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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO 13D-2(a)
(Amendment No. ___)*
ZIONS BANCORPORATION
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(Name of Issuer)
COMMON STOCK, WITHOUT PAR VALUE
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(Title of Class of Securities)
989701107
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(CUSIP Number)
BRAD D. HARDY
FIRST SECURITY CORPORATION
79 SOUTH MAIN
P.O. BOX 30006
SALT LAKE CITY, UTAH 84130-0006
(801) 246-5976
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
JUNE 8, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
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* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 989701107 13D Page 2 of 13 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
FIRST SECURITY CORPORATION
I.R.S. IDENTIFICATION NO.: 87-6118148
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC.
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE ORGANIZATION
DELAWARE.
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7 SOLE VOTING POWER
NUMBER OF 15,724,539*
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SHARES 8 SHARED VOTING POWER
-0-
BENEFICIALLY
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9 SOLE DISPOSITIVE POWER
OWNED BY 15,724,539
EACH
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10 SHARED DISPOSITIVE POWER
REPORTING -0-
PERSON WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
THE REPORTING PERSON HAS ACQUIRED AN OPTION TO PURCHASE UP TO
15,724,539 SHARES OF FIRST SECURITY COMMON STOCK.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9
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14 TYPE OF REPORTING PERSON
CO.
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* Up to 15,724,539 shares of Common Stock, without par value
("Zions Common Stock"), of Zions Bancorporation, a Utah corporation ("Zions"),
covered by this statement are obtainable by First Security Corporation, a
Delaware corporation ("First Security"), upon exercise of the option described
in Item 4 below, if the option were exercisable on the date hereof. First
Security expressly disclaims beneficial ownership of any such shares. Prior to
the existence of the Option (defined below), First Security was not entitled to
any rights of a stockholder of Zions with respect to such shares. The Option may
be exercised only upon the happening of certain events described in Item 4
below, none of which has occurred as of the date hereof, and none of which is in
the control of First Security. Dispositive and voting powers are summarized in
Items 4 and 5 below.
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CUSIP NO. 989701107 13D Page 3 of 13 Pages
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ITEM 1. SECURITY AND ISSUER.
(a) This Schedule 13D relates to the common stock of Zions
Bancorporation, without par value.
(b) The principal executive offices of the Issuer are located at
One South Main, Suite 1830, Salt Lake City, Utah 84111.
ITEM 2. IDENTITY AND BACKGROUND.
(a) The reporting person is First Security Corporation ("First
Security").
(b) The reporting person is incorporated in Delaware.
(c) The reporting person's principal business is that of a holding
company for banking subsidiaries.
(d) The address of the reporting person's principal business and
principal office is 79 South Main, Salt Lake City, Utah
84130-0006.
(e) The reporting person has not been convicted in a criminal
proceeding during the last five years.
(f) The reporting person, during the last five years, was not
a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction which
resulted in or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
It is presently anticipated that, should any purchase of Zions
Common Stock be made by First Security pursuant to the Option
Agreement described below in response to Item 4, or otherwise, the
source of any funds used in any such purchase would be the available
cash, cash equivalents, available for sale securities and bank
financing of First Security.
ITEM 4. PURPOSE OF TRANSACTION.
A. THE MERGER AGREEMENT.
On June 6, 1999, Zions and First Security entered into an Agreement
and Plan of Merger (the "Merger Agreement") pursuant to which Zions
agreed to merge with and into First Security (the "Merger"), with
First Security as the surviving corporation (the "Surviving
Corporation"). The Merger is subject to receipt of regulatory
approval, as well as an affirmative vote of the shareholders of
Zions
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CUSIP NO. 989701107 13D Page 4 of 13 Pages
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and First Security and certain other closing conditions. It is
currently estimated that the Merger will be consummated in the
fourth quarter of 1999, subject to satisfaction of such closing
conditions.
The terms of the Merger Agreement provide for a reverse stock split
immediately prior to the Effective Time of the Merger (as defined in
the Merger Agreement), in which each outstanding share of First
Security Common Stock, par value $1.25 per share ("First Security
Common Stock"), will be converted and reclassified as 0.442 of a
share of the Surviving Corporation Common Stock. Holders of Zions
Common Stock will then receive, in exchange for each share of Zions
Common Stock (other than certain excluded shares) one share of the
Surviving Corporation Common Stock. Upon consummation of the Merger,
the articles of incorporation and by-laws of First Security, amended
and restated as of the Effective Time, will be the articles of
incorporation and by-laws of the Surviving Corporation. The Board of
Directors of the Surviving Corporation, as described in Exhibit B to
the Merger Agreement, shall be composed of 22 members, 11 designated
by Zions and 11 designated by First Security.
The Merger is subject to the approval of the Board of Governors of
the Federal Reserve Board (the "Federal Reserve Board"), the
approval of the shareholders of Zions, the approval of the
stockholders of First Security, and the satisfaction of various
other terms and conditions set forth in the Merger Agreement.
B. THE OPTION.
As an inducement and a condition to First Security's entering into
the Merger Agreement, on June 8, 1999, First Security and Zions
entered into a Stock Option Agreement (the "Option Agreement")
(replacing an earlier stock option agreement executed on June 6,
1999), pursuant to which Zions granted First Security an option (the
"Option") entitling it to purchase up to 15,724,539 (or such lesser
amount as shall constitute 19.9% of the outstanding shares of Zions
Common Stock on the date of exercise) fully paid and nonassessable
shares of Zions Common Stock at a price per share equal to the
average of the last sales price per share of Zions Common Stock on
the NASDAQ National Market on June 4 and June 7, 1999 (the "Option
Price"), subject to adjustment in certain circumstances.*
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* In the event of any change in the Zions Common Stock by reason of stock
dividends, stock splits, split-ups, recapitalizations, stock combinations,
exchanges of shares, or the like, the type and number of shares or securities
subject to the Option, and the Option Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that First Security shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
First Security would have received in respect of the
(footnote continued)
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CUSIP NO. 989701107 13D Page 5 of 13 Pages
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Subject to applicable law, regulatory restrictions and other certain
conditions, First Security may exercise the Option, in whole or in
part, after the occurrence of an Initial Triggering Event (as
defined below), and a Subsequent Triggering Event (as defined below)
and prior to an Exercise Termination Event (as defined below),
provided that: (i) First Security shall have sent the written notice
of such exercise (as described under the notice provisions below)
within six months of such Subsequent Triggering Event, and (ii)
First Security shall not be in material breach of any of its
covenants or agreements contained in the Merger Agreement such that
Zions shall be entitled to terminate the Merger Agreement pursuant
to Section 8.01(b) thereof. At no point may the Option be exercised,
as a whole or in part, to the extent that such exercise (or the
acquisition of Option Shares thereunder) would, if it occurred on
the date hereof, be inconsistent with any provision of the Merger
Agreement.
As defined in the Option Agreement, "Initial Triggering Event,"
means the occurrence of any of the following events or transactions:
1. Zions or any of its Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X) (the "Zions Subsidiaries"),
without having received First Security's prior written
consent, (i) shall have entered into an agreement to engage
in an Acquisition Transaction (as defined below) with any
person (the term "person," as used in the Option Agreement,
has the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder), other than First
Security or any subsidiary of First Security, or (ii) the
Board of Directors of Zions shall have recommended that the
stockholders of Zions approve or accept any Acquisition
Transaction other than as contemplated by the Merger
Agreement. For purposes of the Option Agreement,
"Acquisition Transaction," as defined in the Option
Agreement, means (x) a merger or consolidation, or any
similar transaction, involving Zions or any Zions Subsidiary
(other than such transactions involving solely Zions and/or
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(footnote continued)
Zions Common Stock if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable. If any additional shares of
the Zions Common Stock are issued after the date of the Option Agreement (other
than pursuant to an event described in the preceding sentence), the number of
shares of Zions Common Stock subject to the Option shall be adjusted so that,
after such issuance, it, together with any shares of Zions Common Stock
previously issued pursuant hereto, equals 19.9% of the number of shares of the
Zions Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option.
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CUSIP NO. 989701107 13D Page 6 of 13 Pages
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one or more wholly-owned Subsidiaries of Zions, provided
that any such transaction is not entered into in violation
of the terms of the Merger Agreement), (y) a purchase, lease
or other acquisition of all or a substantial part of the
assets or deposits of Zions or any Zions Subsidiary, or (z)
a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Zions or any
Zions Subsidiary;
2. Any person (other than First Security or any subsidiary of
First Security) shall have acquired Beneficial Ownership or the
right to acquire Beneficial Ownership, of 10% or more of the
outstanding shares of Zions Common Stock (the term "Beneficial
Ownership" as used in the Option Agreement has the meaning
assigned thereto in Section 13(d) of the Exchange Act, and the
rules and regulations thereunder);
3. The stockholders of Zions shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting of
such stockholders held for the purpose of voting on the
Merger Agreement, or any adjournment or postponement
thereof, or such meeting shall not have been held in
violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement, if
prior to such meeting (or if such meeting shall not have
been held or shall have been canceled, prior to such
termination), it shall have been publicly announced that any
person (other than First Security or any subsidiary of First
Security) shall have made, or disclosed an intention to
make, a proposal to engage in an Acquisition Transaction.
4. Zions' Board of Directors shall have withdrawn or modified
(or publicly announced its intention to withdraw, modify or
qualify) in any manner adverse in any respect to First
Security its recommendation that the stockholders of Zions
approve the transactions contemplated by the Merger
Agreement, or Zions or any Zions Subsidiary shall have
authorized, recommended, proposed (or publicly announced its
intention to authorize, recommend or propose) an agreement
to engage in an Acquisition Transaction with any person
other than First Security or a First Security Subsidiary.
5. Any person other than First Security or any First Security
Subsidiary shall have filed with the SEC a registration
statement or tender offer materials with respect to a
potential exchange or tender offer that would constitute an
Acquisition Transaction or filed a preliminary proxy
statement with the Securities and Exchange Commission with
respect to a potential vote by its shareholders to approve
the issuance of shares to be offered in such an exchange
offer);
6. Zions shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of an
Acquisition Transaction, and
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CUSIP NO. 989701107 13D Page 7 of 13 Pages
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following such breach First Security would be entitled to
terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or
7. Any person (other than First Security or any subsidiary of
First Security), without First Security's prior written
consent, shall have filed an application or notice with the
Board of Governors of the Federal Reserve System or other
federal or state bank regulatory or antitrust authority,
which application or notice has been accepted for
processing, for approval to engage in an Acquisition
Transaction.
As defined in the Option Agreement, "Subsequent Triggering
Event," means the occurrence of any of the following events or
transactions:
1. The acquisition by any person other than First Security or any
of its subsidiaries of beneficial ownership of 25% or more of
the then outstanding shares of Zions Common Stock; or
2. The occurrence of an Initial Triggering Event (as defined
above) described in paragraph (1) under the definition of
"Initial Triggering Event" above, except that the percentage
referred to in clause (z) of such paragraph (1) shall be 25%.
As defined in the Option Agreement, "Exercise Termination
Event" means any one of the following events:
1. The Effective Time of the Merger;
2. The termination of the Merger Agreement in accordance with the
terms thereof prior to the occurrence of an Initial Triggering
Event except a termination by First Security pursuant to
Section 8.01(b) of the Merger Agreement (a "Listed
Termination"); or
3. The passage of 18 months (or such longer period if extended
under Section 10 of the Option Agreement) after termination of
the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a Listed Termination.
As provided in the Option Agreement, in the event that First
Security is entitled to and wishes to exercise the Option, it must
send to Zions a written notice (the date of which is referred to in
the Option Agreement as the "Notice Date") specifying (1) the total
number of shares of Zions Common Stock which First Security intends
to purchase pursuant to such exercise and (2) a place and date for
the closing that shall not be less than three business days nor more
than 60 business days from the Notice Date; provided, however, that
if prior notification to or approval of the Federal Reserve Board or
any other regulatory authority or antitrust agency is required in
connection with such purchase, First Security will
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CUSIP NO. 989701107 13D Page 8 of 13 Pages
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promptly file and expeditiously process the required notice or
application for approval.
Under the Bank Holding Company Act of 1956 (the "BHC Act"), First
Security may not directly or indirectly acquire more than 5% of the
outstanding shares of any class of voting securities of Zions
without application to and prior approval from the Federal Reserve
Board.
The Option may be assigned by First Security in certain
circumstances, subject to the terms and conditions described in the
Option Agreement.
In addition, any shares of Zions Common Stock purchased upon the
exercise of the Option may be resold by First Security pursuant to
registration rights under the Option Agreement.
A "Repurchase Event" shall be deemed to occur if: (i) a person
(other than First Security or any First Security subsidiary)
acquires (A) beneficial ownership of 50% or more of the then
outstanding Zions Common Stock, or (B) beneficial ownership of 15%
or more of the then outstanding Zions Common Stock if Zions shall
have violated Section 6.16 of the Merger Agreement; or (ii) any
Acquisition Transaction (as defined above) is consummated. Upon
occurrence of a Repurchase Event, (i) at the request of First
Security, delivered prior to an Exercise Termination Event, Zions
has agreed to repurchase the Option from First Security at a price
(the "Option Repurchase Price") equal to (x) the amount by which (A)
the market/offer price (as defined below) exceeds (B) the Option
Price, multiplied by the number of shares for which the Option may
then be exercised and (ii) at the request of the owner of any shares
that have been issued upon exercise of the Option (the "Option
Shares"), Zions has agreed to repurchase such number of the Option
Shares from the owner thereof as the owner shall designate at a
price (the "Option Share Repurchase Price") equal to (x) the
market/offer price multiplied by the number of Option Shares so
designated. The term "market/offer price" shall mean the highest of
(i) the price per share of Zions Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per
share of Zions Common Stock to be paid by any third party pursuant
to an agreement with Zions, (iii) the highest closing price for
shares of Zions Common Stock within the six-month period immediately
preceding the date the holder or owner gave notice of the required
repurchase, or (iv) in the event of a sale of all or any substantial
part of Zions' assets or deposits, the sum of the price paid in such
sale for such assets and the current market value of the remaining
assets of Zions as determined by a nationally-recognized independent
investment banking firm mutually selected by First Security or the
owner of the Options Shares, as the case may be, and reasonably
acceptable to Zions, divided by the number of shares of Zions Common
Stock outstanding at the time of such sale.
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CUSIP NO. 989701107 13D Page 9 of 13 Pages
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First Security may, at any time following a Repurchase Event and
prior to the occurrence of an Exercise Termination Event, relinquish
the Option (together with any Option Shares issued to and then owned
by First Security) to Zions in exchange for a cash fee equal to $160
million (i) plus, if applicable, First Security's purchase price
with respect to any Option Shares and (ii) minus, if applicable, the
excess of (A) the net price, if any, received by First Security or a
First Security Subsidiary pursuant to the sale of Option Shares (or
any other securities into which such Option Shares were converted or
exchanged) to any unaffiliated party, over (B) First Security's
purchase price of such Option Shares.
If, prior to an Exercise Termination Event, Zions enters into
certain agreements relating to the consolidation or merger of Zions
or the sale of substantially all of its assets or deposits, Zions is
required to make proper provision so that the Option will, upon
consummation of such transaction, be converted into, or exchanged
for, an option (the "Substitute Option"), at First Security's
election, in the Acquiring Corporation (as defined in the Option
Agreement) or in any person that controls the Acquiring Corporation.
The Substitute Option generally will have the same terms and
conditions as the Option; provided, however, that to the extent
terms and conditions of the Substitute Option cannot legally be
identical to those of the Option, they will be as similar as
possible, and in no event will be less advantageous to First
Security.
The Substitute Option shall be exercisable for such number of shares
of the common stock of the Acquiring Corporation or any person that
controls the Acquiring Corporation (the "Substitute Common Stock")
as is equal to the market/offer price (defined in the paragraph
describing "Repurchase Events" above) multiplied by the number of
shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the preceding paragraph,
divided by the average closing price of one share of Substitute
Common Stock for the year immediately prior to the event described
in the preceding paragraph, but in no event higher than the closing
price of one share of the Substitute Common Stock on the day
immediately prior to the event in the preceding paragraph. The
exercise price of the Substitute Option per share of Substitute
Common Stock shall be equal to the Option Price multiplied by a
fraction, the numerator of which shall be the number of shares of
Zions Common Stock for which the Option was exercisable immediately
prior to the event described in the preceding paragraph and the
denominator of which shall be the number of shares of Substitute
Common Stock for which the Substitute Option is exercisable. In no
event, however, shall the Substitute Option be exercisable for more
than 19.9% of the shares of Substitute Common Stock outstanding
prior to exercise of the Substitute Option.
At the request of the holder of the Substitute Option, the issuer of
the Substitute Option shall repurchase the Substitute Option at a
price (the "Substitute Option Repurchase Price") equal to the amount
by which (i) the Highest Closing Price (as hereinafter defined)
exceeds (ii) the exercise price of the Substitute Option,
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CUSIP NO. 989701107 13D Page 10 of 13 Pages
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multiplied by the number of shares of Substitute Common Stock for
which the Substitute Option may then be exercised, and at the
request of the owner of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase
the Substitute Shares at a price equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The
term "Highest Closing Price" shall mean the highest closing price
for shares of Substitute Common Stock within the six-month period
immediately preceding the date the holder of the Substitute Option
gives notice of the required repurchase of the Substitute Option or
owner of the Substitute Shares gives notice of the required
repurchase of the Substitute Shares, as applicable.
In certain circumstances related to the exercise of the Option, the
time periods specified in the Option Agreement will be extended (1)
to the extent necessary to obtain all regulatory approvals (so long
as Holder, the Substitute Option Holder, or Substitute Share Owner
is using commercially reasonable efforts to obtain such approval)
and for the expiration of all statutory waiting periods; (2) to the
extent necessary to avoid liability under Section 16(b) of the
Exchange Act by reason of such exercise; and (3) while there exists
an injunction, order or judgment prohibiting or delaying the
exercise of such right.
Copies of the Option Agreement and the Merger Agreement are filed as
exhibits to this Schedule 13D and are incorporated herein by
reference. The foregoing summary is not intended to be complete and
is qualified in its entirety by reference to such exhibits.
C. PURCHASES OF ZIONS COMMON STOCK.
Subject to market conditions and developments with respect to the
Merger, First Security may purchase shares of Zions Common Stock in
the open market or in privately negotiated transactions, to the
extent permitted by the BHC Act and federal securities laws.
Other than as described above or in item 5 below, First Security
does not have any plans or proposals which relate to or would result
in any of the matters listed in item 4(a)-(j) of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Option. As a result of entry into the Option
Agreement and the granting of the Option thereunder,
pursuant to Rule 13d-3(d)(i) under the Exchange Act, First
Security is deemed to own beneficially 15,724,539 shares of
Zions Common Stock (or such lesser amount as shall
constitute 19.9% of the outstanding shares of Zions Common
Stock on the date of exercise), constituting approximately
19.9% of the shares of Zions Common Stock issued and
outstanding as of June 8, 1999. First Security expressly
disclaims any beneficial ownership of the 15,724,539 shares of
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CUSIP NO. 989701107 13D Page 11 of 13 Pages
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Zions Common Stock which are obtainable by First
Security upon exercise of the Option because the Option is
exercisable only in the circumstances set forth in the
Option Agreement, which is described in Item 4 hereof, none
of which has occurred as of the date hereof and only then
with regulatory approval (if, as a consequence, First
Security would own more than 5% of the outstanding shares
of Zions Common Stock).
(b) If First Security were to exercise the Option, it would have
sole power to vote and, subject to the terms of the Option
Agreement, sole power to direct the disposition of, the shares
of Zions Common Stock covered thereby.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Except for the Option Agreement and the Merger Agreement described
in Item 4 above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between the
reporting person and any person with respect to any securities of
the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits to this Schedule 13D:
1. Agreement and Plan of Merger, dated as of June 6, 1999 by
and among Zions Bancorporation and First Security
Corporation (incorporated by reference to the Schedule 13D
filed with the Securities and Exchange Commission by Zions
Bancorporation on June 16, 1999).
2. Stock Option Agreement, dated as of June 8, 1999, by and
between First Security Corporation and Zions Bancorporation.
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CUSIP NO. 989701107 13D Page 12 of 13 Pages
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SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: June 17, 1999 First Security Corporation
By: /S/ Brad D. Hardy
Name: Brad D. Hardy
Title: Executive Vice
President, Corporate
Services, General Counsel,
Chief Financial Officer and
Secretary
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CUSIP NO. 989701107 13D Page 13 of 13 Pages
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EXHIBIT INDEX
99.1 Agreement and Plan of Merger, dated as of June 6, 1999 by and among
Zions Bancorporation and First Security Corporation (incorporated by
reference to the Schedule 13D filed with the Securities and Exchange
Commission by Zions Bancorporation on June 16, 1999).
99.2 Stock Option Agreement, dated as of June 8, 1999, by and between
First Security Corporation and Zions Bancorporation.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 8, 1999, between First Security
Corporation, a Delaware corporation ("GRANTEE"), and Zions Bancorporation, a
Utah corporation ("ISSUER").
RECITALS
A. MERGER AGREEMENT. Grantee and Issuer have entered into an Agreement
and Plan of Merger, dated as of June 6, 1999 (the "MERGER AGREEMENT"); and
B. OPTION. As a condition to Grantee's entering into the Merger
Agreement and in consideration therefor and in consideration for the option
granted to Issuer by Grantee pursuant to an option agreement dated as of the
date hereof, Issuer has agreed to grant Grantee the Option (as hereinafter
defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "OPTION") to purchase, subject to the terms hereof, up to an aggregate of
15,724,539 fully paid and nonassessable shares of the common stock, no par
value, of Issuer ("COMMON STOCK") at a price per share equal to $64.25;
PROVIDED, HOWEVER, that in no event shall the number of shares for which this
Option is exercisable exceed 19.9% of the issued and outstanding shares of
Common Stock. The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in the
second sentence of Section 5 hereof), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance, such
number together with any shares of Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section l(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer to issue shares in breach of any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10).
<PAGE>
Each of the following shall be an Exercise Termination Event: (i) the Effective
Time of the Merger; (ii) termination of the Merger Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.01(b) of the Merger Agreement (a "LISTED TERMINATION"); or (iii) the passage
of eighteen (18) months (or such longer period as provided in Section 10) after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a Listed Termination. The term "HOLDER"
shall mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof. Anything to
the contrary notwithstanding, at no point may the Option be exercised, as a
whole or in part, to the extent that such exercise (or the acquisition of Option
Shares thereunder) would, if it occurred on the date hereof, be inconsistent
with any provision of the Merger Agreement.
(b) The term "INITIAL TRIGGERING EVENT" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (the "ISSUER SUBSIDIARIES"), without having
received Grantee's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "PERSON" for purposes of this Agreement having
the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "GRANTEE SUBSIDIARY") or the Board of Directors of Issuer (the
"ISSUER BOARD") shall have recommended that the shareholders of Issuer
approve or accept any Acquisition Transaction other than as contemplated by
the Merger Agreement. For purposes of this Agreement, (a) "ACQUISITION
TRANSACTION" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions involving solely Issuer and/or one
or more wholly-owned Subsidiaries of the Issuer, PROVIDED, any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (y) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary, or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary and (b) "SUBSIDIARY" shall have the meaning set forth in Rule
12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common Stock (the
term "BENEFICIAL OWNERSHIP" for purposes of this
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Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to approve
the Merger Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have
been canceled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any of its Subsidiaries)
shall have made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in any
manner adverse in any respect to Grantee its recommendation that the
shareholders of Issuer approve the transactions contemplated by the Merger
Agreement, or Issuer or any Issuer Subsidiary shall have authorized,
recommended, proposed (or publicly announced its intention to authorize,
recommend or propose) an agreement to engage in an Acquisition Transaction
with any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its shareholders to approve the
issuance of shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement in anticipation of an Acquisition
Transaction, and following such breach Grantee would be entitled to
terminate the Merger Agreement (whether immediately or after the giving of
notice or passage of time or both); or
(vii) Any person other than Grantee or any Grantee Subsidiary, without
Grantee's prior written consent, shall have filed an application or notice
with the Board of Governors of the Federal Reserve System (the "FEDERAL
RESERVE BOARD") or other federal or state bank regulatory or antitrust
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "SUBSEQUENT TRIGGERING EVENT" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
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(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"TRIGGERING EVENT"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "NOTICE DATE") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "CLOSING DATE");
PROVIDED, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, PROVIDED that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof
and Issuer and to resale restrictions
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arising under the Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of Issuer and will be provided
to the holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 ACT") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder,
in form and substance reasonably satisfactory to the Issuer; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve
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<PAGE>
Board or such state or other federal regulatory authority as they may require)
in order to permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (iv) promptly
to take all action provided herein to protect the rights of the Holder against
dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "AGREEMENT" and "OPTION" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in Common Stock by
reason of a stock dividend, stock split, split-up, recapitalization, stock
combination, exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Option Price therefor, shall
be adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Grantee shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Grantee would have received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Common Stock are issued after the date
of this Agreement (other than pursuant to an event described in the second
sentence of this Section 5), the number of shares of Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with any
shares of Common Stock previously issued pursuant hereto, equals 19.9% of the
number of shares of Common Stock then issued and outstanding, without giving
effect to any shares subject to or issued pursuant to the Option.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the
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shares of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a registration statement under the 1933 Act covering any shares issued
and issuable pursuant to this Option and shall use its reasonable best efforts
to cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("OPTION SHARES") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 33-1/3% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and PROVIDED FURTHER, HOWEVER, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as
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provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "OPTION REPURCHASE PRICE") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this Option may then
be exercised and (ii) at the request of the owner of Option Shares from time to
time (the "OWNER"), delivered prior to an Exercise Termination Event (or such
later period as provided in Section 10), Issuer (or any successor thereto) shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "OPTION SHARE REPURCHASE PRICE") equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term "MARKET/OFFER PRICE" shall mean the highest of (i) the price per share of
Common Stock at which a tender or exchange offer therefor has been made, (ii)
the price per share of Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives notice
of the required repurchase of Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of Issuer's assets or deposits,
the sum of the net price paid in such sale for such assets or deposits and the
current market value of the remaining net assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the time of such sale.
In determining the market/offer price, the value of consideration other than
cash shall be determined by a nationally recognized investment banking firm
selected by the Holder or Owner, as the case may be, and reasonably acceptable
to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. The
Holder shall also represent and warrant that it has sole record and beneficial
ownership of such Option Shares and that such Option Shares are then free and
clear of all liens. As promptly as practicable, and in any event within five (5)
business days after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating thereto, Issuer
shall deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that
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it is no longer prohibited from delivering, within five (5) business days after
the date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) For purposes of this Agreement, a "REPURCHASE EVENT" shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of (A) beneficial ownership of 50% or more of the then
outstanding Common Stock or (B) beneficial ownership of 15% more of the
then outstanding Common Stock if Issuer shall have violated Section 6.16 of
the Merger Agreement; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 25%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such
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merger or plan of exchange, the then outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common Stock shall
after such merger or plan of exchange represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or a substantial part of its or any Issuer
Subsidiary's assets or deposits to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "SUBSTITUTE
OPTION"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "ACQUIRING CORPORATION" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer),
(ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of any Issuer Subsidiary).
(ii) "SUBSTITUTE COMMON STOCK" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "ASSIGNED VALUE" shall mean the market/offer price, as defined in
Section 7.
(iv) "AVERAGE PRICE" shall mean the average closing price of a share of
the Substitute Common Stock for one (1) year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
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(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "SUBSTITUTE OPTION ISSUER")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"SUBSTITUTE OPTION HOLDER"), the issuer of the Substitute Option (the
"SUBSTITUTE OPTION ISSUER") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "SUBSTITUTE OPTION REPURCHASE PRICE")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "SUBSTITUTE SHARE
OWNER") of shares of Substitute Common Stock (the "SUBSTITUTE SHARES"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"SUBSTITUTE SHARE REPURCHASE PRICE") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "HIGHEST
CLOSING PRICE" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to
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the Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and/or certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable and in any
event within five (5) business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
PROVIDED, HOWEVER, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise
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Termination Event shall have occurred prior to the date of the notice by the
Substitute Option Issuer described in the first sentence of this subsection (c),
or shall be scheduled to occur at any time before the expiration of a period
ending on the thirtieth day after such date, the Substitute Option Holder shall
nevertheless have the right to exercise the Substitute Option until the
expiration of such 30-day period.
10. The periods for exercise of certain rights under Sections 2, 6, 7, 9
and 14 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder, Owner,
Substitute Option Holder or Substitute Share Owner, as the case may be, is using
commercially reasonable efforts to obtain such regulatory approvals), and for
the expiration of all statutory waiting periods; (ii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise;
and (iii) when there exists an injunction, order or judgment that prohibits or
delays exercise of such right.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer as follows: Grantee
has the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Grantee and the performance of its obligations
hereunder by the Grantee have been duly and validly authorized by the Board of
Directors of Grantee and no other corporate proceedings on the part of the
Grantee are necessary to authorize this Agreement or for Grantee to perform its
obligations hereunder. This Agreement has been duly and validly executed and
delivered by Grantee.
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<PAGE>
(c) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired with a
view to the public distribution thereof and will not be transferred or otherwise
disposed or except in a transaction registered or exempt from registration under
the 1933 Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; PROVIDED, HOWEVER,
that until the date fifteen (15) days following the date on which the Federal
Reserve Board has approved an application by Grantee to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Issuer, (iii) an assignment to a single party (E.G., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee's behalf or (iv) any other manner approved by the
Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the Federal Reserve
Board under the BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price. The "SURRENDER PRICE" shall be equal to $[160] million
(i) plus, if applicable, Grantee's purchase price with respect to any Option
Shares and (ii) minus, if applicable, the excess of (A) the net price, if any,
received by Grantee or a Grantee Subsidiary pursuant to the sale of Option
Shares (or any other securities into which such Option Shares were converted or
exchanged) to any unaffiliated party, over (B) Grantee's purchase price of such
Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable
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<PAGE>
in immediately available funds on or before the second business day following
receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five (5) business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five (5) days of the submission or receipt of
any documents relating to any such regulatory and legal approvals, provide
Grantee with copies of the same and (c) keep Grantee advised of both the status
of any such request for regulatory and legal approvals, as well as any
discussions with any relevant regulatory or other third party reasonably related
to the same and (ii) Grantee may revoke such notice of surrender by delivery of
a notice of revocation to Issuer and, upon delivery of such notice of
revocation, the Exercise Termination Date shall be extended to a date six (6)
months from the date on which the Exercise Termination Date would have occurred
if not for the provisions of this Section 14(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith, both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or
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certified mail (postage prepaid, return receipt requested) at the respective
addresses of the parties set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Utah, without regard to the conflict of law principles
thereof (except to the extent that mandatory provisions of Federal law are
applicable).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ZIONS BANCORPORATION
By /s/ Harris H. Simmons
------------------------------------
Name: Harris H. Simmons
Title: President and Chief
Executive Officer
FIRST SECURITY CORPORATION
By /s/ S.F. Eccles
------------------------------------
Name: Spencer F. Eccles
Title: Chairman of the Board and
Chief Executive Officer
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