Document:

EXHIBIT 10.12

 

EMPLOYMENT AGREEMENT

 

Agreement made
effective as of the 23rd day of April, 2004 by and among Boston
Restaurant Associates, Inc. (the “Company”), a Delaware corporation with its
principal place of business in Saugus, Massachusetts and George R. Chapdelaine
(the “Employee”) of Essex County, Massachusetts.

 

WHEREAS,
Employee has served as President and Chief Executive Officer of the Company
since April 1994;

 

WHEREAS, in
order to assure itself of the benefits to be obtained from the special talents
and abilities of Employee resulting from Employee’s involvement and knowledge
of the business of the Company and relative to the continued operation of the
business of the Company, the Company desires to continue Employee’s employment
as an executive officer of the Company on the terms and conditions contained
herein;

 

NOW,
THEREFORE, in consideration of the mutual covenants and promises herein
contained, the receipt and sufficiency of which is acknowledged, and intending
to be legally bound, it is hereby agreed by and between the parties as follows:

 

1                                          Employment.  The Company hereby continues to employ
Employee as President and Chief Executive Officer of the Company.  Employee shall have general management and
control of the business, affairs and property of the Company and its direct and
indirect subsidiaries and shall perform such duties of such offices as are
provided for in the bylaws of the Company subject to the general supervision
and direction of, and any policies and procedures established from time to time
by, the Board of Directors of the Company. 
Employee shall also serve as a director of the Company.  Employee hereby accepts such employment.

 

2                                          Term.  Employee’s employment pursuant to the terms
of this Agreement shall commence on the date hereof and shall continue for a
period of two (2) years or until earlier terminated in accordance with the
termination provisions provided for in Section 10 herein (the “Initial
Term”).  Unless earlier terminated in
accordance with the termination provisions provided for in Section 10 herein,
Employee’s employment pursuant to this Agreement shall automatically renew for
additional periods of one (1) year each (each an “Additional Term”) at the
expiration of the Initial Term and at the expiration of each Additional Term
(the Initial Term and Additional Terms are collectively referred to herein as
the “Term”).

 

3                                          Salary.  (a) The Company shall pay Employee, during
the Term of this Agreement, an annual salary of $232,500 (which amount
represents Employee’s existing salary as adjusted for the Consumer Price Index
as described below for the first year of the Term) payable in installments no
less often than monthly.  A salary
review shall be conducted by the Compensation Committee of the Board of
Directors of the Company no later than twelve (12) months after the
commencement date of this Agreement with yearly reviews thereafter on the
anniversary date of such first review (each a “Review”).  In connection with such Review, the
Compensation Committee may increase, but (subject to Section 3(b), below) not
decrease, the then current salary of Employee by such amount as it determines,
in its sole discretion, provided however, that effective as of the date of each
Review, Employee’s then current salary shall be adjusted to an amount at least
equal to Employee’s then

 

 

current salary multiplied by a
fraction, the numerator of which shall be the Consumer Price Index (as
hereinafter defined) for the month immediately prior to the applicable Review
date, and the denominator of which shall be the Consumer Price Index for the
month that is twelve months prior to the month used as the numerator.  The Consumer Price Index referred to above
is the Consumer Price Index of the United States Bureau of Labor Statistics
(Urban Wage Earners and Clerical Workers, U.S. City Average, all items) on the
1982-84 equals 100 standard.

 

(b)                                 Employee
acknowledges and agrees that the annual salary is subject to reduction in the
event of a general reduction in executive salaries of the Company due to budget
restrictions.

 

4                                          Automobile
During the term of this Agreement, Employee shall be paid the sum of $1,000
plus the amount necessary to pay insurance and parking each month to defray the
cost of the leasing or purchasing of, and gas, mileage, insurance, repairs and
parking for one automobile for his use in connection with his employment
hereunder.

 

5                                          Bonus.  Following each Review date but in no event
later than one hundred (100) days after the Company’s fiscal year end, Employee
shall be paid a performance bonus based on the performance criteria determined
each year by mutual agreement of the Compensation Committee of the Company’s
Board of Directors and the Employee. 
The target bonus shall be equal to 25% of Employee’s annual salary, with
the actual amount of such bonus, if any, to be measured by the extent to which
Employee meets the performance criteria agreed to for each particular year of
the Term.

 

6                                          Expenses.  Employee shall be reimbursed for all
reasonable expenses incurred by Employee in connection with his employment
under this Agreement, including expenses for travel and entertainment.  Employee shall furnish the Company with the
appropriate documentation relating to such expenses.

 

7                                          Fringe
Benefits.  Employee shall be
entitled to the fringe benefits generally made available to employees or
officers of the Company of standing comparable to that of Employee, on the same
or more favorable terms and conditions as such benefits are made available or
furnished to those employees or officers. 
The Company shall continue, at its cost, health insurance for Employee
during any Severance Period.

 

8                                          Vacation.  Employee shall be entitled to at least five
(5) weeks of paid vacation during each year of employment with the Company,
which vacation may be taken by Employee at any time at the sole discretion of
Employee.

 

9                                          Full-Time
Duties.  Employee shall devote all
of his business time, attention and efforts necessary and appropriate to
fulfill his duties hereunder.  This
provision shall not serve to prevent Employee from engaging in investment
activity that is passive in nature.

 

10                                    Termination.

 

(a)                                  Termination
by the Company.  At the election of
the Company, this Agreement shall terminate and any and all rights and
obligations of the Company and Employee hereunder shall cease and be completely
void except as specifically set forth in this Agreement, upon the earliest to
occur of the following: (i) the death or “long-term

 

 

disability” of Employee; or (ii) the termination of
Employee by the Company for “just cause” pursuant to written notice thereof; or
(iii) at any time, without cause, upon thirty (30) days prior written notice.

 

For purposes
of this Agreement, “long-term disability” shall mean the disability of Employee
which prevents Employee from devoting to the business of the Company his
full-time, best efforts, skill and attention, and such condition continues for
a period of one hundred eighty (180) consecutive days.

 

For purposes
hereof, “just cause” shall include, without limitation, the occurrence of any
of the following events during the Term of this Agreement:

 

(A)                        habitual
neglect of material duties assigned to Employee hereunder which is not remedied
within thirty (30) days of receipt of written notice thereof from the Company;

 

(B)                          fraud,
embezzlement or similar act of dishonesty committed by Employee against the
Company; and

 

(C)                          conviction
of a crime classified as a felony under any Federal, state or local law with
all appeals relating thereto having been unsuccessfully exhausted and all appeal
periods being lapsed.

 

(b)                                 Termination
by Employee.  At the election of the
Employee, this Agreement shall terminate and any and all rights and obligations
of the Company and Employee under this Agreement shall cease and be completely
void except as specifically set forth in this Agreement, upon the earlier to
occur of (i) termination by Employee of his employment with the Company,
pursuant to thirty (30) days prior written notice thereof to the Company for
any reason, or (ii) termination by Employee of his employment with the Company
at any time in the event the Employee has “good reason”, pursuant to written
notice thereof, or (iii) a “change in control” of the Company.

 

For purposes
hereof, “good reason” shall mean (A) the Company has taken action that serves
to adversely change Employee’s status by a reduction in title or a reduction in
duties without Employee’s consent, or (B) without the Employee’s consent the
Company’s corporate offices are relocated to a place that is more than
thirty-five (35) miles from Boston, Massachusetts.

 

For purposes
hereof a “change of control” of the Company shall be deemed to have occurred
if:

 

(I)                                    any
person (as defined in Section 13(d) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) shall have become the beneficial owner
of 20% or more of the combined voting power of the Company’s voting securities
(other than any person who is a beneficial owner of such 20% threshold as at
the date of this Agreement), not counting for purposes of such 20% threshold
any voting securities acquired from the Employee;

 

(II)                                the
stockholders or directors approve by the requisite vote any Business
Combination; or

 

 

(III)                            the
stockholders or directors approve the complete liquidation or dissolution of the
Company.

 

“Business
Combination” means any of the following transactions:  (x) a merger or consolidation of the Company (except for a merger
that Employee consents to and supports or a merger in respect of which,
pursuant to Section 251(f) of the Delaware General Corporation law, as now in
effect and as the same may be amended from time to time, no vote of the
stockholders of the Company is required); (y) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a series
of transactions), whether as part of a dissolution or otherwise, of assets of
the Company or of any direct or indirect majority-owned subsidiary of the
Company (other than to any direct or indirect wholly-owned subsidiary or to the
Company) having an aggregate market value equal to 50% or more of either that
aggregate market value of all of the assets of the Company determined on a
consolidated basis or the aggregate market value of all the outstanding stock
of the Company; or (z) a proposed tender or exchange offer for 50% or more of
the outstanding voting stock of the Company.

 

(c)                                  Effect
of Termination. (i) It is expressly acknowledged and agreed that, if the
Employee’s employment shall terminate at any time pursuant to paragraph (a)
above, the Company will pay to Employee or his estate any salary and bonus
pursuant to Sections 3 and 5, respectively, hereof, and any perquisites and
fringe benefits, which shall be paid proportionately to the time of termination
(which payment shall be made at the time it would be normally paid) without
further recourse or liability to the Company, except that, in the event such
termination of Employee by the Company is pursuant to clause (a)(iii), above,
or in the event such termination is at the election of Employee and is pursuant
to clause (b)(ii) or (b)(iii), above or if the term of this Agreement is ever
not renewed by the Company as contemplated by Section 2, then the Company shall
pay to Employee his then current annual base salary payable in equal monthly
installments on the first business day of each month (prorated for any partial
month) (the “Severance Payment”) from the date of such termination until the
later of (A) May 1, 2006 or (B) the second business day of the month next
following the expiration of twelve (12) months following the date of such
termination (the “Severance Period”); provided, however, that during such
Severance Period Employee shall not, within the Territory (as such term is
defined in Section 12 hereof), whether as owner, partner, shareholder
(excluding as a passive shareholder of not more than 1% in a class of
securities of any business enterprise registered under the Exchange Act),
director, consultant, agent, employee, or otherwise, or through any person,
engage in any employment, consulting or other activity which competes, directly
or indirectly with the business of the Company (as such phrase is defined in
Section 12 hereof); provided, further that in the event the Company does not
make any past due portion of the Severance Payment hereunder within ten (10)
business days of written demand therefor by Employee, then the entire remaining
portion of the Severance Payment to be paid hereunder shall become immediately
due and payable and the non-competition covenant set forth above shall cease
and be of no further effect against Employee. 
Notwithstanding the foregoing, if Employee’s employment is terminated in
connection with a “change in control” of Employer, as that term is used in
Section 280G of the Internal Revenue Code of 1986 as amended (“Section 280G”), 

 

 

Employee is a “disqualified individual” as that term
is used in Section 280G, and such payment, or portion thereof, would otherwise
be considered an “excess parachute payment”, as that term is used in Section
280G, then the aggregate present value of the payments or portion thereof,
which are in the nature of compensation to (or for the benefit of) Employee,
which are contingent on such change in control, and which would otherwise be
considered an excess parachute payment, shall be the lesser of (x) the result
of the proceeding sentence, or (y) one dollar ($1.00) less than three (3) times
Employee’s annualized compensation which was includable in Employee’s income
and which was paid by the Company during the five (5) most recent taxable years
ending before the change in control. 
The foregoing calculations shall be made by the Company, provided that
if Employee provides the Company with a calculation thereof reasonably prepared
by an independent certified public accountant then, within thirty (30) days of
receipt thereof, the Company shall pay Employee the amount of such calculation,
reduced by the amount, if any, previously paid by the Company as the Severance
Payment pursuant to this provision.

 

(ii)                                  It
is further expressly acknowledged and agreed that if the Employee’s employment
shall terminate at any time pursuant to paragraph (b) above, the Company will
pay to Employee or his estate any salary and bonus pursuant to Sections 3 and
5, respectively, hereof and any perquisites and fringe benefits, which shall be
paid proportionately to the time of termination (which payment shall be made at
the time it would be normally paid) without further recourse or liability to
the Company, except that, in the event such termination is pursuant to clause
(b)(ii) or (b)(iii) above, then the Employee shall be entitled to receive the
Severance Payment in accordance with paragraph (c)(i) above.

 

(iii)                               For
purposes of this subsection (c), Employee’s bonuses will be determined by the
Compensation Committee of the Company’s Board of Directors, in good faith.  To the extent any perquisite or fringe
benefit that the Company is obligated to continue hereunder after the
termination of Employee’s employment cannot be so continued due to legal
impediment then, in such event, the Company shall, in lieu thereof, pay in cash
to the Employee the equivalent cost to the Company of such perquisite or fringe
benefit, with any such payments to be made at the time the payment of such
perquisite or fringe benefit would normally be paid.  It is further expressly acknowledged and agreed that,
notwithstanding the termination of this Agreement pursuant to paragraph (a) or
(b) above or otherwise, the provisions of this Section 10 shall survive such
termination for the periods of time provided therein.

 

11                                    Stock
Options.  By separate agreement of
even date (the “Stock Option Agreement”), Employee is being granted the option
to purchase up to 100,000 shares of the Company’s common stock at a price of
$0.75 per share, which options shall vest during the next two years as
described therein, with such options being exercisable during the five-year
period commencing on the date hereof.

 

12                                    Notices.  Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if in writing
(or in the form of a telegram addressed as provided below) and if either (a)
actually delivered (electronically or physically) at said address, or (b) in
the case of a letter, three (3) business days shall have elapsed after the same
shall have been deposited in the United States mail, postage prepaid and
registered or certified, return receipt requested:

 

 

If to
Employee, to:

 

Mr. George R.
Chapdelaine

20 Nicholson
Street

Marblehead,
MA  01945

 

If to the
Company to:

 

Boston Restaurant
Associates, Inc.

999 Broadway

Saugus,
Massachusetts  01906

 

and in any case at such other
address as the addressee shall have specified by written notice.

 

13                                    Noncompetition
and Confidentiality.

 

(a)                                  As
long as Employee is an employee of the Company or any successor in interest
and, if Employee’s employment is terminated pursuant to either clause 10(a)(ii)
or 10(b)(i), then for an additional period of twenty-four (24) months
thereafter, Employee shall not, within the Territory, whether as owner, partner,
shareholder, director, consultant, agent, employee, or otherwise, or through
any person, engage in any employment, consulting or other activity which
competes, directly or indirectly, with the business of the Company.  The “Territory” shall be each ten (10) mile
radius surrounding any Italian or pizza-style restaurant operated by the
Company.  The “business of the Company”
shall be limited to mean the operation of Italian and pizza-style restaurants.  The involvement of Employee with a business
or enterprise that operates restaurants that specialize in foods other than
Italian food or pizza shall not be deemed to be competitive with the business
of the Company.

 

(b)                                 Nothing
in this Agreement shall preclude Employee from making passive investments of not
more than 1% in a class of securities of any business enterprise registered
under the Exchange Act.

 

(c)                                  Employee
recognizes that the Company is and will be engaged in a continuous program of
research and development relating to its business opportunities, operating
procedures, products, methods, service techniques, engineering and
manufacturing data, machines, devices, apparatus, “know-how”, formulas, secret
processes, plans, designs, specifications, trade secrets, marketing and Company
data regarding costs, profits, markets, sales, customer lists, plans for
present and future development and acquisitions and other proprietary
information not available to the public (collectively, the “Proprietary
Information”) which gives it a special competence in its various fields of
endeavor, all of which have been or may be acquired or developed at
considerable expense to the Company. 
Employee understands that in connection with his employment with the
Company the Employee is expected to make contributions to the development of
Proprietary Information.  Employee
acknowledges that his employment creates a relationship of confidentiality and
trust between Employee and the Company with respect to information of a
confidential or secret nature which is discovered, made known to, or learned by
Employee during his employment with the Company including, without limitation,
Proprietary Information.

 

 

(d)                                 Employee
will not, while he is or after he ceases to be an employee of the Company,
disclose any of the Proprietary Information referred to above to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, other than in furtherance of the business of the Company or in
response to court order.

 

(e)                                  Employee
further agrees that in the event of the termination of his employment with the
Company, for any reason, or at any time upon the request of the Company,
Employee will deliver to the Company all documents and other material items of
any nature pertaining to any Proprietary Information.  When Employee terminates employment with the Company, Employee
will sign a certificate confirming that he has complied with the requirements
of this subparagraph.

 

(f)                                    In
the event of any breach or threatened breach by Employee of the provisions of
this Agreement, the Company shall be entitled to an injunction restraining such
breach.   Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to the Company for such breach or threatened breach, including the recovery of
damages from Employee.

 

14                                    Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof, and all promises, representations, understandings,
warranties and agreements with reference to the subject matter hereof and
inducements to the making of this Agreement relied upon by any party hereto
have been expressed herein.

 

15                                    Governing
Law.  This Agreement shall be deemed
a contract made and entered into in the Commonwealth of Massachusetts and,
together with the rights and obligations of the parties hereunder, shall be
construed under and governed by the laws of such state.

 

16                                    Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

17                                    Effect
of Headings.  Any title of an
article or section heading herein contained is for convenience of reference
only, and shall not affect the meaning of construction of any of the provisions
hereof.

 

18                                    Successors
and Assigns.  All covenants,
promises and agreements by or on behalf of the parties contained in this
Agreement shall inure to the benefit of, and be binding upon, the successors
and assigns of the parties hereto.

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed in
multiple counterparts as of the date set forth above by their duly authorized
representative.

 

 

	
   

  	
  BOSTON
  RESTAURANT ASSOCIATES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:  Director,

  Member of the Compensation Committee

  

 

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  George R.
  ChapdelaineExhibit 10.1

 

Includes all amendments through 4/30/2004

 

ZIONS BANCORPORATION

 

KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN

 

ARTICLE I

 

Purpose and Scope of the Plan

 

1.1                               Purpose

 

The purpose of the Plan is to promote the long-term success of Zions
Bancorporation by providing financial incentives to key employees who are in
positions to make significant contributions toward such success.  The Plan is designed to attract individuals
of outstanding ability to employment with Zions Bancorporation and to encourage
key employees to acquire a proprietary interest in Zions Bancorporation, to
continue employment with Zions Bancorporation, and to render superior
performance during such employment.

 

1.2                               Definitions

 

Unless the context clearly indicates otherwise, the following terms
have the meanings set forth below.

 

“Board of Directors” means the Board of Directors of the
Company.

 

“Cause” shall have the meaning set forth in the Zions
Bancorporation Change in Control Agreement entered into between the Company and
its senior executives from time to time.

 

“Change in Control” shall have the meaning set forth in the
Zions Bancorporation Change in Control Agreement entered into between the
Company and its senior executives from time to time.

 

“CIC Agreement” shall mean the Zions Bancorporation Change in
Control Agreements entered into between the Company and its senior executives
from time to time.

 

“Code” means the Internal Revenue Code of 1954, as amended.

 

“Committee” means the Executive Compensation Committee of the
Board of Directors, which committee shall be composed of at least three
directors who have not been eligible to receive an award under the Plan at any
time within a period of one year immediately preceding the date of their
appointment to such committee.

 

“Common Stock” means the common stock of the Company, without
par value, or such other class of shares or other securities as to which the
provisions of the Plan may be applicable.

 

 

“Company” means Zions Bancorporation.

 

“Fair Market Value” of a share of Common Stock on any particular
date is the mean between the closing dealer “bid” and “ask” prices of a share
of Common Stock as quoted by NASDAQ.  If
no “bid” and “ask” prices are quoted for the date of grant, the Fair Market
Value of a share of Common Stock on such date shall be determined with
reference to such prices of a share of Common Stock on the first preceding date
on which such prices were quoted.  If
Common Stock is listed on an established stock exchange or exchanges, the Fair
Market Value shall be deemed to be the highest closing price of Common Stock on
such stock exchange or exchanges on the day the option is granted or, if no
sale of Common Stock has been made on any stock exchange on that day, the Fair
Market Value shall be determined by reference to such price for the next
preceding day on which a sale occurred. 
In the event that Common Stock is not traded on an established stock
exchange, and no closing dealer “bid” and “ask” prices are available, then the
purchase price shall be 100 percent of the Fair Market Value of one share of
Common Stock on the day the option is granted, as determined on the Committee
in good faith.

 

“Grant Date,” as used with respect to a particular Option, means
the date as of which such option is granted by the Committee pursuant to the
Plan.

 

“Grantee” means the individual to whom an Option is granted by
the Committee pursuant to the Plan.

 

“Incentive Stock Option” means an option, granted by the
Committee pursuant to Article II, to purchase shares of Common Stock in a
manner which qualifies as an Incentive Stock Option as described in
Section 422A of the Code of 1954, as amended.

 

“Option Period” means the period beginning on the Grant Date and
ending the day specified in the agreement for each option but in no event
longer than the tenth anniversary of the Grant Date.

 

“Plan” means the Zions Bancorporation Key Employee Incentive
Stock Option Plan as set forth herein and as may be amended from time to time.

 

“Retirement,” as applied to a Grantee, means the Grantee’s termination
of employment with Zions Bancorporation at a time when the Grantee receives an
immediately payable retirement benefit under the Zions Bancorporation
Retirement Plan or under any other retirement plan that is maintained by a
subsidiary of Zions Bancorporation and that is determined by the Committee to
be the functional equivalent of the Company’s Retirement Plan.  [Note:
This definition applies only to Options awarded prior to April 30, 2004.]

 

“Retirement,” as applied to a Grantee, means the Grantee’s
termination of employment with Zions Bancorporation other than for Cause and
the Grantee has reached the following age with the corresponding number of
years of service with the Company:

 

2

 

	
  Age

  	
   

  	
  Years of
  Service

  
	
  55

  	
   

  	
  10

  
	
  56

  	
   

  	
  9

  
	
  57

  	
   

  	
  8

  
	
  58

  	
   

  	
  7

  
	
  59

  	
   

  	
  6

  
	
  60 and older

  	
   

  	
  5

  

 

[Note: This definition applies only to
Options awarded on or after April 30, 2004.]

 

“Zions” means the Company, any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Company, and any other company designated as such by the Committee, but
only during the period of such ownership or designation.

 

“Total and Permanent Disability,” as applied to a Grantee, means
that the Grantee; (i) has established to the satisfaction of the Company that
the Grantee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of not less than 12 months (all within the meaning of
Section 105[d][4] of the Code); and (ii) has satisfied any requirement
imposed by the Committee.

 

1.3                               Aggregate
Limitation

 

(a)                                  The aggregate number
of shares of Common Stock with respect to which Incentive Stock Options may be
granted under the Plan shall not exceed 806,000 shares of Common Stock, subject
to adjustment in accordance with Section 3.1.

 

(b)                                 Any shares of Common
Stock to be delivered by the Company upon the exercise of Incentive Stock
Options shall be issued from the Company’s authorized but unissued shares of
Common Stock or from Treasury Stock acquired by the Company at the discretion
of the Board of Directors.

 

(c)                                  In the event that any
Incentive Stock Option lapses or otherwise terminates prior to being fully
exercised, any share of Common Stock allocable to the unexercised portion of
such option may again be made subject to an Incentive Stock Option.

 

1.4                               Administration
of the Plan

 

(a)                                  The Plan shall be
administered by the Committee which shall have the authority:

 

(i)                                     to determine key
employees of Zions and its subsidiaries to whom, and the times as which,
Incentive Stock Options shall be granted and the number of shares of Common
Stock to be subject to each such option taking into account the nature of the
services rendered by the particular employee, the employee’s potential
contribution to the long-term success of the Corporation

 

3

 

and/or any of its subsidiaries and such other factors as the Committee
in its discretion shall deem relevant;

 

(ii)                                  to interpret the Plan
and to establish rules and regulations relating to it;

 

(iii)                               to prescribe the terms
and provisions of the agreements for the grant of Incentive Stock Options; and

 

(iv)                              to make all other
determinations necessary or advisable in order to administer the Plan.

 

(b)                                 All decisions of the
Committee upon questions concerning the Plan or any Incentive Stock Option
shall be conclusive.

 

1.5                               Eligibility
for Awards

 

The Committee shall designate from time to time the key employees of
Zions and its subsidiaries who are to be granted Incentive Stock Options.  In no event may a member of the Committee or
any nonemployee Director be granted an Incentive Stock Option.

 

1.6                               Effective
Date and Duration of Plan

 

The Plan shall become effective as of December 28, 1981, upon its
adoption by the Board of Directors; provided, that any grant of Incentive Stock
Options is subject to the approval of the Plan by the shareholders of the
Company within twelve months of adoption by the Board of Directors.  Unless previously terminated by the Board of
Directors, the Plan shall terminate on March 3, 2005.

 

ARTICLE II

 

STOCK OPTIONS

 

2.1                               Grant
of Incentive Stock Options

 

The Committee may from time to time, subject to the provisions of the
Plan, grant Incentive Stock Options to key employees to purchase shares of
Common Stock allotted in accordance with Section 1.3.

 

2.2                               Option
Requirements

 

(a)                                All
Incentive Stock Options are intended to qualify as an “incentive stock options”
within the meaning of Subsection (b) of Section 422A of the Code.

 

(b)                               An
Incentive Stock Option shall be evidenced by a written instrument specifying
the number of shares of Common Stock that may be purchased by its exercise, the
Option Period and any other such terms and conditions consistent with the Plan
as the Committee shall determine.

 

4

 

(c)                                An
Incentive Stock Option shall not be granted on or after the tenth anniversary
of the date upon which the Plan was adopted by the Board of Directors.

 

(d)                               An
Incentive Stock Option shall not be granted to an individual who, on the date
of grant, owns stock possessing more than ten percent of the total combined
voting power of all classes of stock of Zions or any subsidiary corporation.

 

(e)                                An
Incentive Stock Option shall not be exercisable after the expiration of the
Option Period.

 

(f)                                  [deleted]

 

(g)                               The
Committee may provide, in the instrument evidencing an Incentive Stock Option,
for the lapse of the Incentive Stock Option, prior to the expiration of the
Option Period, upon the occurrence of any event specified by the Committee.

 

(h)                               The
option price per share of Common Stock shall be equal to the Fair Market Value
of a share of Common Stock on the Grant Date.

 

(i)                                   The
aggregate Fair Market Value, determined on the Grant Date, of the shares of
Common Stock with respect to which any Grantee may be granted one or more
Incentive Stock Options under the Plan (within the meaning of
Subsection [b] of Section 422A of the Code) in any calendar year
shall not exceed $100,000.00 plus any “unused limit carryover” to such year,
determined in accordance with Section 422A(c)(4) of the Code.

 

(j)                                   An
Incentive Stock Option shall not be transferable other than by will or the laws
of descent and distribution and, during the Grantee’s lifetime, shall be
exercisable only by the Grantee; except, that the Committee may permit:

 

(i)                                   exercise,
during Grantee’s lifetime, by Grantee’s guardian or legal representative; and

 

(ii)                                transfer,
upon Grantee’s death, to beneficiaries designated by Grantee in a manner
authorized by the Company; provided that the Committee determines that such
exercise and such transfer are consonant with requirements for exemption from
Section 16(b) of the Securities Exchange Act of 1934, as amended, and with
the requirements of Section 422A(b)(5) of the Code.

 

[Note: Section 2.2(k) below is only
applicable to Options granted prior to April 30, 2004]

 

(k)                                In
the event of retirement or involuntary termination of employment without cause,
the option to exercise shall lapse at the earlier of the Option Period of the
Incentive Stock Option or three months after retirement.  In the event of voluntary termination of
employment at the election of the employee or termination for cause at the
election

 

5

 

of the Company, all Incentive Stock Options shall lapse forthwith.  In the event of termination due to death or
total and permanent disability, any Incentive Stock Options shall lapse at the
earlier of the appropriate Option Period or one year after termination due to
such causes.

 

[Note: Section 2.2(k) below is only
applicable to Options granted on or after April 30, 2004]

 

(k)                                In
the event of Retirement, the time period during which all Incentive Stock
Options may be exercised shall lapse at the earlier of:

 

(i)                                   the
full remaining term of the Option Period,

 

(ii)                                the
date the Grantee begins employment with another company that is in the
financial services industry unless such employment is specifically approved by
the Committee, or

 

(iii)                             up to
three years, as determined by the Committee, after Retirement.

 

In the event of involuntary termination of employment without Cause,
the Option shall lapse at the earlier of the end of the Option Period of the
Incentive Stock Option or three months after such involuntary termination.  In the event of voluntary termination of
employment at the election of the employee or termination for cause at the
election of the Company, all Incentive Stock Options shall lapse
forthwith.  In the event of termination
due to death or total and permanent disability, any Incentive Stock Options
shall lapse at the earlier of the end of the appropriate Option Period or one
year after termination due to such causes.

 

(l)                                   A
person electing to exercise an Incentive Stock Option shall give written
notice, in such form as the Committee may require, of such election to the
Company and shall tender to the Company the full specified option purchase
price of the shares of Common Stock for which the election is made.  Payment of the purchase price shall be made
in cash or in such other form as the Board of Directors may approve, including
shares of Common Stock of the Company valued at the Fair Market Value on the
date of exercise of the Option.

 

(m)                             Notwithstanding
anything contained herein to the contrary, upon Retirement of any Grantee, the
exercise period for any outstanding Options the exercise price of which on
January 18, 2002 was greater than the Fair Market Value of the Company’s
Common Stock on such date shall be extended to equal the lesser of 3 years from
the date of Retirement or the full remaining term of the Option Period.

 

6

 

ARTICLE III

 

General Provisions

 

3.1                                 Adjustment
Provisions

 

(a)                                If:

 

(i)                                   any
recapitalization, reclassification, split-up or consolidation of Common Stock
is effected;

 

(ii)                                the
outstanding shares of Common Stock are exchanged, in connection with a merger
or consolidation of the Company or a sale by the Company of all or a part of
its assets, for a different number or class of shares of stock or other
securities of the Company or for shares of the stock or other securities of any
other corporation;

 

(iii)                             new,
different or additional shares or other securities of the Company or of another
corporation are received by the holders of Common Stock; or

 

(iv)                            any
distribution is made to the holders of Common Stock other than a cash dividend;
then the Committee shall make appropriate adjustments to:

 

(A)                              The number and class of
shares or other securities that may be issued or transferred pursuant to
Incentive Stock Options, and

 

(B)                                The purchase price to
be paid per share under outstanding options.

 

(b)                               Upon
the dissolution or liquidation of the Company, the Plan shall terminate, and
all options previously granted shall lapse on the date of such dissolution or
liquidation of the Company.

 

(c)                                Adjustments
under Subsection (a) shall be made according to the sole discretion of the
Committee, and its decision shall be binding and conclusive.

 

(d)                               Except
as provided in subparagraphs (a) and (b), the issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class shall not affect the Incentive Stock Options.

 

3.2                               Additional
Conditions

 

Any shares of Common Stock issued or transferred under any provision of
the Plan may be issued or transferred subject to such conditions, in addition
to those specifically provided in the Plan, as the Committee or Company may
impose.

 

7

 

3.3                               No
Right to Employment

 

Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any employee any right to continue in the employ of Zions
Bancorporation or any of its subsidiaries or shall affect the right of Zions
Bancorporation or a subsidiary thereof to terminate the employment of any
employee, with or without cause.

 

3.4                               Legal
Restrictions

 

The Company will not be obligated to issue shares of Common Stock or
make any payment if counsel to the Company determines that such issuance or
payment would violate any law or regulation of any governmental authority or
any agreement between the Company and any national securities exchange upon
which the Common Stock may be listed. 
In connection with any stock issuance or transfer, the person acquiring
the shares shall, if requested by the Company, give assurances satisfactory to
counsel to the Company regarding such matters as the Company may deem desirable
to assure compliance with all legal requirements.  The Company shall in no event be obliged to take any action in
order to cause the exercise of any Incentive Stock Option.

 

3.5                               No
Rights as Shareholders

 

No Grantee, and no beneficiary or other person claiming through a
Grantee, shall have any interest in any shares of Common Stock allocated for
the purposes of the Plan or subject to any Incentive Stock Option until such
shares of Common Stock shall have been transferred to the Grantee or such
person.  Furthermore, the existence of
the Incentive Stock Options shall not affect: the right or power of the Company
or its stockholders to make adjustments, recapitalizations, reorganizations or
other changes in the Company’s capital structure or its business; any issue of
bonds, debentures, preferred or prior preference stocks affecting the Common
Stock of the Company or the rights thereof; the dissolution or liquidation of
the Company, or sale or transfer of any part of its assets or business; or any
other corporate act, whether of a similar character or otherwise.

 

3.6                               Withholding
Taxes

 

The Company may require Grantee, as a condition of exercise of an
Incentive Stock Option, to pay or reimburse any taxes which it determines it is
required to withhold in connection with the grant or exercise of the Incentive
Stock Option.

 

3.7                               Choice
of Law

 

The validity, interpretation and administration of the Plan and of any
rules, regulations, determinations or decisions made thereunder, and the rights
of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with the laws of the
State of Utah.  Without limiting the
generality of the foregoing, the period within which any action in connection
with the Plan must be commenced shall be governed by the Laws of the State of
Utah; without regard to the place

 

8

 

where the act or omission complained of took place, the residence of
any party to such action or the place where the action may be brought.

 

3.8                               Amendment,
Suspension and Termination of Plan

 

The Board of Directors may at any time terminate, suspend or amend the
Plan; however, no such amendment shall, without the approval of the
shareholders of the Company:

 

(a)                                  increase the
aggregate number of shares which may be issued in connection with Incentive
Stock Options;

 

(b)                                 change the Incentive
Stock Option exercise price;

 

(c)                                  increase the maximum
period during which Incentive Stock Options may be exercised;

 

(d)                                 extend the effective
period of the Plan; or

 

(e)                                  materially modify the
requirements as to eligibility for participation in the Plan.

 

ARTICLE IV

 

Change in Control

 

4.1                               Vesting
Upon a Change in Control

 

Notwithstanding anything contained herein to the contrary, upon a
Change in Control, all unvested options outstanding under the Plan shall vest
immediately.

 

4.2                               Termination
Other Than For Cause

 

Notwithstanding anything contained herein to the contrary, if any
Grantee is terminated from employment, other than for Cause, within 2 years
following a Change in Control, the exercise period for such Grantee’s
outstanding options under the Plan shall automatically be extended to the full
remaining term of such options.

 

9

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