' equity, statements of cash flows and related notes, and the
unaudited, consolidated financial statements of the Company and Glenwood for
the years ended December 31, 1996 and 1997 (the unaudited, consolidated
financial statements for the year ended December 31, 1997 being referred to as
the "1997 Financial Statements") and (ii) unaudited, consolidated financial
statements of the Company and Glenwood for the period and January 31, 1998,
including a balance sheet, statement of income and related notes. In addition,
the Company will deliver to Vail Banks unaudited, consolidated financial
statements for (i) the period ended March 31, 1998 and (ii) each month ended
thereafter up to and including the month during which the Closing occurs;
provided, that any such financial statement deliverable to Vail Banks pursuant
to this sentence shall be delivered no later than 45 days after the end of the
applicable period. All of such financial statements have been or will be
prepared in accordance with generally accepted accounting principles
consistently applied and truthfully reflect the assets, liabilities and
financial condition of the Company and Glenwood as of the dates indicated
therein and the results of its operations for the respective periods then
ended.
4.2.7 REGULATORY REPORTS. The Company has delivered to Vail Banks
------------------
for review and inspection as a part of the Disclosure Memorandum all Forms
FRY6 filed by the Company with the Board of Governors of the Federal Reserve
System (the "Federal Reserve") for the three years ended December 31, 1997 and
through the date of this Agreement, together with all other reports filed by
the Company or Glenwood for the same period with the Division of Banking of
the Department of Regulatory Agencies of the State of Colorado (the "Division
of Banking"), and other applicable regulatory agencies (collectively, the
"Reports"). In addition, the Company will deliver to Vail Banks for review and
inspection all CALL reports for any period filed after the date of this
Agreement and shall deliver such reports to Vail Banks within 45 days of the
end of the applicable period. All of such Reports, as amended, have been or
will be prepared in accordance with applicable rules and regulations applied
on a basis consistent with prior periods and contain in all material respects
all information required to be presented therein in accordance with such rules
and regulations.
4.2.8 ACCOUNTS. Section 4.2.8 of the Disclosure Memorandum
--------
contains a list of each and every bank and other institution in which the
Company or Glenwood maintains an account or safety deposit box, the account
numbers and the names of all persons who are presently authorized to draw
thereon, have access thereto or give instructions regarding distribution of
funds or assets therein.
4.2.9 NOTES AND OBLIGATIONS. (a) Except as set forth in Section
---------------------
4.2.9(a) of the Disclosure Memorandum or as provided for in the loss reserve
described in subsection (b) below, all notes receivable or other obligations
owned by the Company or Glenwood or due to either of them shown in the 1997
Financial Statements and any such notes receivable and obligations on the date
hereof and on the Closing
12
Date are, and will be, genuine, legal, valid and collectible obligations of
the respective makers thereof and are not and will not be subject to any
offset or counterclaim. Except as set forth in Section 4.2.9(a) of the
Disclosure Memorandum or in subsection (b) below, all such notes and
obligations are evidenced by written agreements, true and correct copies of
which will be made available to Vail Banks for examination prior to the
Closing Date. All such notes and obligations were entered into by either the
Company or Glenwood, as the case may be, in the ordinary course of business
and in compliance with all applicable laws and regulations.
(b) The Company has established a loss reserve in its 1997
Financial Statements and will continue to maintain appropriate loan loss
reserves which will be adequate to cover anticipated losses which might result
from such items as the insolvency or default of borrowers or obligors on such
loans or obligations, defects in the notes or evidences of obligation
(including losses of original notes or instruments), offsets or counterclaims
properly chargeable to such reserve, or the availability of legal or equitable
defenses which might preclude or limit the ability of the Company or Glenwood,
as the case may be, to enforce the note or obligation, and the representations
set forth in subsection (a) above are qualified in their entirety by the
aggregate of such loss reserve.
4.2.10 LIABILITIES. Neither the Company nor Glenwood has any
-----------
debt, liability or obligation of any kind required to be shown pursuant to
generally accepted accounting principles on the consolidated balance sheet of
the Company, whether accrued, absolute, known or unknown, contingent or
otherwise, including, but not limited to, (a) liability or obligation on
account of any federal, state or local taxes or penalty, or interest or fines
with respect to such taxes, (b) liability arising from or by virtue of the
distribution, delivery or other transfer or disposition of goods, personal
property or services of any type, kind or variety, (c) unfunded liabilities
with respect to any pension, profit sharing or employee stock ownership plan,
whether operated by the Company or Glenwood or any other entity covering
employees of the Company or Glenwood, or (d) environmental liability, except
(i) those reflected in the 1997 Financial Statements, and (ii) as disclosed in
Section 4.2.10 of the Disclosure Memorandum. On the Closing Date, the Company
shall have no indebtedness of any nature whatsoever, and Glenwood shall have
any indebtedness resulting from the borrowing of any funds, property or
services; provided, however, that this section 4.2.10 shall not apply to the
purchase of Federal Funds in the ordinary course of business.
4.2.11 ABSENCE OF CHANGES. Except as specifically provided for in
------------------
this Agreement or specifically set forth in Section 4.2.11 of the Disclosure
Memorandum, since December 31, 1997:
(a) there have been no changes in the business, assets,
properties, liabilities, results of operations or financial condition of the
Company or Glenwood, or in any of their respective relationships with
customers, employees, lessors or others, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had or
which Management believes will have a material adverse effect
13
on such businesses, assets, liabilities, results of operations, financial
conditions or properties;
(b) there has been no material damage, destruction or loss
to the assets, properties or business of the Company or Glenwood, whether or
not covered by insurance, which has had or which Management believes may have
an adverse effect thereon;
(c) the businesses of the Company and Glenwood have been
operated in the ordinary course, and not otherwise;
(d) the properties and assets of the Company and Glenwood
used in their respective businesses have been maintained in good order, repair
and condition, ordinary wear and tear excepted;
(e) the respective books, accounts and records of the
Company and Glenwood have been maintained in the usual, regular and ordinary
manner;
(f) except as disclosed to Vail Banks, there has been no
increase in the compensation or in the rate of compensation or commissions
payable by the Company and/or Glenwood to any of their directors or executive
officers, or to any of their employees, or any increase in any payment of or
commitment to pay any bonus, profit sharing or other extraordinary
compensation to any of their employees;
(g) there have been no changes in the articles of
incorporation or charter, as the case may be, or bylaws of the Company or
Glenwood;
(h) there has been no labor dispute, unfair labor practice
charge or employment discrimination charge, nor, to the knowledge of
Management, any organizational effort by any union, or institution or
threatened institution of any effort, complaint or other proceeding in
connection therewith, involving the Company or Glenwood, or affecting their
respective operations;
(i) there has been no issuance, sale, repurchase,
acquisition or redemption by the Company or Glenwood of any of their
respective capital stock, bonds, notes, debt or other securities or any
modification or amendment of the rights of the holders of any outstanding
capital stock, bonds, notes, debt or other securities thereof;
(j) there has been no mortgage, lien or other encumbrance
or security interest (other than liens for current taxes not yet due or
purchase money security interests or pledges to secure public deposits or
federal funds purchased arising in the ordinary course of business) created on
or in (including without limitation, any deposit for security consisting of)
any asset or assets of the Company or Glenwood or assumed by either of them
with respect to any of their assets;
14
(k) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred by
the Company or Glenwood which would be required to be reflected on a balance
sheet of the Company or Glenwood prepared as of the date hereof in accordance
with generally accepted accounting principles applied on a consistent basis,
except as incurred in the ordinary course of business;
(l) no obligation or liability of either the Company or
Glenwood has been discharged or satisfied, other than in the ordinary course
of business;
(m) there have been no sales, transfers or other
dispositions of any asset or assets of either the Company or Glenwood, other
than sales in the ordinary course of business; and
(n) there has been no amendment, termination or waiver of
any right of either the Company or Glenwood under any contract or agreement or
governmental license, permit or permission which has had or may have an
adverse effect on either of their businesses or properties.
4.2.12 LITIGATION AND PROCEEDINGS. Except as set forth in
--------------------------
Section 4.2.12 of the Disclosure Memorandum, there are no actions, decrees,
suits, counterclaims, claims, proceedings or governmental actions or
investigations pending or, to the knowledge of Management, threatened against,
by or affecting either the Company or Glenwood, or any officer, director,
employee or agent in such person's capacity as an officer, director, employee
or agent of either the Company or Glenwood or relating to the business or
affairs of either the Company or Glenwood, in any court or before any
arbitrator or governmental agency, and no judgment, award, order or decree of
any nature has been rendered against or with respect thereto by any agency,
arbitrator, court, commission or other authority, nor does either the Company
or Glenwood have any unasserted contingent liabilities which might have an
adverse effect on either of their assets or on the operation of their
respective businesses or which might prevent or impede the consummation of the
transactions contemplated by this Agreement.
4.2.13 CASH ITEMS. Except as set forth on Exhibit 4.1.13, there
----------
is no cash item on Glenwood's balance sheet which has remained unreconciled
for a period of thirty (30) days. All other cash items on Glenwood's balance
sheet occurred in the normal course of business and neither the Company nor
Glenwood anticipate that any such item cannot be reconciled in the normal
course of business or contains significant loss content.
4.2.14 INVESTMENT INTENTIONS. (a) Each Company Shareholder (i)
---------------------
will be acquiring the shares of Vail Banks Common Stock to be issued pursuant
to Section 1.2 to the Company Shareholder solely for such Company
Shareholder's account, for investment purposes only and with no current
intention or plan to distribute, sell, or otherwise dispose of any of those
shares in connection with any distribution; (ii) is not a
15
party to any agreement or other arrangement for the disposition of any shares
of Vail Banks Common Stock other than this Merger Agreement; (iii) unless
disclosed otherwise in Section 4.2.13 of the Disclosure Memorandum, is an
"accredited investor" as defined in Securities Act Rule 501(a); (iv) (A) is
able to bear the economic risks of an investment in the Vail Banks Common
Stock acquired pursuant to this Agreement, (B) can afford to sustain a total
loss of that investment, (C) has such knowledge and experience in financial
and business matters that the Company Shareholder is capable of evaluating the
merits and risks of the proposed investment in the Vail Banks Common Stock,
(D) has had an adequate opportunity to ask questions and receive answers from
the officers of Vail Banks concerning any and all matters relating to the
transactions contemplated hereby, including the background and experience of
the current and proposed officers and directors of Vail Banks, the plans for
the operations of the business of Vail Banks, the business, operations, and
financial condition of Vail Banks, and any plans of Vail Banks for additional
acquisitions, and (E) has asked all questions of the nature described in
preceding clause (D), and all those questions have been answered to such
Company Shareholder's satisfaction.
(b) There is no plan or intention by any Company
Shareholder who owns one percent (1%) or more of the Company Common Stock and
to the best of the knowledge of management of the Company, there is no plan or
intention on the part of the remaining shareholders of the Company to sell,
exchange, or otherwise dispose of a number of shares of Vail Banks Common
Stock received in the merger that would reduce the Company Shareholders'
ownership of Vail Banks Common Stock to a number of shares having a value, as
of the date of the Closing, of less than forty-five percent (45%) of the value
of all of the formerly outstanding stock of the Company as of the date of the
Closing. For purposes of this representation, shares of Company Common Stock
exchanged for cash or other property, surrendered by dissenters, or exchanged
for cash in lieu of fractional shares of Vail Banks Common Stock will be
treated as outstanding Company Common Stock on the date of the Closing.
Moreover, shares of Company Common Stock redeemed, or disposed of prior or
subsequent to the Closing will be considered in making this representation.
4.3 BUSINESS OPERATIONS.
-------------------
4.3.1 CUSTOMERS. Management has no knowledge of any
---------
presently existing facts which could reasonably be expected to result in the
loss of any material borrower or depositor of Glenwood or in the inability of
Glenwood to collect amounts due therefrom or to return funds deposited
thereby, except as set forth in Section 4.3.1 of the Disclosure Memorandum.
4.3.2 PERMITS; COMPLIANCE WITH LAW. (a) The Company and
----------------------------
Glenwood have all permits, licenses, approvals, authorizations and
registrations under all federal, state, local and foreign laws required for
them to carry on their respective businesses as presently conducted, and all
of such permits, licenses, approvals, authorizations and registrations are in
full force and effect, and no suspension or cancellation of any of them is
pending or, to the knowledge of Management, threatened.
16
(b) The Company and Glenwood have materially complied with
all laws, regulations, and orders applicable to them or their businesses.
Section 4.3.2(b) of the Disclosure Memorandum contains a list of any known
violations of such laws, regulations, ordinances or rules by any present
officer, director, or employee of the Company or Glenwood which occurred since
December 31, 1992, and which resulted in any order, proceeding, judgment or
decree which would be required to be disclosed pursuant to Item 401(d) of
Regulation S-K promulgated by the Securities and Exchange Commission if the
Company or Glenwood had been subject to the reporting requirements under the
Securities Act or the Exchange Act. No past violation of any such law,
regulation, ordinance or rule has occurred which could impair the right or
ability of the Company or Glenwood to conduct their businesses.
(c) Except as set forth in Section 4.3.2(c) of the
Disclosure Memorandum, no notice or warning from any governmental authority
with respect to any failure or alleged failure of the Company or Glenwood to
comply in any respect with any law, regulation or order has been received, nor
is any such notice or warning proposed or, to the knowledge of Management,
threatened.
4.3.3 ENVIRONMENTAL. (a) Except as set forth in Section 4.3.3(a)
-------------
of the Disclosure Memorandum, the Company and Glenwood:
(i) have not caused or permitted, and have no
knowledge of, the generation, manufacture, use, or handling or the release or
presence of any hazardous substances on, in, under or from any properties or
facilities currently owned or leased by the Company or Glenwood or adjacent to
any properties so owned or leased; and
(ii) have complied with, and have kept all records and
made all filings required by, applicable federal, state and local laws,
regulations, orders, permits and licenses relating to the generation,
manufacture, use, handling, release or presence of any hazardous substance on,
in, under or from any properties or facilities currently owned or leased by
the Company or Glenwood.
(b) Except as set forth in Section 4.3.3(b) of the
Disclosure Memorandum, neither the Company nor Glenwood nor any of their
officers, directors, employees or agents, in the course of their employment by
the Company or Glenwood, has directly or indirectly given advice with respect
to, or participated in any respect, directly or indirectly, in, the management
or operation of any entity or concern whose business relates in any way to the
generation, storage, handling, disposal, transfer, production or processing of
hazardous substances, nor has the Company or Glenwood foreclosed on any
property on which there is a threatened release of any hazardous substances or
on which there has been such a release and full remediation has not been
completed, or any property on which contained (non-released) hazardous
substances or solid wastes are located.
17
(c) Except as set forth in Section 4.3.3(c) of the
Disclosure Memorandum, neither the Company nor Glenwood, nor any of their
officers, directors, employees, and agents, are aware of, have been told of,
or have observed, the presence of any hazardous substance or solid waste on,
in, under, or around property on which the Company or Glenwood holds a legal
or security interest, in violation of, or creating liability under, federal,
state or local environmental statutes, regulations, or ordinances.
4.3.4 INSURANCE. Section 4.3.4 of the Disclosure Memorandum
---------
contains a complete list and description (including the expiration date,
premium amount and coverage thereunder) of all policies of insurance and bonds
presently maintained by, or providing coverage for, the Company and Glenwood
or any of their officers, directors and employees, all of which are, and will
be maintained through the Closing Date, in full force and effect, together
with a complete list of all pending claims under any of such policies or
bonds. All terms, obligations and provisions of each of such policies and
bonds have been complied with, all premiums due thereon have been paid, and no
notice of cancellation with respect thereto has been received. Except as set
forth in Section 4.3.4 of the Disclosure Memorandum, Management believes that
such policies and bonds provide adequate coverage to insure the properties and
businesses of the Company and Glenwood and the activities of their officers,
directors and employees against such risks and in such amounts as are prudent
and customary. Neither the Company nor Glenwood will as of the Closing Date
have any liability for premiums or for retrospective premium adjustments for
any period prior to the Closing Date. The Company and Glenwood have previously
made available to Vail Banks a true, correct and complete copy of each
insurance policy and bond in effect since January 1, 1992 with respect to the
business and affairs of the Company and Glenwood.
4.4 PROPERTIES AND ASSETS.
---------------------
4.4.1 CONTRACTS AND COMMITMENTS. Section 4.4.1 of the
-------------------------
Disclosure Memorandum contains a list identifying and briefly describing all
written contracts, purchase orders, agreements, security deeds, guaranties or
commitments to which the Company or Glenwood is a party, or by which they may
be bound, involving the payment or receipt, actual or contingent, of more than
$25,000 or having a term or requiring performance over a period of more than
ninety (90) days. Except as set forth in Section 4.4.1 of the Disclosure
Memorandum, each such contract, agreement, guaranty and commitment of the
Company and Glenwood is in full force and effect and is valid and enforceable
in accordance with its terms, and constitutes a legal and binding obligation
of the respective parties thereto and is not the subject of any notice of
default, termination, partial termination or of any ongoing, pending,
completed or threatened investigation, inquiry or other proceeding or action
that will give rise to any notice of default, termination or partial
termination. The Company and Glenwood have complied with the provisions of
such contracts, agreements, guaranties and commitments. A true and complete
copy of each such document has been made available to Vail Banks for
examination.
18
4.4.2 LICENSES; INTELLECTUAL PROPERTY. The Company and Glenwood
-------------------------------
have all patents, trademarks, trade names, service marks, copyrights, trade
secrets and know-how reasonably necessary to conduct their businesses as
presently conducted and, except as described in Section 4.4.2 of the
Disclosure Memorandum, neither the Company nor Glenwood is a party, either as
licensor or licensee, to any agreement for any patent, process, trademark,
service xxxx, trade name, copyright, trade secret or other confidential
information, and there are no rights of third parties with respect to any
trademark, service xxxx, trade secrets, confidential information, trade name,
patent, patent application, copyright, invention, device or process owned or
used by the Company or Glenwood or presently expected to be used by either of
them in the future. All patents, copyrights, trademarks, service marks, trade
names, and applications therefor or registrations thereof, owned or used by
the Company or Glenwood, are listed in Section 4.4.2 of the Disclosure
Memorandum. The Company and Glenwood have complied with all applicable laws
relating to the filing or registration of "fictitious names" or trade names.
4.4.3 PERSONAL PROPERTY. The Company and Glenwood each have good
-----------------
and marketable title to all of their respective personalty, tangible and
intangible, reflected in the 1997 Financial Statements (except as since sold
or otherwise disposed of by either of them in the ordinary course of
business), free and clear of all encumbrances, liens or charges of any kind or
character except (i) those referred to in the notes to the 1997 Financial
Statements as securing specified liabilities (with respect to which no default
exists or, to the knowledge of Management, is claimed to exist), (ii) those
described in Section 4.4.3 of the Disclosure Memorandum and (iii) liens for
taxes not due and payable.
4.4.4 LEASES. (a) All leases pursuant to which either the Company
------
or Glenwood is lessor or lessee (the "Leases") of any real or personal
property are valid and enforceable in accordance with their terms; there is
not, under any of such Leases any default or, to the knowledge of Management,
any claimed default by the Company or Glenwood, as the case may be, or event
of default or event which with notice or lapse of time, or both would
constitute a default by the Company or Glenwood, as the case may be, and in
respect of which adequate steps have not been taken to prevent a default on
either of their parts from occurring.
(b) Except as set forth in Section 4.4.4(b) of the
Disclosure Memorandum, there are no contractual obligations, agreements in
principle or present plans for either the Company or Glenwood to enter into
new leases of real property or to renew or amend existing Leases prior to the
Closing Date.
(c) The copies of the Leases heretofore furnished or made
available by the Company and Glenwood to Vail Banks are true, correct and
complete, and the Leases have not been modified in any respect other than
pursuant to amendments, copies of which have been concurrently delivered or
made available to Vail Banks, and are in full force and effect in accordance
with their terms.
19
(d) Except as set forth in Section 4.4.4(d) of the
Disclosure Memorandum, no rent has been paid in advance and no security
deposit has been paid, nor is any brokerage commission payable, by or to the
Company or Glenwood with respect to any Lease.
4.4.5 REAL PROPERTY. (a) Except as disclosed in Section 4.4.5(a)
-------------
of the Disclosure Memorandum, the Company and Glenwood have good and
marketable title to the real property reflected in the 1997 Financial
Statements (the "Realty"), and the titles to the Realty are covered by title
insurance policies providing coverage in the amount of the original purchase
price.
(b) Except as set forth in Section 4.4.5(b) of the
Disclosure Memorandum, the interests of the Company or Glenwood in the Realty
and in and under each of the Leases are free and clear of any and all liens
and encumbrances except for liens for current taxes not yet due, and are
subject to no present claim, contest, dispute, action or, to the knowledge of
Management, threatened action at law or in equity.
(c) The present and past use and operations of, and
improvements upon, the Realty and all real properties leased by the Company
and Glenwood (the "Leased Properties") are in material compliance with all
applicable building, fire, zoning and other applicable laws, ordinances and
regulations, including the Americans with Disabilities Act, and with all deed
restrictions of record, no notice of any violation or alleged violation
thereof has been received, and to the knowledge of Management, there are no
proposed changes therein that would affect the Realty, the Leased Properties
or their uses.
(d) Management is not aware of any proposed or pending
change in the zoning of, or of any proposed or pending condemnation proceeding
with respect to, any of the Realty or the Leased Properties which may
adversely affect the Realty or the Leased Properties or the current or
currently contemplated use thereof.
(e) The buildings and structures owned, leased or used by
the Company and Glenwood are, taken as a whole, in good operating order
(except for ordinary wear and tear), usable in the ordinary course of
business, and are sufficient and adequate to carry on the businesses and
affairs of the Company and Glenwood as presently conducted.
4.5 EMPLOYEES AND BENEFITS.
----------------------
4.5.1 COMPENSATION STRUCTURE. Section 4.5.1 of the
----------------------
Disclosure Memorandum contains:
(a) a true and complete list of the names, titles,
responsibilities and compensation arrangements of each person whose earned
compensation (including without limitation all salary, wages, bonuses and
fringe
20
benefits made available to all employees on a non-discriminatory basis),
regardless of whether actually payable in such year, from the Company and
Glenwood for the current fiscal year. For purposes of this Section 4.5.1(a),
compensation shall include any amounts which are or could be owed to any person
in payment of accrued vacation time, sick leave, or as a result of any other
incentive plan currently or previously in effect with respect to such person.
(b) copies of all written agreements, correspondence (other than
outstanding offers of employment to prospective employees whose compensation
levels will not exceed $25,000 in cash), memoranda and other written materials
currently in effect which have been provided to such employees relating to their
compensation.
4.5.2 DIRECTORS OR OFFICERS OF OTHER CORPORATIONS. Except as set
-------------------------------------------
forth in Section 4.5.2 of the Disclosure Memorandum, no director, officer, or
employee of the Company or Glenwood serves, or in the past five years has
served, as a director or officer of any other corporation (other than the
Company or Glenwood) on behalf of or as a designee of the Company or any of its
subsidiaries.
4.5.3 EMPLOYEE BENEFITS. (a) Except as set forth in Section
-----------------
4.5.3(a) of the Disclosure Memorandum, neither the Company nor Glenwood has or
maintains a pension plan, profit sharing plan, group insurance plan, employee
welfare benefit plan (as such term is defined in Section 3(l) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), severance plan,
bonus plan, stock option plan or deferred compensation plan for any of its
current or former employees.
(b) Each "employee benefit plan" as defined in Section
3(3) of ERISA, maintained by or on behalf of the Company or Glenwood (including
any plans which are "multiemployer plans" under Section 3(37)(A) of ERISA
("Multiemployer Plans") and any defined benefit plan (as defined in Section
3(35) of ERISA) terminated by the Company or Glenwood within the five plan-years
ending immediately before the Closing Date), which covers or covered any
employees of the Company, Glenwood, or any subsidiary or of any predecessors
thereof (each a "Plan"), is listed in Section 4.5.3(b) of the Disclosure
Memorandum, and copies of all the Plans and Plan trusts (if applicable), Summary
Plan Descriptions, Actuarial Reports and valuations (if any), and Annual Reports
(and attachments thereto) on Form 5500, 5500-C or 5500-R, as the case may be (if
required pursuant to ERISA), for the most recent three years with respect to the
Plans, Internal Revenue Service determination letters and any other related
documents requested by Vail Banks or its counsel have been, or prior to the
Closing Date will be, provided to Vail Banks.
(c) Except as set forth in Section 4.5.3(c) of the
Disclosure Memorandum, with respect to each Plan: no litigation or
administrative or other proceeding is pending or, to the knowledge of
Management, threatened; each Plan has been restated or amended so as to comply
with all applicable requirements of law, including all
21
applicable requirements of ERISA, the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations promulgated thereunder by the Internal Revenue
Service and the United States Department of Labor. Neither the Plan nor any
trustee, administrator or fiduciary thereof has at any time been involved in any
transaction relating to the Plan which would constitute a breach of fiduciary
duty under ERISA or a "prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code, unless such transaction is specifically
permitted under Sections 407 or 408 of ERISA, Section 4975 of the Code or a
class or administrative exemption issued by the Department of Labor.
(d) Except as set forth in Section 4.5.3(d) of the
Disclosure Memorandum, each Plan has been administered in compliance in all
material respects with applicable law and the terms of the Plan.
(e) Except as disclosed in Section 4.5.3(e) of the
Disclosure Memorandum and except for obligations under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), neither the Company nor
Glenwood has any obligation to provide, or material liability for, health care,
life insurance or other benefits after termination of active employment. As of
the Closing Date, the Company and Glenwood will have provided adequate reserves,
or insurance or qualified trust funds, for all claims incurred through the
Closing Date, including adequate reserves to provide for any post-retirement
health care, life insurance or other benefits with respect to periods of
employment prior to the Closing Date, based on an actuarial valuation
satisfactory to the actuaries of the Company and Glenwood representing a
projection of claims expected to be incurred for such retirees during their
period of coverage under such Plan.
(f) To the knowledge of Management, no fact or
circumstance exists which could constitute grounds in the future for the Pension
Benefit Guaranty Corporation ("PBGC") (or any successor to the PBGC) to take any
action whatsoever under Section 4042 of ERISA in connection with any plan which
an Affiliate (as defined below) of the Company maintains within the meaning of
Section 4062 or 4064 of ERISA, and, in either case, PBGC has not previously
taken any such action which has, or reasonably might, result in any liability of
an Affiliate or the Company to the PBGC, which would have an adverse effect on
the business of the Company. The term "Affiliate" for purposes of this Section
means any trade or business (whether incorporated or unincorporated) which is a
member of a group described in Sections 414(b) or 414(c) of the Code of which
the Company is also a member.
(g) Only current and former employees of the Company or
Glenwood participate in any Plan.
4.5.4 LABOR-RELATED MATTERS. Neither the Company nor Glenwood
---------------------
is, and neither the Company nor Glenwood has been, a party to any collective
bargaining agreement or agreement of any kind with any union or labor
organization or to any agreement with any of its employees which is not
terminable at will or upon ninety (90)
22
days notice at the election of, and without cost or penalty to, the Company or
Glenwood. Except as set forth in Section 4.5.4 of the Disclosure Memorandum,
neither the Company nor Glenwood has received at any time in the past five (5)
years, any demand for recognition from any union, and no attempt has been made,
or will have been made as of the Closing Date, to organize any of their
employees. The Company has complied with all obligations under the National
Labor Relations Act, as amended, the Age Discrimination in Employment Act, as
amended, and all other federal, state and local labor laws and regulations
applicable to employees. To the knowledge of Management, there are no unfair
labor practice charges pending or threatened against the Company or Glenwood,
and there are, and in the past three (3) years there have been, no charges,
complaints, claims or proceedings, or slowdowns or strikes pending or threatened
against, or involving, as the case may be, the Company or Glenwood with respect
to any alleged violation of any legal duty (including but not limited to any
wage and hour claims, employment discrimination claims or claims arising out of
any employment relationship) by the Company or Glenwood as to any of their
employees or as to any person seeking employment therefrom, and no such
violations exist.
4.5.5 RELATED-PARTY TRANSACTIONS. Except for (a) loans and
--------------------------
extensions of credit made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions by the Company or Glenwood with other persons who are not
affiliated with the Company or Glenwood, and which do not involve more than the
normal risk of repayment or present other unfavorable features, (b) deposits,
all of which are on terms and conditions identical to those made available to
all customers of Glenwood at the time such deposits were entered into, and (c)
transactions specifically described in Section 4.5.5 of the Disclosure
Memorandum, there are no contracts with or commitments to present or former 5%
or greater shareholders, directors, officers, or employees of the Company or
Glenwood involving the expenditure after December 31, 1997 of more than $60,000
as to any one individual, including with respect to any business directly or
indirectly controlled by any such person, or $100,000 for all such contracts or
commitments in the aggregate for all such individuals (other than contracts or
commitments relating to services to be performed by any officer, director or
employee as a currently-employed employee of the Company or Glenwood).
4.6 OTHER MATTERS.
-------------
4.6.1 APPROVALS, CONSENTS AND FILINGS. Except for the
-------------------------------
approval of the Federal Reserve, the Federal Deposit Insurance Corporation (the
"FDIC"), the Division of Banking, the Company Shareholders, or as set forth in
Section 4.6.1 of the Disclosure Memorandum, neither the execution and delivery
of this Agreement or the Holding Company Merger Agreement by the Company or the
Bank Merger Agreement by Glenwood, nor the consummation of the transactions
contemplated hereby or thereby, will (a) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, or (b) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or Glenwood, or any of
their respective assets.
23
4.6.2 DEFAULT. (a) Except for those consents described in
-------
or set forth pursuant to Section 4.6.1 above or as set forth in Section 4.6.2(a)
of the Disclosure Memorandum, neither the execution of this Agreement, the
Holding Company Merger Agreement, or the Bank Merger Agreement nor the
consummation of the transactions contemplated herein or therein (i) constitutes
a breach of or default under any contract or commitment to which the Company or
Glenwood is a party or by which the Company or Glenwood or their properties or
assets are bound, (ii) does or will result in the creation or imposition of any
security interest, lien, encumbrance, charge, equity or restriction of any
nature whatsoever in favor of any third party upon any assets of the Company or
Glenwood, or (iii) constitutes an event permitting termination of any agreement
or the acceleration of any indebtedness of the Company or Glenwood.
(b) Except as set forth in Section 4.6.2(b) of the
Disclosure Memorandum, neither the Company nor Glenwood is in default under its
articles of incorporation or charter, as the case may be, or bylaws or under any
term or provision of any security deed, mortgage, indenture or security
agreement or of any other contract or instrument to which the Company or
Glenwood is a party or by which either of them or any of their property is
bound.
4.6.3 GLENWOOD. The Company owns or controls one hundred
--------
percent (100%) of the shares of the Common Stock of Glenwood (the "Glenwood
Shares"), and the Company will vote, or cause to be voted, the Glenwood Shares
in favor of the Bank Merger. Pursuant to the Holding Company Merger, Vail Banks
will acquire all of the Company's rights, title and interest in and to the
Glenwood Shares.
4.6.4 REPRESENTATIONS AND WARRANTIES. No material
------------------------------
representation or warranty contained in this Article IV or in any written
statement delivered by or at the direction of the Company or Glenwood pursuant
hereto or in connection with the transactions contemplated hereby contains or
shall contain any untrue statement, nor shall such representations and
warranties taken as a whole omit any statement necessary in order to make any
statement not misleading. Copies of all documents furnished to Vail Banks in
connection with this Agreement or pursuant hereto are true, correct and
complete.
ARTICLE V
---------
REPRESENTATIONS, WARRANTIES AND
-------------------------------
COVENANTS OF COMPANY SHAREHOLDERS
---------------------------------
Each Company Shareholder (as listed on Exhibit C) represents,
warrants, covenants and agrees as follows, which representations, warranties,
covenants and agreements are being made as of the date hereof and shall be
deemed to be made again as of the Closing:
24
5.1 TITLE. Company Shareholder has good and marketable title to
-----
the Company Common Stock owned by such Company Shareholder (as listed on Exhibit
C) free and clear of any and all claims, liens, charges and encumbrances.
5.2 CONSENT. Company Shareholder's entry into this Agreement
-------
constitutes Company Shareholder's consent to this Agreement.
ARTICLE VI
----------
CONDUCT OF BUSINESS OF THE COMPANY
----------------------------------
OR GLENWOOD PENDING CLOSING
---------------------------
During the period from the date of this Agreement and
continuing until the Closing Date, or the earlier termination of this Agreement
pursuant to Article XI hereof, the Company Shareholders and Company agree
(except as expressly contemplated by this Agreement or to the extent that Vail
Banks shall otherwise consent in advance in writing) that:
(a) ORDINARY COURSE. Except in specific contemplation of
---------------
the transactions contemplated by this Agreement, the Company and Glenwood shall
carry on their businesses in the usual, regular and ordinary course in the same
manner as heretofore conducted, without the creation of any indebtedness for
borrowed money (other than deposit and similar accounts and customary credit
arrangements between banks in the ordinary course of business), and, to the
extent consistent with such businesses, use their best efforts to preserve
intact their present business organizations, keep available the services of
their present officers and employees and preserve their relationships with
representatives, customers, suppliers, personnel and others having business
dealings with the Company and Glenwood.
(b) DIVIDENDS; CHANGES IN STOCK. Except upon the prior
---------------------------
written approval of Vail Banks, neither the Company nor Glenwood shall or shall
propose to (i) declare or pay any dividends on, or make other distributions in
respect of, any of their capital stock, (ii) split, combine or reclassify any of
their capital stock or issue, authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of capital
stock of the Company or Glenwood, or (iii) repurchase or otherwise acquire any
shares of their capital stock.
(c) ISSUANCE OF SECURITIES. The Company and Glenwood shall
----------------------
not sell, issue, authorize or propose the sale or issuance of, or purchase or
propose the purchase of, any shares of their capital stock or any class of
securities convertible into, or rights, warrants or options to acquire, any such
shares or other convertible securities or enter into any agreement with respect
to the foregoing.
(d) GOVERNING DOCUMENTS; COMPLIANCE WITH LAW. The Company
----------------------------------------
and Glenwood shall not amend their articles of incorporation or charter, as the
case may be, or bylaws. The Company and Glenwood shall each maintain their
corporate
25
existence and powers and fully comply with all federal, state and local laws
with respect to their operations and the conduct of their businesses.
(e) NO ACQUISITIONS. The Company and Glenwood shall not acquire by
---------------
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other entity or division thereof or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to them.
(f) NO DISPOSITIONS. The Company and Glenwood shall not sell,
---------------
lease or otherwise dispose of any of their assets except for sales, leases
and other dispositions in the ordinary course of business consistent with
prior practice.
(g) MAINTENANCE OF PROPERTIES. The Company and Glenwood shall
-------------------------
maintain their properties and assets in satisfactory condition and repair for
the purposes intended, ordinary wear and tear and damage by fire or other
casualty excepted.
(h) BENEFIT PLANS, ETC. The Company and Glenwood shall not enter
------------------
into or amend any bonus, incentive compensation, deferred compensation, profit
sharing, retirement, pension, group insurance, stock option, stock purchase or
other benefit plan or any union, employment or consulting agreement except as
required by law or regulations and shall not accelerate the exercisability of
any options, warrants or rights to purchase securities of the Company or
Glenwood pursuant to any benefit plan.
(i) BOOKS AND RECORDS. The books and records of the Company and
-----------------
Glenwood shall be maintained in the usual, regular and ordinary course on a
basis consistent with prior years.
(j) INCREASE IN COMPENSATION. The Company and Glenwood shall not
------------------------
grant to any officer, employee or agent any increase in compensation or in
severance or termination pay, or enter into any employment agreement, except
as may be required under employment, termination or other agreements in effect
on the date of this Agreement and which are described in the Disclosure
Memorandum.
(k) PAYMENT OF DEBT. Except in the ordinary course of business and
---------------
in accordance with past practice, the Company and Glenwood shall not pay any
claim or discharge or satisfy any lien or encumbrance or pay any obligation or
liability other than in the ordinary course of business or as required by the
terms of any written instrument evidencing or governing the same, a copy of
which has been heretofore made available to Vail Banks.
(l) OTHER ACTIONS. The Company and Glenwood shall not take any
-------------
action that would or could reasonably be expected to result in any of the
representations and warranties of the Company and Glenwood set forth in this
Agreement becoming untrue at any time on or prior to the Closing Date.
26
(m) MAINTENANCE OF INSURANCE. The Company and Glenwood shall
------------------------
maintain and keep or cause to be maintained and kept in full force and effect
all of the insurance referred to in Section 4.3.4 hereof or other insurance
equivalent thereto.
(n) INVESTMENT PORTFOLIO. The Company and Glenwood, in accordance
--------------------
with current practice, shall only invest funds of the Company or Glenwood in
securities of the government of the United States which have a stated maturity
of no greater than two (2) years from the Closing Date.
(o) BANKING RELATIONSHIPS. No change will be made in the banking
---------------------
and safe deposit arrangements referred to in Section 4.2.8 hereof.
(p) ADVICE OF CHANGES. The Company and Glenwood shall promptly
-----------------
advise Vail Banks orally and in writing of any change or event having, or
which Management of the Company and Glenwood believes could have, a material
adverse effect on the assets, liabilities, business, operations or financial
condition of the Company or Glenwood.
27
ARTICLE VII
-----------
REPRESENTATIONS AND WARRANTIES OF VAIL BANKS
--------------------------------------------
To induce the Company to enter into and perform this Agreement, Vail
Banks represents, warrants, covenants and agrees as follows, which
representations, warranties, covenants and agreements are being made as of the
date hereof and shall be deemed to be made again as of the Closing:
7.1 GOOD STANDING. Vail Banks is a business corporation duly
-------------
organized, validly existing and in good standing under the laws of the State
of Colorado and is entitled to own or lease its properties and to carry on its
business as now conducted.
7.2 AUTHORITY. Subject to approval of the Federal Reserve, and the
---------
Division of Banking, Vail Banks has full corporate power and authority to
make, execute and perform this Agreement and the transactions contemplated
hereby and the execution, delivery and performance of this Agreement by Vail
Banks have been duly authorized by all necessary corporate action of Vail
Banks.
7.3 DEFAULT. Neither the execution and delivery of this Agreement
-------
nor performance by Vail Banks in compliance with its terms will result in a
breach of the terms or conditions of, or constitute a default under, the
articles of incorporation or bylaws of Vail Banks or of any mortgage, note,
bond, indenture, agreement, license or other instrument or obligation to which
it is a party or by which it or any of its properties or assets may be bound
or, to the knowledge of management of Vail Banks, affected.
7.4 APPLICATIONS. Vail Banks shall prepare and file, or shall
------------
cause to be prepared and filed, all regulatory applications as may be required
in order to consummate the transactions contemplated by this Agreement. Vail
Banks shall file within sixty (60) days of the date hereof all original
applications for regulatory approval with any and all governmental
authorities, bodies or agencies having jurisdiction over the transactions
contemplated by this Agreement, including, but not limited to, the Federal
Reserve, FDIC and the Division of Banking. Vail Banks shall provide the
Company with copies of all regulatory applications filed pursuant to this
Section 7.4.
7.5 DOCUMENTS RECEIVED FROM COMPANY AND GLENWOOD. Vail Banks has
--------------------------------------------
received either a copy or original of each document listed on the attached
Exhibit D.
7.6 REPRESENTATIONS AND WARRANTIES. No representation or warranty
------------------------------
contained in this Article VII contains or will contain any untrue statement,
nor shall such representations and warranties taken as a whole omit any
statement necessary in order to make any statement therein not misleading.
ARTICLE VIII
------------
28
CONDITIONS TO OBLIGATIONS OF
----------------------------
VAIL BANKS
----------
All of the obligations of Vail Banks under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by Vail Banks:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of the Company contained herein or in any certificate, schedule or
other document delivered pursuant to the provisions hereof, or in connection
herewith, shall be true in all material respects as of the date when made and,
except where otherwise expressly provided herein, shall be deemed to be made
again at and as of the Closing Date and shall be true in all material respects
at and as of such time, except (i) for those representations and warranties
confined to a specific date, which shall be true and correct as of such date,
or (ii) as a result of changes or events expressly permitted or contemplated
herein.
8.2 PERFORMANCE OF CONDITIONS AND AGREEMENTS. The Shareholders and
----------------------------------------
the Company shall have performed and complied in all material respects with
all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
8.3 CERTIFICATES, RESOLUTIONS, OPINION. The Shareholders or the
----------------------------------
Company shall have delivered, or cause Glenwood to deliver, to Vail Banks:
(a) a certificate executed by the Shareholders or the President
or Chairman of the Company, dated as of the Closing Date, and
certifying in such detail as Vail Banks may reasonably request to
the fulfillment of the conditions specified in Sections 8.1 and 8.2
hereof;
(b) certificates executed by the Secretary of State of the State
of Colorado dated not more than thirty (30) business days prior to
the Closing Date, of the valid existence of the Company and
Glenwood, respectively, under the laws of Colorado;
(c) evidence that the Company and Glenwood have filed all
corporate tax returns required by the laws of the State of Colorado,
and have paid all taxes shown thereon to be due; and
(d) an opinion from counsel of the Company acceptable to Vail
Banks and its counsel, dated the Closing Date, in the form attached
as Exhibit E.
8.4 ACCOUNTANTS' LETTER. Vail Banks shall have received a letter
-------------------
from GRA, Xxxxxxxx, White & Co., P.C. dated the Closing Date, to the effect
that: At
29
the request of the Company they have carried out procedures to a specified
date not more than five business days prior to the Closing Date, which
procedures did not constitute an examination in accordance with generally
accepted auditing standards, of the financial statements of the Company, as
follows: (a) read the unaudited balance sheets and statements of income of the
Company and Glenwood from December 31, 1997 through the date of the most
recent monthly financial statements available in the ordinary course of
business; (b) read the minutes of the meetings of shareholders and Board of
Directors of the Company and Glenwood from December 31, 1997 to said date not
more than five business days prior to the Closing Date; and (c) consulted with
certain officers and employees of the Company and Glenwood responsible for
financial and accounting matters and, based on such procedures, nothing has
come to their attention which would cause them to believe that (i) such
unaudited interim balance sheets and statements of income are not fairly
presented in conformity with generally accepted accounting principles applied
on a basis consistent with that of the 1997 Financial Statements, (ii) as of
said date not more than five business days prior to the Closing Date the
shareholders' equity, long-term debt, reserve for possible loan losses and
total assets of the Company, in each case as compared with the amounts shown
in the 1997 Financial Statements, are not different except as set forth in
such letter, or (iii) for the period from December 31, 1997 to said date not
more than five business days prior to the Closing Date, the net interest
income, total and per share amounts of consolidated income (before
extraordinary items) and net income of the Company, as compared with the
corresponding portion of the preceding 12-month period, are not different
except as set forth in such letter.
8.5 REGULATORY APPROVALS. Vail Banks shall have received from any
--------------------
and all governmental authorities, bodies or agencies having jurisdiction over
the transactions contemplated by this Agreement, including, but not limited
to, the Federal Reserve, FDIC and the Division of Banking, all such consents,
authorizations and approvals as are necessary for the consummation thereof and
all applicable waiting or similar periods required by law shall have expired.
8.6 CERTIFICATES. The Secretary of State of the State of Colorado
------------
shall have issued certificates of merger with respect to (i) the merger of the
Company into Vail Banks in accordance with the provisions of Colorado law and
(ii) the Merger of Glenwood with and into WestStar in accordance with the
provisions of Colorado law.
8.7 EMPLOYMENT. All written employment, termination, consulting or
----------
similar agreements entered into by the Company or Glenwood shall have been
effectively terminated with no remaining liabilities, duties or obligations on
the part of the Company or Glenwood under said agreements.
8.8 CONSENTS TO THE HOLDING COMPANY MERGER. The Company shall have
--------------------------------------
delivered to Vail Banks all consents to the Holding Company Merger and the
Bank Merger that are required to be secured from any party to any agreement
with the Company or Glenwood.
30
8.9 BOARD APPROVAL. The Board of Directors of Vail Banks shall
--------------
have approved the transactions provided for herein, which approval shall be
given no later than May 1, 1998.
8.10 AUDITED 1997 FINANCIAL STATEMENTS. The Company shall have
---------------------------------
delivered to Vail Banks audited, consolidated financial statements of the
Company and Glenwood for the year ended December 31, 1997, including balance
sheets, statements of income, statements of shareholders' equity, statements
of cash flows and related notes (the "Audited 1997 Financial Statements"), and
all representations and warranties given by the Company or Glenwood with
respect to the 1997 Financial Statements, including any disclosures related
thereto and included in the corresponding section of the Disclosure
Memorandum, shall be true and correct as of the Closing Date as applied to the
Audited 1997 Financial Statements. Vail Banks shall pay up to a maximum of
$15,000 of the expense of the preparation of the Audited 1997 Financial
Statements.
ARTICLE IX
----------
CONDITIONS TO OBLIGATIONS OF THE COMPANY
----------------------------------------
All of the obligations of the Company under this Agreement are
subject to the fulfillment prior to or at the Closing Date of each of the
following conditions, any one or more of which may be waived by the Company:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of Vail Banks contained herein or in any certificate, schedule or
other document delivered pursuant to the provisions hereof, or in connection
herewith, shall be true in all material respects as of the date when made and
shall be deemed to be made again at and as of the Closing Date and shall be
true in all material respects at and as of such time.
9.2 PERFORMANCE OF AGREEMENTS. Vail Banks shall have performed and
-------------------------
complied in all material respects with all agreements and conditions required
by this Agreement to be performed or complied with by it prior to or at the
Closing Date.
9.3 CERTIFICATES, RESOLUTIONS, OPINIONS. Vail Banks shall have
-----------------------------------
delivered to the Company:
(a) a certificate executed by the President of Vail Banks, dated
the Closing Date, certifying in such detail as the Company may
reasonably request to the fulfillment of the conditions specified in
Sections 9.1 and 9.2 hereof;
(b) duly adopted resolutions of the Board of Directors of Vail
Banks, certified by the Secretary or an Assistant Secretary thereof,
dated the Closing Date, authorizing and approving (i) the execution
of this Agreement and the Holding Company Merger Agreement, and the
consummation of the
31
transactions contemplated herein and therein in accordance with
their respective terms, and (ii) all other necessary and proper
corporate action to enable Vail Banks to comply with the terms
hereof;
(c) duly adopted resolutions of the Board of Directors and
shareholders of Vail Banks, certified by the Secretary or Assistant
Secretary thereof, dated the Closing Date, authorizing and approving
(i) the execution of the Bank Merger Agreement and the consummation
of the transactions contemplated therein in accordance with its
terms, and (ii) all other necessary and proper corporate action to
enable Vail Banks to comply with the terms thereof; and
(d) an opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel for Vail
Banks, dated the Closing Date, in the form attached as Exhibit F.
(e) certificates executed by the Secretary of State of the State
of Colorado, dated not more than thirty (30) business days prior to
the Closing Date, of the valid existence of Vail Banks under the
laws of Colorado.
9.4 SHAREHOLDER APPROVAL. The Holding Company Merger Agreement
--------------------
shall have been approved by the vote of the holders of at least a majority of
the Company Stock.
9.5 REGULATORY APPROVALS. Any and all governmental authorities,
--------------------
bodies or agencies having jurisdiction over the transactions contemplated by
this Agreement, including, but not limited to, the Federal Reserve, the FDIC
and the Division of Banking, shall have granted all such consents,
authorizations and approvals as are necessary for the consummation thereof,
and all applicable waiting or similar periods required by law shall have
expired.
ARTICLE X
---------
WARRANTIES, NOTICES, ETC.
-------------------------
10.1 WARRANTIES. All statements contained in any certificate or
-----------
other instrument delivered by or on behalf of the Company pursuant to Article
VIII or Vail Banks pursuant to Article IX hereto or in connection with the
transactions contemplated hereby shall be deemed representations and
warranties hereunder by the delivering party.
10.2 SURVIVAL OF REPRESENTATIONS. All representations,
---------------------------
warranties, covenants, and agreements made by either party hereto in or
pursuant to this Agreement or in any instrument, exhibit or certificate
delivered pursuant hereto shall be deemed to have been material and to have
been relied upon by the party to which made, but, except as set forth
hereafter or specifically stated in this Agreement, such representations,
warranties, covenants, and agreements shall expire and be of no further force
and effect upon the
32
consummation of the Holding Company Merger; provided, however, that the
following shall survive consummation of the Holding Company Merger and the
transactions contemplated hereby:
(a) the opinions of counsel referred to in Sections 8.3(d) and
9.3(d) of this Agreement;
(b) the opinion of accountants referred to in Section 8.4 of
this Agreement;
(c) any intentional misrepresentation of any material fact made
by any party hereto in or pursuant to this Agreement or in any
instrument, document or certificate delivered pursuant hereto, which
shall survive for a period of two (2) years from the consummation of
the Holding Company Merger and the Bank Merger; and
(d) the covenant with respect to the confidentiality of certain
information contained in Section 3.4 of this Agreement.
The Company Shareholders shall be liable for any liability under Section
10.2(c) hereof arising out of a breach of any representation, warranty,
covenant or agreement delivered by or on behalf of the Company or the Company
Shareholders; provided, however, that the total amount of any such liability
shall not exceed the amount of the Purchase Price and each Company Shareholder
shall be personally liable for that percentage of the total liability which
the number of shares of Company Common Stock owned by such Company Shareholder
as set forth on Exhibit C bears to the total number of Company Common Shares
owned by all Company Shareholders as set forth on Exhibit C; and provided
further that the Company Shareholders shall be liable only to the extent any
such liability is in excess of any applicable insurance coverage.
10.3 NOTICE. All notices, requests, demands and other
------
communications required or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered or mailed, first class,
certified mail, postage prepaid to each of the parties hereto at the
respective addresses set forth below (or at such other address either party
may have theretofore notified the other party in writing):
(a) To the Company: Independent Bankshares, Inc.
0000 Xxxxx Xxxxxx
Post Xxxxxx Xxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn.: Xxxxxx X. Xxxxxxxxxx
33
With copies to: GRA, Xxxxxxxx, White & Co., P.C.
0000 Xxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn.: Xxxx X. Xxxxx
(b) To Vail Banks: Vail Banks, Inc.
000 X. Xxxxxxxx Xxxx, Xxxx
Xxxxx 000
Xxxx, Xxxxxxxx 00000
Attn.: X. X. Xxxxxxx, Xx.
With copies to: Xxxxxxxxxx Xxxxxxxx LLP
Suite 2800
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn.: R. Xxxxxxxxx Xxxxxxxxx, Xx.
10.4 ENTIRE AGREEMENT. This Agreement, the Holding Company
----------------
Merger Agreement and the Bank Merger Agreement supersede all prior discussions
and agreements by and between Vail Banks and the Company with respect to the
Holding Company Merger and the other matters with respect thereto, and the
Agreement and the Holding Company Merger Agreement contain the sole and entire
agreement between the parties hereto with respect to the transactions
contemplated herein.
10.5 WAIVER; AMENDMENT. Prior to or on the Closing Date, Vail
-----------------
Banks, acting through its Board of Directors, Chairman or President, shall
have the right to waive any default in the performance of any term of this
Agreement by the Company, to waive or extend the time for the fulfillment by
the Company of any and all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations of Vail Banks
under this Agreement, except any condition which, if not satisfied, would
result in the violation of any law or applicable governmental regulation.
Prior to or on the Closing Date, the Company, acting through its Board of
Directors or Chairman, shall have the right to waive any default in the
performance of any term of this Agreement by Vail Banks, to waive or extend
the time for the fulfillment by Vail Banks of any and all of its obligations
under this Agreement, and to waive any or all of the conditions precedent to
the obligations of the Company under this Agreement, except any condition
which, if not satisfied, would result in the violation of any law or
applicable governmental regulation. This Agreement may be amended by a
subsequent writing signed by the parties hereto upon the approval of the
Boards of Directors of each of the parties hereto; provided, however, that the
provisions of Sections 8.5 and 9.5 requiring regulatory approval shall not be
amended by the parties hereto without such approval.
34
ARTICLE XI
----------
TERMINATION
-----------
This Agreement may be terminated at any time prior to or on the
Closing Date upon written notice to the other party hereto as follows, and,
upon any such termination of this Agreement no party hereto shall have any
liability to the other party, except that the provisions of Sections 3.4 and
3.6 hereof shall survive the termination of this Agreement for any reason.
11.1 MATERIAL ADVERSE CHANGE OF THE COMPANY OR GLENWOOD. By Vail
--------------------------------------------------
Banks, if, after the date hereof, a material adverse change in the financial
condition or business of the Company or Glenwood shall have occurred or the
Company or Glenwood shall have suffered a material loss or damage to any of
its properties or assets, which change, loss or damage materially affects or
impairs the ability of either the Company or Glenwood to conduct its business.
A material adverse change shall be found to exist if Glenwood fails to
maintain any of the following: (a) a CAMELS rating of 2 or better; (b) a
satisfactory or better CRA rating; or (c) a satisfactory or better compliance
rating.
11.2 NONCOMPLIANCE OF THE COMPANY. By Vail Banks, if the terms,
----------------------------
covenants or conditions of this Agreement to be complied with or performed by
the Company at or before the Closing shall not have been complied with or
performed in all material respects and such noncompliance or non-performance
shall not have been waived by Vail Banks.
11.3 NONCOMPLIANCE OF VAIL BANKS. By the Company, if the terms,
---------------------------
covenants or conditions of this Agreement to be complied with or performed by
Vail Banks at or before the Closing shall not have been complied with or
performed in all material respects and such noncompliance or non-performance
shall not have been waived by the Company.
11.4 EARLY TERMINATION. By either party, if any information
-----------------
provided to or discovered by either party during the two (2) month due
diligence period is unsatisfactory to such party as determined in such party's
sole discretion.
11.5 FAILURE TO DISCLOSE. By Vail Banks, if it learns of any fact
-------------------
or condition not disclosed in this Agreement, the Disclosure Memorandum or the
1997 Financial Statements and which was required to be disclosed by the
Company pursuant to the provisions of this Agreement at or prior to the date
of execution hereof with respect to the business, properties, assets or
earnings of the Company or Glenwood which materially and adversely affects
such business, properties, assets or earnings or the ownership, value or
continuance thereof.
11.6 ENVIRONMENTAL LIABILITY. By Vail Banks, if it learns of any
-----------------------
potential liability of the Company arising from noncompliance with any
federal, state or
35
local environmental law by the Company, or any potential liability of the
Company arising from any environmental condition of the properties or assets
of the Company, including any properties or assets in which the Company holds
a security interest.
11.7 ADVERSE PROCEEDINGS. By either party, if any action, suit or
-------------------
proceeding shall have been instituted or threatened against either party to
this Agreement to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the consummation of the transactions
contemplated herein, which, in the good faith opinion of such party, makes
consummation of the transactions herein contemplated inadvisable.
11.8 TERMINATION DATE. By either party, if all consents,
----------------
authorizations and approvals of any and all governmental authorities, bodies
or agencies having jurisdiction over the transactions contemplated by this
Agreement necessary for the consummation of such transactions have not been
granted on or before June 30, 1998; provided, however, that in the event
application has been made for all such consents, authorizations and approvals
and on June 30, 1998 any required consent, authorization or approval has not
been received or compliance with any such consent, authorization or approval
which has been received has not been completed then the Termination Date shall
be September 30, 1998.
ARTICLE XII
-----------
COUNTERPARTS, HEADINGS, ETC.
----------------------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument. The headings herein set out are
for convenience of reference only and shall not be deemed a part of this
Agreement.
ARTICLE XIII
------------
BINDING EFFECT
--------------
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement may not be assigned by any party without the
prior written consent of the others.
ARTICLE XIV
-----------
GOVERNING LAW
-------------
The validity and effect of this Agreement and the rights and
obligations of the parties hereto shall be governed by and construed and
enforced in accordance with the laws of the State of Colorado.
36
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized corporate officers and their corporate seals
to be affixed hereto all as of the day and year first above written.
VAIL BANKS, INC.
By: /s/ Xxxx X. Xxxxxx, President
(CORPORATE SEAL)
Attest:
/s/ R. Xxxxxxxxx Xxxxxxxxx, Xx.,
Assistant Secretary
INDEPENDENT BANKSHARES, INC.
By: /s/Xxxxxx X. Xxxxxxxxxx, President
(CORPORATE SEAL)
Attest:
/s/ Secretary
WESTSTAR BANK
By: /s/ Xxxx X. Xxxxxx, President
(CORPORATE SEAL)
Attest:
/s/ Xxxxxx X. Xxxxx, Secretary
GLENWOOD INDEPENDENT BANK
By: /s/ Xxxxx Xxxxxxxxxx, President
(CORPORATE SEAL)
Attest:
37
_________________________
Secretary
COMPANY SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxxxxx
/s/ Xxxx Xxxxxxxxxx
/s/ Xxxxx Xxxxxxxxxx
/s/ Xxxx Xxxxxxx
/s/ Xxxxxx Xxxxxx
/s/ Xxxx Xxxxx
[signatures continued on following page]
00
/x/ Xxxxxxxx Xxxxxxx
/s/ Xxx Xxxxxx
/s/ Xxxx Xxxxx
39
INDEX OF EXHIBITS
-----------------
Exhibit A: Agreement and Plan of Merger between Independent Bankshares, Inc.
and Vail Banks, Inc.
Exhibit B: Agreement and Plan of Merger by and between Glenwood Independent
Bank and WestStar Bank
Exhibit C: List of Glenwood Shareholders and Number of Shares Owned
Exhibit D: List of Documents Vail Banks Received from Glenwood
Exhibit E: Opinion of Glenwood's Counsel
Exhibit F: Opinion of Vail Banks' Counsel
40
