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CUSIP NO. 0003362941 13D PAGE 1 OF 17 PAGES
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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. _____)*
FIRST SECURITY CORPORATION
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(Name of Issuer)
COMMON STOCK, PAR VALUE $1.25
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(Title of Class of Securities)
0003362941
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(CUSIP Number)
DALE M. GIBBONS, ZIONS BANCORPORATION, ONE SOUTH MAIN, SUITE
1830, SALT LAKE CITY, UTAH 84111 (801) 524-4787
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
JUNE 6, 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. 0003362941 13D PAGE 2 OF 17 PAGES
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1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ZIONS BANCORPORATION, I.R.S. IDENTIFICATION NO.: 87-0227400.
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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 OF ORGANIZATION
UTAH.
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NUMBER OF 7. SOLE VOTING POWER
SHARES 39,661,068*
BENEFICIALLY ---------------------------------------------------
OWNED BY
EACH 8. SHARED VOTING POWER
REPORTING -0-
PERSON ---------------------------------------------------
WITH
9. SOLE DISPOSITIVE POWER
39,661,068
---------------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
---------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
THE REPORTING PERSON HAS ACQUIRED AN OPTION TO PURCHASE UP TO
38,798,410 SHARES OF FIRST SECURITY COMMON STOCK AND CURRENTLY OWNS
862,658 SHARES OF FIRST SECURITY COMMON STOCK.
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* Up to 38,798,410 shares of Common Stock, par value $1.25 ("First Security
Common Stock"), of First Security Corporation, a Delaware corporation
("First Security"), covered by this statement are obtainable by Zions
Bancorporation, a Utah corporation ("Zions"), upon exercise of the option
described in Item 4 below, if the option were exercisable on the date
hereof. Zions expressly disclaims beneficial ownership of any such shares.
Prior to the existence of the Option (defined below), Zions was not
entitled to any rights of a stockholder of First Security 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 Zions. Dispositive and
voting powers are summarized in Items 4 and 5 below. During the 60-day
period prior to the date hereof, Zions has acquired 862,658 shares of First
Security Common Stock at an average price of $23.49 per share in brokers
transactions on the NASDAQ National Stock Market.
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CUSIP NO. 0003362941 13D PAGE 3 OF 17 PAGES
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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)
20.3.
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14. TYPE OF REPORTING PERSON
CO.
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ITEM 1. SECURITY AND ISSUER.
(a) This Schedule 13D relates to the common stock of First Security
Corporation, par value $1.25.
(b) The principal executive offices of the Issuer are located at 79
S. Main Street, Salt Lake City, Utah 84111.
ITEM 2. IDENTITY AND BACKGROUND.
(a) The reporting person is Zions Bancorporation ("Zions").
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CUSIP NO. 0003362941 13D PAGE 4 OF 17 PAGES
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(b) The reporting person is incorporated in Utah.
(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 One South Main, Suite 1380, Salt Lake City,
Utah 84111.
(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 First Security
Common Stock be made by Zions 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 Zions.
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 and First Security and
certain other closing conditions. It is currently estimated that the
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CUSIP NO. 0003362941 13D PAGE 5 OF 17 PAGES
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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 will be converted and reclassified as 0.442 of a
share of the Surviving Corporation Common Stock. Holders of Zions
common stock, no par value per share ("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 Zions' 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
First Security granted Zions an option (the "Option") entitling it to
purchase up to 38,798,410 (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 First Security Common Stock on the NASDAQ National Market on
June 4 and June 7, 1999 (the
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CUSIP NO. 0003362941 13D PAGE 6 OF 17 PAGES
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"Option Price"), subject to adjustment in certain circumstances.*
Subject to applicable law, regulatory restrictions and other certain
conditions, Zions 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) Zions 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) Zions shall not be in material breach of any
of its covenants or agreements contained in the Merger Agreement such
that First Security 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.
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* In the event of any change in the First Security 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 Zions shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Zions would have
received in respect of the First Security 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 First Security 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 First Security
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of First Security Common Stock previously
issued pursuant hereto, equals 19.9% of the number of shares of the First
Security Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option.
<PAGE>
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CUSIP NO. 0003362941 13D PAGE 7 OF 17 PAGES
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As defined in the Option Agreement, "Initial Triggering Event," means
the occurrence of any of the following events or transactions:
1. First Security or any of its Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X)(the "First Security
Subsidiaries"), without having received Zions' 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 Zions or any subsidiary of
Zions, or (ii) the Board of Directors of First Security shall
have recommended that the stockholders of First Security 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 First Security or any First Security Subsidiary (other
than such transactions involving solely First Security and/or one
or more wholly-owned Subsidiaries of First Security, 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 First Security or any First Security 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 First Security or
any First Security Subsidiary;
2. Any person (other than Zions or any subsidiary of Zions) shall
have acquired Beneficial Ownership or the right to acquire
Beneficial Ownership, of 10% or more of the outstanding shares of
First Security Common Stock (the term "Beneficial Ownership" as
used in the Option Agreement has the meaning assigned thereto in
Section 13(d) of the
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CUSIP NO. 0003362941 13D PAGE 8 OF 17 PAGES
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Exchange Act, and the rules and regulations thereunder);
3. The stockholders of First Security 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 Zions or any subsidiary of Zions) shall have
made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction.
4. First Security's 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 Zions its
recommendation that the stockholders of First Security approve
the transactions contemplated by the Merger Agreement, or First
Security or any First Security 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 Zions or a
Zions Subsidiary.
5. Any person other than Zions or any Zions 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. Issuer shall have willfully breached any covenant or obligation
contained in the
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CUSIP NO. 0003362941 13D PAGE 9 OF 17 PAGES
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Merger Agreement in anticipation of an Acquisition Transaction,
and following such breach Zions 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 Zions or any subsidiary of Zions), without
Zions' 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 Zions or any of its
subsidiaries of beneficial ownership of 25% or more of the then
outstanding shares of First Security 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 Zions 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
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CUSIP NO. 0003362941 13D PAGE 10 OF 17 PAGES
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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 Zions is
entitled to and wishes to exercise the Option, it must send to First
Security 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 First Security Common Stock which Zions 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, Zions will promptly file and expeditiously process the
required notice or application for approval.
Under the Bank Holding Company Act of 1956 (the "BHC Act"), Zions may
not directly or indirectly acquire more than 5% of the outstanding
shares of any class of voting securities of First Security without
application to and prior approval from the Federal Reserve Board.
The Option may be assigned by Zions in certain circumstances, subject
to the terms and conditions described in the Option Agreement.
In addition, any shares of First Security Common Stock purchased upon
the exercise of the Option may be resold by Zions pursuant to
registration rights under the Option Agreement.
A "Repurchase Event" shall be deemed to occur if: (i) a person (other
than Zions or any Zions subsidiary) acquires (A) beneficial ownership
of 50% or more of the then outstanding First Security Common Stock, or
(B) beneficial ownership of 15% or more of the then outstanding First
Security Common Stock if First Security 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 Zions, delivered prior to an Exercise Termination
Event, First
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CUSIP NO. 0003362941 13D PAGE 11 OF 17 PAGES
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Security has agreed to repurchase the Option from Zions 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"), First
Security 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 First
Security Common Stock at which a tender offer or exchange offer
therefor has been made, (ii) the price per share of First Security
Common Stock to be paid by any third party pursuant to an agreement
with First Security, (iii) the highest closing price for shares of
First Security 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 First Security's 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 First Security as determined by a
nationally-recognized independent investment banking firm mutually
selected by Zions or the owner of the Options Shares, as the case may
be, and reasonably acceptable to First Security, divided by the number
of shares of First Security Common Stock outstanding at the time of
such sale.
Zions 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 Zions) to
First Security in exchange for a cash fee equal to $160 million (i)
plus, if applicable, Zions' purchase price with respect to any Option
Shares and (ii) minus, if applicable, the excess of (A) the net price,
if any, received by Zions or a Zions 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) Zions'
purchase price of such Option Shares.
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CUSIP NO. 0003362941 13D PAGE 12 OF 17 PAGES
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If, prior to an Exercise Termination Event, First Security enters into
certain agreements relating to the consolidation or merger of First
Security or the sale of substantially all of its assets or deposits,
First Security 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 Zions' 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 Zions.
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 First Security 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.
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CUSIP NO. 0003362941 13D PAGE 13 OF 17 PAGES
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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, 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 FIRST SECURITY COMMON STOCK.
During the 60-day period prior to the date hereof, Zions acquired
862,658 shares of First Security Common Stock in brokers transactions
on the NASDAQ
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CUSIP NO. 0003362941 13D PAGE 14 OF 17 PAGES
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National Market. Subject to market conditions and developments with
respect to the Merger, Zions may purchase additional shares of First
Security 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, Zions 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, Zions is deemed to own
beneficially 38,798,410 shares of First Security Common Stock (or
such lesser amount as shall constitute 19.9% of the outstanding
shares of First Security Common Stock on the date of exercise),
constituting approximately 19.9% of the shares of First Security
Common Stock issued and outstanding as of June 8, 1999. Zions
expressly disclaims any beneficial ownership of the 38,798,410
shares of First Security Common Stock which are obtainable by
Zions 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, Zions would own more than 5% of
the outstanding shares of First Security Common Stock).
(b) If Zions 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 First Security
Common Stock covered thereby.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
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CUSIP NO. 0003362941 13D PAGE 15 OF 17 PAGES
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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.
2. Stock Option Agreement, dated as of June 8, 1999, by and between
Zions Bancorporation and First Security Corporation.
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CUSIP NO. 0003362941 13D PAGE 16 OF 17 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 15, 1999 Zions Bancorporation
By: /s/ Dale M. Gibbons
-------------------------
Name: Dale M. Gibbons
Title: Chief Financial
Officer
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CUSIP NO. 0003362941 13D PAGE 17 OF 17 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.
99.2 Stock Option Agreement, dated as of June 8, 1999, by and between Zions
Bancorporation and First Security Corporation.
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of June 6, 1999
by and between
ZIONS BANCORPORATION
and
FIRST SECURITY CORPORATION
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE I
Definitions; Interpretations
1.01 Certain Definitions...................................................2
1.02 Interpretation........................................................8
ARTICLE II
The Merger; the Reverse Stock Split
2.01 The Merger............................................................9
2.02 Closing...............................................................9
2.03 Effective Time........................................................9
2.04 Effects of the Merger.................................................9
2.05 Certificate of Incorporation and By-laws..............................9
2.06 Board of Directors and Officers......................................10
2.07 Reverse Stock Split..................................................10
ARTICLE III
Consideration; Exchange Procedures
3.01 Effect on Capital Stock..............................................11
3.02 Rights as Stockholders; Stock Transfers..............................11
3.03 Exchange Procedures..................................................12
3.04 Anti-Dilution Provisions.............................................13
3.05 Stock Options........................................................13
ARTICLE IV
Conduct of Business Pending Merger
4.01 Forebearances........................................................16
-i-
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4.02 Coordination of Dividends............................................18
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules.................................................19
5.02 Standard.............................................................19
5.03 Representations and Warranties.......................................19
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts..............................................30
6.02 Stockholder Approvals................................................31
6.03 Registration Statement and Joint Proxy Statement.....................31
6.04 Press Releases.......................................................32
6.05 Access; Information..................................................32
6.06 Acquisition Proposals................................................33
6.07 Affiliate Agreements.................................................33
6.08 Takeover Laws........................................................34
6.09 NASDAQ...............................................................34
6.10 Regulatory Applications..............................................34
6.11 Indemnification......................................................35
6.12 Benefit Plans........................................................36
6.13 Accountants' Letters.................................................36
6.14 Notification of Certain Matters......................................37
6.15 Financial Statements.................................................37
6.16 Rights Agreements....................................................37
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger...........37
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PAGE
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7.02 Conditions to Obligation of First Security...........................38
7.03 Conditions to Obligation of Zions....................................39
ARTICLE VIII
Termination
8.01 Termination..........................................................40
8.02 Effect of Termination and Abandonment................................41
ARTICLE IX
Miscellaneous
9.01 Survival.............................................................41
9.02 Waiver; Amendment....................................................41
9.03 Counterparts.........................................................42
9.04 Governing Law........................................................42
9.05 Expenses.............................................................42
9.06 Notices..............................................................42
9.07 Entire Understanding; No Third Party Beneficiaries...................43
9.08 Effect...............................................................43
9.09 Severability.........................................................43
9.10 Alternative Structure................................................43
9.11 Enforcement of the Agreement.........................................44
EXHIBIT A-1 Form of Amended and Restated Certificate of Incorporation of
Surviving Corporation
EXHIBIT A-2 Form of Amended and Restated By-laws of Surviving Corporation
EXHIBIT B Certain Provisions Concerning Officers and Directors of
Surviving Corporation
EXHIBIT C Zions Affiliate Letter
EXHIBIT D First Security Affiliate Letter
EXHIBIT E Stock Option Agreement for Zions
EXHIBIT F Stock Option Agreement for First Security
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AGREEMENT AND PLAN OF MERGER, dated as of June 6, 1999 (this
"Agreement"), by and between Zions Bancorporation, a Utah corporation ("Zions"),
and First Security Corporation, a Delaware corporation ("First Security").
RECITALS
A. The Proposed Transaction. This Agreement provides for a business
combination to be effected through the merger of Zions with and into First
Security (the "Merger"), with First Security as the surviving corporation (the
"Surviving Corporation"), whereby each outstanding share of common stock, no par
value per share, of Zions ("Zions Common Stock"), other than certain excluded
shares, will be converted into one share of common stock, par value $1.25 per
share, of the Surviving Corporation ("Surviving Corporation Common Stock").
Immediately prior to the effectiveness of the Merger, First Security will effect
a reverse stock split in which each outstanding share of common stock, par value
$1.25 per share, of First Security ("First Security Common Stock") will be
reclassified and converted into 0.442 of a share of Surviving Corporation Common
Stock.
B. Board Approvals. The respective boards of directors of Zions and
First Security have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their respective
business strategies and goals.
C. Intended Tax Treatment. For federal income tax purposes, it is
intended that the Merger will be treated as a reorganization under the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder (the "Code").
D. Intended Accounting Treatment. For financial accounting purposes, it
is intended that the Merger will be accounted for as a pooling-of-interests
transaction.
E. Stock Option Agreements. Immediately following the due execution and
delivery of this Agreement, First Security and Zions will enter into a stock
option agreement (the "First Security Stock Option Agreement"), pursuant to
which First Security will grant Zions the option (the "First Security Option")
to purchase shares of First Security Common Stock, upon the terms and subject to
the conditions set forth therein. Simultaneously with the due execution and
delivery of this Agreement, Zions and First Security will enter into a stock
option agreement (the "Zions Stock Option Agreement" and, together with the
First Security Stock Option Agreement, the "Option Agreements"), pursuant to
which Zions will grant First Security the option (the "Zions Option") to
purchase shares of Zions Common Stock, upon the terms and subject to the
conditions set forth therein.
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATIONS
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal", with respect to either Zions or First
Security, means any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Zions or First
Security, as the case may be, or any of its Subsidiaries or any proposal or
offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets or deposits of, Zions or First Security,
as the case may be, or any of its Significant Subsidiaries, other than the
transactions contemplated by this Agreement.
"Adjusted Option" has the meaning set forth in Section 3.05.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Articles of Merger" has the meaning set forth in Section 2.03.
"Benefit Plans" has the meaning set forth in Section 5.03(n).
"Certificate of Merger" has the meaning set forth in Section 2.03.
"Closing" has the meaning set forth in Section 2.02.
"Closing Date" has the meaning set forth in Section 2.02.
"Code" has the meaning set forth in the Recitals.
"Constituent Documents" means, with respect to Zions, the Zions
Articles and the Zions By-Laws, and, with respect to First Security, the
First Security Certificate and the First Security By-Laws.
"Conversion Ratio" has the meaning set forth in Section 3.01(b).
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"Corporation Division" has the meaning set forth in Section 2.03.
"Costs" has the meaning set forth in Section 6.11(a).
"Delaware Secretary" means the Secretary of the State of Delaware.
"DGCL" means the Delaware General Corporation Law.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" has the meaning set forth in Section 2.03.
"Employees" has the meaning set forth in Section 5.03(n).
"Environmental Laws" means any federal, state or local law,
regulation, order, decree, permit, authorization, opinion, common law or
agency requirement relating to: (i) the protection or restoration of the
environment, health, safety, or natural resources, (ii) the handling, use,
presence, disposal, release or threatened release of any Hazardous
Substance or (iii) noise, odor, wetlands, indoor air, pollution,
contamination or any injury or threat of injury to persons or property in
connection with any Hazardous Substance including, without limitation, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation, and Liability Act, the Clean Water Act, the Federal
Clean Air Act, and the Occupational Safety and Health Act, each as amended,
regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(n).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.03(a).
"First Security" has the meaning set forth in the preamble to this
Agreement.
"First Security Affiliate" has the meaning set forth in Section
6.07(a).
"First Security Benefit Plans" has the meaning set forth in Section
6.12.
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"First Security Board" means the Board of Directors of First Security.
"First Security By-Laws" means the Restated By-laws of First Security,
as amended.
"First Security Certificate" means the Certificate of Incorporation of
First Security, as amended.
"First Security Common Stock" has the meaning set forth in the
Recitals.
"First Security Common Stock Option" has the meaning set forth in
Section 3.05.
"First Security Meeting" has the meaning set forth in Section 6.02.
"First Security Option" has the meaning set forth in the Recitals.
"First Security Current Rights Agreement" has the meaning set forth in
Section 5.03(b).
"First Security Replacement Rights Agreement" has the meaning set
forth in Section 5.03(b).
"First Security Rights" has the meaning set forth in Section 5.03(b).
"First Security Stock" means collectively First Security Common Stock
and Series A Preferred Stock.
"First Security Stock Option Agreement" has the meaning set forth in
the Recitals.
"First Security Stock Plans" has the meaning set forth in Section
5.03(b).
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that
is: (i) listed, classified or regulated pursuant to any Environmental Law;
(ii) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (iii) any other substance
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which is or may be the subject of regulatory action by any Governmental
Authority in connection with any Environmental Law.
"Indemnified Party" has the meaning set forth in Section 6.11(a).
"Insurance Policies" has the meaning set forth in Section 5.03(t).
"Joint Proxy Statement" has the meaning set forth in Section 6.03(a).
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to Zions or First
Security, any effect that (a) is material and adverse to the financial
condition, results of operations or business of Zions and its Subsidiaries,
taken as a whole, or First Security and its Subsidiaries, taken as a whole,
respectively, excluding the impact of (i) changes in banking and other laws
of general applicability or interpretations thereof by Governmental
Authorities, (ii) changes in GAAP or regulatory accounting requirements
applicable to banks and their holding companies generally, (iii) changes in
general economic conditions affecting banks and their holding companies
generally, provided that, with respect to each of clause (i), (ii) or
(iii), to the extent that a change does not materially affect it in a way
that materially differs from other banking organizations, (iv) actions or
omissions of a party to this Agreement taken with the prior written consent
of the other party to this Agreement, in contemplation of the transactions
contemplated hereby, and (v) any modifications or changes to valuation
policies and practices in connection with the Merger or restructuring
charges, in each case taken with the prior approval of Zions or First
Security, as the case may be, in connection with the Merger, in each case
in accordance with GAAP; or (b) would materially impair the ability of
Zions or First Security to perform its obligations under this Agreement or
to consummate the transactions contemplated hereby.
"Merger" has the meaning set forth in the Recitals.
"NASDAQ" means the Nasdaq National Market.
"New Certificate" has the meaning set forth in Section 3.03(a).
"Old Certificate" has the meaning set forth in Section 3.03(a).
"Option Agreements" has the meaning set forth in the Recitals.
"Pension Plan" has the meaning set forth in Section 5.03(n).
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"Person" means any individual, savings association, bank, corporation,
limited liability company, partnership, association, joint-stock company,
business trust or unincorporated organization.
"Plan" has the meaning set forth in Section 5.03(n).
"Previously Disclosed" by a party means information set forth in the
applicable paragraph of its Disclosure Schedule, or any other paragraph of
its Disclosure Schedule so long as it is clear from the context of the
disclosure that the disclosure in such other paragraph of its Disclosure
Schedule is also applicable to the section of this Agreement in question.
"Ratio" has the meaning set forth in Section 2.07.
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authorities" has the meaning set forth in Section 5.03(j).
"Regulatory Filings" has the meaning set forth in Section 5.03(h).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Reverse Stock Split" has the meaning set forth in Section 2.07.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any other
Person any right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock appreciation right or other
instrument the value of which is determined in whole or in part by
reference to the market price or value of, shares of capital stock of such
first Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Series A Preferred Stock" has the meaning set forth in Section
5.03(b).
"Subsidiary" and "Significant Subsidiary" have the meaning ascribed to
those terms in Rule 1-02 of Regulation S-X of the SEC.
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"Surviving Corporation" has the meaning set forth in the Recitals.
"Surviving Corporation Common Stock" has the meaning set forth in the
Recitals.
"Takeover Laws" has the meaning set forth in Section 5.03(v).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Zions Common Stock held by First
Security or any of its Subsidiaries or by Zions or any of its Subsidiaries,
in each case other than in a fiduciary (including custodial or agency)
capacity or as a result of debts previously contracted in good faith.
"UBCA" means the Utah Business Corporation Act.
"Zions" has the meaning set forth in the preamble to this Agreement.
"Zions Affiliate" has the meaning set forth in Section 6.07(a).
"Zions Articles" means the Amended and Restated Articles of
Incorporation of Zions.
"Zions Benefit Plans" has the meaning set forth in Section 6.12.
"Zions Board" means the Board of Directors of Zions.
"Zions By-Laws" means the Amended and Restated By-laws of Zions.
"Zions Common Stock" has the meaning set forth in the Recitals.
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"Zions Common Stock Option" has the meaning set forth in Section 3.05.
"Zions Meeting" has the meaning set forth in Section 6.02.
"Zions Option" has the meaning set forth in the Recitals.
"Zions Rights" has the meaning set forth in Section 5.03(c).
"Zions Rights Agreement" has the meaning set forth in Section 5.03(c).
"Zions Stock Option Agreement" has the meaning set forth in the
Recitals.
"Zions Stock Plans" has the meaning set forth in Section 5.03(c).
1.02 Interpretation. (a) In this Agreement, unless the context
otherwise requires, references:
(i) to the Recitals, Sections, Exhibits or Schedules are to a Recital
or Section of, or Exhibit or Schedule to, this Agreement;
(ii) to any agreement (including this Agreement), contract, statute or
regulation are to the agreement, contract, statute or regulation as
amended, modified, supplemented or replaced from time to time, and to any
section of any statute or regulation are to any successor to the section;
(iii) to any Governmental Authority include any successor to that
Governmental Authority; and
(iv) to this Agreement are to this Agreement, the Exhibits and
Schedules to it, taken as a whole.
(b) The table of contents and headings contained herein are for
reference purposes only and do not limit or otherwise affect any of the
provisions of this Agreement.
(c) Whenever the words "include," "includes" or "including" are used
in this Agreement, they will be deemed to be followed by the words "without
limitation."
(d) Whenever the words "herein" or "hereunder" are used in this
Agreement, they will be deemed to refer to this Agreement as a whole and
not to any specific Section.
(e) This Agreement is the product of negotiation by the parties,
having the assistance of counsel and other advisers. It is the intention of
the parties that this
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Agreement not be construed more strictly with regard to one party than with
regard to the other party.
ARTICLE II
THE MERGER; THE REVERSE STOCK SPLIT
2.01 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL and the UBCA, Zions shall be
merged with and into First Security at the Effective Time with First Security as
the Surviving Corporation. The Surviving Corporation shall retain the First
Security name and will be headquartered in Salt Lake City, Utah.
2.02 Closing. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. on the third business day after satisfaction or waiver of the
conditions set forth in Article VII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions), unless another time or date is agreed to by the
parties hereto (the "Closing Date").
2.03 Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the parties shall acknowledge and file
a certificate of merger or other appropriate documents (in any such case, the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and articles of merger or other appropriate documents (in any such
case, the "Articles of Merger") executed in accordance with the relevant
provisions of the UBCA. The parties shall make all other filings or recordings
required under the DGCL and the UBCA and the Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Delaware Secretary
and the Articles of Merger are filed in the office of the Utah Division of
Corporation and Commercial Code (the "Corporation Division"), or at such
subsequent date or time as Zions and First Security shall agree and specify in
the Certificate of Merger and the Articles of Merger (the time the Merger
becomes effective being hereinafter referred to as the "Effective Time").
2.04 Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL and Section 16-10a-1106 of the UBCA.
2.05 Certificate of Incorporation and By-laws.
(a) The First Security Certificate, as in effect immediately prior to
the Effective Time, shall be amended and restated as of the Effective Time
so as to read in its entirety in the form set forth as Exhibit A-1 and, as
so amended and restated, such certificate of
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incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The First Security By-laws, as in effect immediately prior to the
Effective Time, shall be amended and restated as of the Effective Time so
as to read in their entirety in the form set forth as Exhibit A-2 and, as
so amended and restated, such by-laws shall be the by-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
2.06 Board of Directors and Officers. The board of directors and
certain officers of the Surviving Corporation shall be as set forth on or
designated in accordance with Exhibit B hereto until the earlier of the
resignation or removal of any individual set forth on or designated in
accordance with Exhibit B or until their respective successors are duly elected
and qualified, as the case may be, it being agreed that if any director shall be
unable or unwilling to serve as a director at the Effective Time the party which
designated such individual as indicated in Exhibit B shall designate another
individual to serve in such individual's place. If any officer set forth on or
designated in accordance with Exhibit B ceases to be a full-time employee of
either First Security or Zions at or before the Effective Time or shall be
unable or unwilling to serve as an officer of the Surviving Corporation at the
Effective Time, the parties will agree upon another individual to serve in such
individual's stead.
2.07 Reverse Stock Split. First Security shall take all actions
necessary to effect the reclassification of the First Security Common Stock such
that, immediately prior to the Effective Time, each outstanding share (which
shall include for this purpose any First Security Common Stock held by First
Security as Treasury Stock) of First Security Common Stock shall be
automatically reclassified and converted into 0.442 (the "Ratio") of a validly
issued, fully paid and nonassessable share of Surviving Corporation Common Stock
(the "Reverse Stock Split") (with the resulting number of shares of each
registered holder of First Security Common Stock being rounded down to the
nearest whole number and with each such registered holder being entitled to
receive from First Security in lieu of any fractional share of Surviving
Corporation Common Stock prior to such rounding down an amount in cash (without
interest) equal to the product obtained by multiplying (x) the fraction of a
share of Surviving Corporation Common Stock to which such holder (after taking
into account all shares of First Security Common Stock held immediately prior to
the effective time of the Reverse Stock Split by such holder) would otherwise be
entitled to and (y) the last sales price per share of Zions Common Stock on
NASDAQ on the last trading day prior to the date on which the Reverse Stock
Split occurs), including arranging for the exchange of certificates representing
First Security Common Stock for certificates representing Surviving Corporation
Common Stock following the effectiveness of the Reverse Stock Split. Anything to
the contrary notwithstanding, First Security's obligation to cause the Reverse
Stock Split to become effective shall be subject to the prior satisfaction or
waiver, as applicable, of each of the conditions to the respective obligation of
each party to effect
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the Merger set forth in Article VII (other than Section 7.01(g)) shall have been
satisfied or waived.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
First Security Stock or Zions Common Stock:
(a) Cancellation of Treasury Stock. Each share of Treasury Stock shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Zions and First Security Common Stock and Series A Preferred
Stock. (i) Except as set forth in Section 3.01(a), each issued and
outstanding share of Zions Common Stock immediately prior to the Effective
Time shall be converted into, subject to the prior effectiveness of the
Reverse Stock Split, one fully paid and nonassessable share of Surviving
Corporation Common Stock (the "Conversion Ratio"). As of the Effective
Time, all shares of Zions Common Stock shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and from and
after the Effective Time, certificates representing Zions Common Stock
(other than shares to be canceled in accordance with Section 3.01(a))
immediately prior to the Effective Time shall be deemed for all purposes to
represent the number of shares of Surviving Corporation Common Stock into
which they were converted pursuant to this subparagraph (b) (provided that
if an exchange of certificates formerly representing Zions Common Stock for
certificates representing Surviving Corporation Common Stock is required by
law or applicable rule or regulation, the parties will cause the Surviving
Corporation to arrange for such exchange on a one share-for-one share
basis).
(ii) Each share of First Security Common Stock and each share of
Series A Preferred Stock issued and outstanding immediately prior to the
Effective Time, assuming the prior effectiveness of the Reverse Stock
Split, shall remain an issued and outstanding share of Surviving
Corporation Common Stock and a share of Series A Preferred Stock of the
Surviving Corporation, respectively.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Zions Common Stock shall cease to be, and shall have no rights as,
shareholders of Zions, other than to receive any dividend or other distribution
with respect to such Zions Common Stock with a record date occurring prior to
the Effective Date and the conversion rights provided under this
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Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of Zions or the Surviving Corporation of shares of Zions Common
Stock.
3.03 Exchange Procedures. If, pursuant to Section 3.01(b)(i), an
exchange of certificates will occur:
(a) At or prior to the Effective Time, First Security shall deposit,
or shall cause to be deposited, with First Security's transfer agent or a
depository or trust institution of recognized standing selected by First
Security and reasonably satisfactory to Zions (in such capacity, the
"Exchange Agent"), which may be an affiliate of the Surviving Corporation,
for the benefit of the holders of certificates formerly representing shares
of Zions Common Stock ("Old Certificates") to be exchanged in accordance
with this Article III, certificates representing the shares of First
Security Common Stock ("New Certificates") to which the holders of the Old
Certificates are entitled pursuant to this Agreement.
(b) Promptly after the Effective Date, First Security shall send or
cause to be sent to each former holder of record of shares of Zions Common
Stock immediately prior to the Effective Time transmittal materials for use
in exchanging such shareholder's Old Certificates for the New Certificates
provided for in this Article III. First Security shall cause the New
Certificates and/or any check in respect of dividends or distributions
which such Person shall be entitled to receive to be delivered to such
shareholder upon delivery to the Exchange Agent of Old Certificates
representing such shares of Zions Common Stock (or indemnity reasonably
satisfactory to First Security and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such shareholder. No
interest will be paid on any such cash to be paid in respect of dividends
or distributions which any such Person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Neither the Exchange Agent nor any party hereto shall be liable to
any former holder of Zions Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(d) From and after the 30th day following the Effective Date, no
dividends or other distributions with respect to First Security Common
Stock with a record date occurring after the Effective Date shall be paid
in respect of any unsurrendered Old Certificate representing shares of
Zions Common Stock converted in the Merger into the right to receive shares
of First Security Common Stock. Upon surrender of Old Certificates (or
indemnity reasonably satisfactory to First Security and the Exchange Agent,
if any of such certificates are lost, stolen or destroyed) in accordance
with this Section 3.03, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable
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with respect to shares of First Security Common Stock such holder had the
right to receive upon surrender of Old Certificates (or delivery of such
indemnity).
3.04 Anti-Dilution Provisions. In the event that, with the other
party's consent, Zions or First Security changes (or establishes a record date
for changing) the number or kind of shares of Zions Common Stock or First
Security Common Stock, as the case may be, issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization,
reclassification, reorganization or similar transaction with respect to the
outstanding Zions Common Stock or First Security Common Stock, as the case may
be (other than, with respect to First Security, the Reverse Stock Split), and
the record date therefor shall be prior to the Effective Date, the ratio
contemplated by Section 3.01(b) or Section 2.07, as the case may be, shall be
proportionately adjusted in such manner as First Security and Zions shall agree,
which adjustment may include, as appropriate, the issuance of securities,
property or cash on the same basis as that on which any of the foregoing shall
have been issued, distributed or paid to the holders of Zions Common Stock or
First Security Common Stock, as the case may be, generally.
3.05 Stock Options. (a) As soon as practicable following the date of
this Agreement, the Zions Board (or, if appropriate, any committee administering
the Zions Stock Plans) shall adopt such resolutions or take such other actions
as may be required to effect the following:
(i) adjust the terms of all outstanding options to purchase shares of
Zions Common Stock ("Zions Common Stock Options") granted under the Zions
Stock Plans, whether vested or unvested, as necessary to provide that, at
the Effective Time, each such Zions Common Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted,
subject to the prior effectiveness of the Reverse Stock Split, into an
option to acquire one share of Surviving Corporation Common Stock for each
share of Zions Common Stock subject to such Zions Common Stock Option
(each, as so adjusted, an "Adjusted Option"); and
(ii) make such other changes to the Zions Stock Plans as First
Security and Zions may agree are appropriate to give effect to the Merger,
including as provided in paragraph (d) of this Section 3.05.
(b) As soon as practicable following the date of this Agreement, the
First Security Board (or, if appropriate, any committee administering the
First Security Stock Plans) shall adopt such resolutions or take such other
actions as may be required to effect the following:
(i) all outstanding options to purchase shares of First Security
Common Stock ("First Security Common Stock Options") granted under the
First Security Stock Plans, whether vested or unvested, shall be adjusted
in accordance with their terms to provide
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that at the effectiveness of the Reverse Stock Split (A) each such First
Security Common Stock Option outstanding immediately prior to the
effectiveness of the Reverse Stock Split shall be converted into an option
to acquire a number of shares of Surviving Corporation Common Stock equal
to the number of shares of First Security Common Stock for which such First
Security Common Stock Option was exercisable immediately prior to the
Reverse Stock Split multiplied by the Ratio, provided that any fractional
shares of Surviving Corporation Common Stock resulting therefrom shall be
rounded to the nearest whole share; and (B) the exercise price per share of
Surviving Corporation Common Stock under a First Security Common Stock
Option which has been adjusted in accordance with this Section 3.05(b)(i)
shall be equal to the exercise price per share of First Security Common
Stock under the original First Security Common Stock Option divided by the
Ratio, provided that such exercise price shall be rounded to the nearest
whole cent; and
(ii) make such other changes to the First Security Stock Plans as
First Security and Zions may agree are appropriate to give effect to the
Merger, including as provided in paragraph (d) of this Section 3.05.
(c) As soon as practicable after the Effective Time, the Surviving
Corporation shall: (i) deliver to the holders of Zions Common Stock Options
appropriate notices setting forth such holders' rights pursuant to the
respective Zions Stock Plans and the agreements evidencing the grants of
such Zions Common Stock Options and that such Zions Common Stock Options
and agreements shall be assumed by the Surviving Corporation and shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 3.05 after giving effect to the
Merger); and (ii) deliver to the holders of First Security Common Stock
Options appropriate notices setting forth such holders' rights pursuant to
the respective First Security Stock Plans and the agreements evidencing the
grants of such First Security Common Stock Options and that such First
Security Common Stock Options and agreements shall be assumed by the
Surviving Corporation and shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 3.05 after
giving effect to the Merger).
(d) At the Effective Time, by virtue of the Merger, the Zions Stock
Plans shall be assumed by the Surviving Corporation, with the result that
all obligations of Zions under the Zions Stock Plans, including with
respect to awards outstanding at the Effective Time under each Zions Stock
Plan, shall be obligations of the Surviving Corporation following the
Effective Time. Prior to the Effective Time, First Security shall take all
necessary actions (including, if required, to comply with Section 162(m) of
the Code (and the regulations thereunder) or applicable law, including
obtaining the approval of its stockholders at the First Security Meeting)
for the assumption of the Zions Stock Plans, including the reservation,
issuance and listing of shares of Surviving Corporation
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Common Stock in a number at least equal to the number of shares of
Surviving Corporation Common Stock that will be subject to Adjusted
Options. No later than the Effective Time, First Security shall prepare and
file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Surviving Corporation
Common Stock determined in accordance with the preceding sentence. Such
registration statement shall be kept effective (and the current status of
the prospectus or prospectuses required thereby shall be maintained) at
least for so long as Adjusted Options or any unsettled awards granted under
the Zions Stock Plans after the Effective Time remain outstanding.
Following the Effective Time, the Surviving Corporation shall maintain the
effectiveness of a registration statement on Form S-3 or Form S-8, as the
case may be (or any successor or other appropriate forms), and shall
maintain the current status of the prospectus or prospectuses contained
therein, with respect to the First Security Common Stock subject to the
First Security Common Stock Options, for so long as such First Security
Common Stock Options remain outstanding.
(e) At the Effective Time, each right of any kind, whether vested or
unvested, contingent or accrued, to acquire or receive shares of Zions
Common Stock that may be held, awarded, outstanding, credited, payable or
reserved for issuance under the Zions Stock Plans and any other Zions
Benefit Plan, except for Zions Common Stock Options converted in accordance
with Section 3.05(a) above, shall be deemed to be converted into a right to
acquire or receive, as the case may be, subject to the prior effectiveness
of the Reverse Stock Split, the number of shares of Surviving Corporation
Common Stock equal to the number of shares of Zions Common Stock subject to
such right immediately prior to the Effective Time, and such rights with
respect to the shares of Surviving Corporation Common Stock shall otherwise
be subject to the same terms, conditions and restrictions, if any, as were
applicable to the rights with respect to the shares of Zions Common Stock
under the relevant Zions Stock Plan or Zions Benefit Plan. Similarly, all
Zions Stock Plans and other Zions Benefit Plans (and awards thereunder)
providing for benefits measured by the value of a number of shares of Zions
Common Stock shall be deemed to refer, subject to the prior effectiveness
of the Reverse Stock Split, to the same number of shares of Surviving
Corporation Common Stock, and such benefits shall otherwise be paid on the
same terms, conditions and restrictions, if any, as were applicable under
the relevant Zions Stock Plan or Zions Benefit Plan. At or prior to the
Effective Time, Zions shall adopt appropriate amendments to the Zions Stock
Plans and the Zions Benefit Plans to effectuate the provisions of this
paragraph. Without limiting the applicability of the foregoing, Zions shall
take all necessary action to ensure that the Surviving Corporation will not
be bound at the Effective Time by any options, stock appreciation rights,
warrants or other rights or arrangements under any Zions Benefit Plan that
would entitle any person to own any shares of Zions Common Stock or to
receive any payments in respect thereof, and all Zions Benefit Plans
conferring any rights to Zions Common Stock or other capital stock of Zions
shall be deemed to be amended to be in conformity with this paragraph.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING MERGER
4.01 Forebearances. Each of Zions and First Security agrees that from
the date hereof until the Effective Time, except as expressly contemplated by
this Agreement or as set forth in paragraph 4.01 of First Security's Disclosure
Schedule or paragraph 4.01 of Zions' Disclosure Schedule, as the case may be,
without the prior written consent of the other party hereto (which consent shall
not be unreasonably withheld), it will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct its business and the business of its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to have an adverse effect upon its ability to perform any
of its material obligations under this Agreement or the Option Agreements.
(b) Capital Stock. Other than pursuant to Rights outstanding on the
date hereof, (i) issue, sell or otherwise permit to become outstanding, or
authorize the creation of, any additional shares of its stock or any
Rights, (ii) enter into any agreement with respect to the foregoing or
(iii) permit any additional shares of its stock to become subject to new
grants of employee or director stock options, other Rights or other
stock-based employee rights.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment
any dividend (other than (A) dividends from its wholly owned Subsidiaries
to it or another of its wholly owned Subsidiaries, (B) regular quarterly
dividends on its common stock at a rate equal to the rate paid by it during
the fiscal quarter immediately preceding the date hereof and (C) in the
case of First Security's Series A Preferred Stock, regular quarterly or
semiannual dividends thereon at the rate set forth in the certificate of
designation for such securities) on or in respect of, or declare or make
any distribution on any shares of its stock or (ii) directly or indirectly
adjust, split, combine, redeem, reclassify, purchase or otherwise acquire,
any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any of its directors, officers or employees or those of
its Subsidiaries, or hire any new employees above the rank of vice
president, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for
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normal individual increases in compensation to employees (including,
without limitation, annual salary increases and annual bonus payments) in
the ordinary course of business consistent with past practice, (ii) for
other changes that are required by applicable law and (iii) to satisfy
Previously Disclosed contractual obligations existing as of the date
hereof.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any of
its directors, officers or employees or those of its Subsidiaries, or take
any action to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or
properties except for sales, transfers, mortgages, encumbrances or other
dispositions or discontinuances in the ordinary course of business
consistent with past practice and in a transaction that, together with
other such transactions, is not material to it and its Subsidiaries, taken
as a whole.
(g) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice)
all or any portion of the assets, business, deposits or properties of any
other entity except in the ordinary course of business consistent with past
practice and in a transaction that, together with other such transactions,
is not material to it and its Subsidiaries, taken as a whole.
(h) Constituent Documents. In the case of Zions, amend the Zions
Articles or the Zions By-Laws or the certificate of incorporation or
by-laws (or similar governing documents) of any of its Subsidiaries. In the
case of First Security, amend the First Security Certificate or the First
Security By-Laws or the certificate of incorporation or by-laws (or similar
governing documents) of any of its Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by GAAP or regulatory accounting requirements.
(j) Contracts. Enter into, renew or terminate, or make any payment not
then required under, any contract or agreement that calls for aggregate
annual payments of $1,000,000 or more and which is not terminable at will
on 60 days or less notice without
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payment of a premium penalty, other than loans and other transactions made
in the ordinary course of the banking business.
(k) Claims. Other than in the ordinary course of business, settle any
claim, action or proceeding against it, except for any claim, action or
proceeding in an amount or for such consideration, individually or in the
aggregate for all such settlements, that is not material to it and its
Subsidiaries, taken as a whole, and would not impose any material
restriction on the business of the Surviving Corporation or create
precedent for claims that are reasonably likely to be material to it and
its Subsidiaries, taken as a whole.
(l) Adverse Actions. Notwithstanding anything herein to the contrary,
(i) take any action that would, or is reasonably likely to, prevent or
impede the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code or qualifying for pooling-of-interests
accounting treatment or (ii) take any action that is intended or is
reasonably likely to result in (A) any of the conditions to the Merger set
forth in Article VII not being satisfied or (B) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(m) Capital Expenditures. Other than in the ordinary course of
business, make any capital expenditures in excess of (A) $1,000,000 per
project or related series of projects or (B) $3,000,000 in the aggregate.
(n) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 Coordination of Dividends. Until the Effective Time, Zions and
First Security shall coordinate with the other the declaration of any dividends
or other distributions with respect to the Zions Common Stock and the First
Security Common Stock and the record dates and payment dates relating thereto,
it being the intention of the parties that holders of shares of Zions Common
Stock or First Security Common Stock shall not receive more than one dividend,
or fail to receive one dividend, for any single calendar quarter on their shares
of Zions Common Stock or First Security Common Stock (including any shares of
Surviving Corporation Common Stock received in the Merger), as the case may be.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, Zions has
delivered to First Security a schedule and First Security has delivered to Zions
a schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or to one or more of its covenants contained in Article IV;
provided, that the mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by a
party that such item was required to be disclosed therein.
5.02 Standard. No representation or warranty of First Security or Zions
contained in Section 5.03 (other than the representations and warranties
contained in Section 5.03(b) and 5.03(c)) shall be deemed untrue and no party
hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 has had or is reasonably likely to have a Material
Adverse Effect with respect to First Security or Zions, as the case may be.
5.03 Representations and Warranties. Subject to Section 5.01 and
Section 5.02 and except as Previously Disclosed, First Security hereby
represents and warrants to Zions, and Zions hereby represents and warrants to
First Security, to the extent applicable, in each case with respect to itself
and its Subsidiaries, as follows:
(a) Organization, Standing and Authority. It is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, in the case of First Security, and the State of Utah, in
the case of Zions. It is duly qualified to do business and is in good
standing in the states of the United States and any foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified.
(b) First Security Stock. In the case of First Security only, the
authorized capital stock of First Security consists of 300,000,000 shares
of First Security Common Stock, par value $1.25 per share, and 400,000
shares of preferred stock. At the close of business on June 4, 1999, (i)
194,966,889 shares of First Security Common Stock plus any shares of First
Security Common Stock issued upon exercise or conversion of outstanding
Rights since June 3, 1999 and 9,063 shares of $3.15 Series "A" Cumulative
Convertible Preferred Stock ("Series A Preferred Stock") were issued and
outstanding and (ii) as of April 30, 1999, 1,595,469 shares of First
Security Common Stock were held
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by First Security in its treasury. As of June 4, 1999, 380,000 shares of
Junior Series B Preferred Stock were reserved for issuance in connection
with the rights (the "First Security Rights") to purchase shares of Junior
Series B Preferred Stock, issued pursuant to the Shareholder Rights
Agreement dated as of August 28, 1989 (the "First Security Current Rights
Agreement"), as amended, between First Security and the First Chicago Trust
Company, as rights agent, and to be issued pursuant to the Shareholder
Rights Agreement dated as of October 27, 1998 between First Security and
the First Chicago Trust Company of New York, as rights agent (the "First
Security Replacement Rights Agreement"). As of June 3, 1998, 11,152,250
shares of First Security Common Stock were subject to First Security Common
Stock Options granted under the Comprehensive Management Incentive Plan of
1989 and the Non-Employee Director Stock Option Plan of 1995 (collectively,
the "First Security Stock Plans"). As of June 4, 1999, there were
27,726,563 shares of First Security Common Stock reserved for issuance
under the First Security Stock Plans. The outstanding shares of First
Security Common Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). Except
as set forth above, as of the date hereof, there are no shares of First
Security Stock authorized and reserved for issuance, First Security does
not have any Rights issued or outstanding with respect to First Security
Stock, and First Security does not have any commitment to authorize, issue
or sell any First Security Stock or Rights, except pursuant to this
Agreement, outstanding First Security Common Stock Options, the First
Security Option and the First Security Stock Plans.
(c) Zions Stock. In the case of Zions only, the authorized capital
stock of Zions consists of 200,000,000 shares of Zions Common Stock and
3,000,000 shares of preferred stock. At the close of business on June 4,
1999, (i) 79,017,788 shares of Zions Common Stock and no shares of
preferred stock were issued and outstanding and (ii) no shares of Zions
Common Stock were held by Zions in its treasury. As of June 4, 1999,
160,000 shares of Series A Participating Preferred Stock were reserved for
issuance in connection with the rights (the "Zions Rights") to purchase
shares of Series A Participating Preferred Stock, issued pursuant to the
Shareholder Protection Rights Agreement dated as of September 27, 1996, as
amended (the "Zions Rights Agreement"), between Zions and Zions First
National Bank, as Right Agent. As of June 4, 1999, 3,295,594 shares of
Zions Common Stock were subject to Zions Common Stock Options granted under
the Key Employee Stock Option Plan, the Non-Qualified Stock Option and
Incentive Plan (You're the Owner!) and the Non-Employee Directors Stock
Option Plan (collectively, the "Zions Stock Plans"). As of June 4, 1999,
there were 5,283,710 shares of Zions Common Stock reserved for issuance
under the Zions Stock Plans. As of the date hereof, Zions is obligated to
issue approximately 1,000,000 shares of Zions Common Stock pursuant to an
Agreement and Plan of Merger, dated as of April 27, 1999, by and among
Zions, Regency Bancorp and Regency Bank, and approximately 5,500,000 shares
of Zions Common Stock pursuant to an Agreement and Plan of Merger, dated as
of
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May 7, 1999, by and among Zions, Pioneer Bancorporation and Pioneer
Citizens Bank of Nevada. The outstanding shares of Zions Common Stock have
been duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). Except as set forth above, as of the
date hereof, there are no shares of Zions Common Stock authorized and
reserved for issuance, Zions does not have any Rights issued or outstanding
with respect to Zions Common Stock, and Zions does not have any commitment
to authorize, issue or sell any Zions Common Stock or Rights, except
pursuant to this Agreement, outstanding Zions Common Stock Options, the
Zions Option and the Zions Stock Plans.
(d) Significant Subsidiaries. (i)(A) It owns, directly or indirectly,
all the issued and outstanding equity securities of each of its Significant
Subsidiaries, (B) no equity securities of any of its Significant
Subsidiaries are or may become required to be issued (other than to it or
its wholly owned Subsidiaries) by reason of any Right or otherwise, (C)
there are no contracts, commitments, understandings or arrangements by
which any of such Subsidiaries is or may be bound to sell or otherwise
transfer any equity securities of any such Subsidiaries (other than to it
or its wholly-owned Subsidiaries), (D) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities and (E) all the equity securities of each
Significant Subsidiary held by it or its Subsidiaries have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable (except as provided in 12 U.S.C. ss. 55 or comparable state
laws) and are owned by it or its Subsidiaries free and clear of any Liens.
(ii) Each of its Significant Subsidiaries has been duly organized and
is validly existing in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and in good standing
in the jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified.
(e) Corporate Power. It and each of its Significant Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and it has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Option Agreements, and to
consummate the transactions contemplated hereby and thereby.
(f) Corporate Authority. (i) Subject to receipt of the stockholder
approval described in paragraph (ii) of this Section 5.03(f), in the case
of First Security, and in paragraph (iii) of this Section 5.03(f), in the
case of Zions, this Agreement and the Option Agreements, and the
transactions contemplated hereby and thereby have been authorized by all
necessary corporate action on or prior to the date hereof. This Agreement
is a valid and legally binding obligation of such party, enforceable in
accordance with its terms
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(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles). In the case of First Security, the First
Security Board has received the written opinion of J.P. Morgan Securities
Inc. to the effect that as of the date hereof the Ratio is fair to the
holders of First Security Common Stock from a financial point of view. In
the case of Zions, the Zions Board has received the written opinion of
Goldman, Sachs & Co. to the effect that as of the date hereof the
Conversion Ratio is fair to the holders of Zions Common Stock from a
financial point of view.
(ii) In the case of First Security, the affirmative vote of (A) the
holders of a majority of the voting power of all outstanding shares of
First Security Stock to (I) adopt this Agreement is the only vote of the
holders of any class or series of First Security's capital stock necessary
to approve and adopt this Agreement, the Option Agreements and, other than
the Reverse Stock Split and the transaction contemplated by clause (B)
below, the transactions contemplated hereby and thereby and (II) adopt an
amendment to and a restatement of the First Security Certificate to, among
other things, effect the Reverse Stock Split and (B) the holders of a
majority of all shares of First Security Stock casting votes (provided that
the total vote cast represents more than fifty percent in interest of all
capital stock of First Security entitled to vote) is the only vote of the
holders of any class or series of First Security's capital stock necessary
to approve, in accordance with the rules of any applicable securities
exchange, the issuance of Surviving Corporation Common Stock in the Merger.
(iii) In the case of Zions, the affirmative vote of the holders of a
majority of the voting power of all outstanding shares of Zions Common
Stock to adopt this Agreement is the only vote of the holders of any class
or series of Zions' capital stock necessary to approve and adopt this
Agreement, the Option Agreements and the transactions contemplated hereby
and thereby.
(g) Regulatory Approvals; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with
any third party are required to be made or obtained by it or any of its
Subsidiaries in connection with the execution, delivery or performance by
it of this Agreement and the Option Agreements or to consummate the Merger
except for (A) filings and approvals of applications with and by federal
and state banking authorities, (B) filings with the SEC and state
securities authorities, (C) the stockholder approval described in paragraph
(ii) of Section 5.03(f) or the shareholder approval described in paragraph
(iii) of Section 5.03(f), as applicable, (D) the filing of the Articles of
Merger with the Corporation Division pursuant to the UBCA and the
Certificate of Merger with the Delaware Secretary pursuant to the DGCL, (E)
the filing of the amended and restated First Security Certificate as
contemplated by Section
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2.05 hereof and (F) such filings with applicable securities exchanges to
obtain the authorizations for listing contemplated by this Agreement.
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Option Agreements and
the consummation of the transactions contemplated hereby and thereby do not
and will not (A) constitute a breach or violation of, or a default under,
or give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of it or of any of its Subsidiaries or to which it or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the First Security Certificate or the
Zions Articles, as the case may be, or the First Security By-laws or the
Zions By-laws, as the case may be, or (C) require any consent or approval
under any such law, rule, regulation, judgment, decree, order, governmental
permit or license, agreement, indenture or instrument.
(h) Financial Reports and Regulatory Documents; Material Adverse
Effect. (i) Its Annual Reports on Form 10-K for the fiscal years ended
December 31, 1998, 1997 and 1996, and all other reports, registration
statements, definitive proxy statements or information statements filed by
it or any of its Subsidiaries subsequent to December 31, 1996 under the
Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act or under the securities regulations of the SEC, in the form filed
(collectively, its "Regulatory Filings") with the SEC as of the date filed,
(A) complied in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may
be, and (B) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such Regulatory Filing (including the
related notes and schedules thereto) fairly presented in all material
respects, its financial position and that of its Subsidiaries as of its
date, and each of the statements of income and changes in shareholders'
equity and cash flows or equivalent statements in such Regulatory Filings
(including any related notes and schedules thereto) fairly presented in all
material respects, the results of operations, changes in shareholders'
equity and changes in cash flows, as the case may be, of it and its
Subsidiaries for the periods to which they relate, in each case in
accordance with GAAP consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
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(ii) Since December 31, 1998, it and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(iii) Since December 31, 1998, (A) it and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to it.
(i) Litigation. Except as Previously Disclosed or set forth in its
Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
there is no suit, action or proceeding pending or, to the knowledge of it,
threatened against or affecting it or any of its Subsidiaries (and it is
not aware of any basis for any such suit, action or proceeding) that,
individually or in the aggregate, is (i) material to it and its
Subsidiaries, taken as a whole, or (ii) that is reasonably likely to
prevent or delay it in any material respect from performing its obligations
under, or consummating the transactions contemplated by, this Agreement or
the Option Agreements.
(j) Regulatory Matters. (i) Neither it nor any of its Subsidiaries is
a party to or is subject to any written order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment
letter or similar submission to, or extraordinary supervisory letter from,
any federal or state Governmental Authority charged with the supervision or
regulation of financial institutions or issuers of securities or engaged in
the insurance of deposits or the supervision or regulation of it or any of
its Subsidiaries (collectively, the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such written order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(k) Compliance with Laws. It and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
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(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to its knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1998, no written notification
from any Governmental Authority (A) asserting that it or any of its
Subsidiaries is not in compliance with any of the statutes, regulations or
ordinances which such Governmental Authority enforces or (B) threatening to
revoke any license, franchise, permit or governmental authorization.
(l) Material Contracts; Defaults. Except for those agreements and
other documents filed as exhibits to its Regulatory Filings, neither it nor
any of its Subsidiaries is a party to, bound by or subject to any
agreement, contract, arrangement, commitment or understanding (whether
written or oral) (i) that is a "material contract" within the meaning of
Item 601(b)(10) of the SEC's Regulation S-K or (ii) that materially
restricts the conduct of business by it or any of its Subsidiaries. Neither
it nor any of its Subsidiaries is in default under any material contract,
agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
(m) No Brokers. No action has been taken by it that would give rise to
any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee to be
paid to J.P. Morgan Securities Inc. in the case of First Security and a
Previously Disclosed fee to be paid to Goldman, Sachs & Co. in the case of
Zions.
(n) Employee Benefit Plans.
(i) All material benefit and compensation plans, contracts, policies
or arrangements covering its current employees or former employees and
those of its Subsidiaries (its "Employees") and its current or former
directors, including, but not limited to, "employee benefit plans" within
the meaning of Section 3(3) of ERISA, and deferred compensation, stock
option, stock purchase, stock appreciation rights, stock based, incentive
and bonus plans (its "Benefit Plans"), are Previously Disclosed. True and
complete copies of all Benefit Plans, including, but not limited to, any
trust instruments and insurance contracts forming a part of any Benefit
Plans, and all amendments thereto, have been made available to the other
party hereto.
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(ii) All employee benefit plans, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering its Employees (its
"Plans"), to the extent subject to ERISA, are in substantial compliance
with ERISA. Each of its Plans which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan"), and which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service with
respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and it is
not aware of any circumstances reasonably likely to result in revocation of
any such favorable determination letter. There is no material pending or,
to its knowledge, threatened litigation relating to its Plans. Neither it
nor any of its Subsidiaries has engaged in a transaction with respect to
any of its Plans that, assuming the taxable period of such transaction
expired as of the date hereof, could be reasonably likely to subject it or
any of its Subsidiaries to a tax or penalty imposed by either Section 4975
of the Code or Section 502(i) of ERISA in an amount which would be
material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is reasonably expected to be incurred by it or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which
is considered one employer with it under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"). None of it, any of its Subsidiaries
or any of its ERISA Affiliates has contributed to a "multiemployer plan",
within the meaning of Section 3(37) of ERISA, at any time on or after
September 26, 1980. No notice of a "reportable event", within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived, has been required to be filed for any of its Pension Plans or
by any of its ERISA Affiliates within the 12-month period ending on the
date hereof or will be required to be filed solely as a result of the
transactions contemplated by this Agreement.
(iv) All contributions required to be made under the terms of any of
its Plans have been timely made or have been reflected on its consolidated
financial statements included in its Regulatory Filings. None of its
Pension Plans or any single-employer plan of any of its ERISA Affiliates
has an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and none of its
ERISA Affiliates has an outstanding funding waiver. Neither it nor any of
its Subsidiaries has provided, or is required to provide, security to any
of its Pension Plans or to any single-employer plan of any of its ERISA
Affiliates pursuant to Section 401(a)(29) of the Code.
(v) Under each of its Pension Plans which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in its
Plan's most recent actuarial valuation), did not exceed the then current
value of the assets of such Plan, and there
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has been no material change in the financial condition of such Plan since
the last day of the most recent plan year.
(vi) Neither it nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any of its Benefit Plans. It or its
Subsidiaries may amend or terminate any of its Benefit Plans at any time
without incurring any liability thereunder.
(vii) Neither its execution of this Agreement, the performance of its
obligations hereunder, the consummation of the transactions contemplated by
this Agreement, the termination of the employment of any of its employees
within a specified time of the Effective Date, nor any other action taken
or failed to be taken by it prior to the execution of this Agreement will
(w) limit its right, in its sole discretion, to administer or amend in any
respect or terminate any of its Benefit Plans or any related trust, (x)
entitle any of its employees or any employees of its Subsidiaries to
severance pay, (y) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of its Benefit Plans
or (z) result in any breach or violation of, or a default under, any of its
Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement (including,
without limitation, as a result of the termination of the employment of any
of its employees within a specified time of the Effective Date) neither it
nor any of its Subsidiaries will be obligated to make a payment to an
individual that would be a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal
services performed or to be performed in the future.
(o) Labor Matters. Neither it nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
it or any of its Subsidiaries the subject of a proceeding asserting that it
or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel it or any
of its Subsidiaries to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other material labor
dispute involving it or any of its Subsidiaries pending or, to its
knowledge, threatened, nor to its knowledge is there any activity involving
its or any of its Subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in other organizational activity.
(p) Environmental Matters. To its knowledge, neither its conduct nor
its operation or the conduct or operation of its Subsidiaries nor any
condition of any property presently or previously owned, leased or operated
by any of them (including, without limitation, in a fiduciary or agency
capacity), violates or violated Environmental Laws and no condition has
existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is reasonably
likely to result in liability under
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Environmental Laws. To its knowledge, no property on which it or any of its
Subsidiaries holds a Lien, violates or violated Environmental Laws and no
condition has existed or event has occurred with respect to any such
property that, with notice or the passage of time, or both, is reasonably
likely to result in liability under Environmental Laws. Neither it nor any
of its Subsidiaries has received any written notice from any person or
entity that it or its Subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a
fiduciary capacity by any of them are or were in violation of or otherwise
are alleged to have liability under any Environmental Law, including, but
not limited to, responsibility (or potential responsibility) for the
cleanup or other remediation of any pollutants, contaminants, or hazardous
or toxic wastes, substances or materials at, on, beneath, or originating
from, any such property.
(q) Tax Matters. (i) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or
with respect to it and its Subsidiaries have been duly and timely filed,
and all such Tax Returns are complete and accurate in all material
respects, (B) all Taxes shown to be due on the Tax Returns referred to in
clause (A) have been paid in full, (C) all Taxes that it or any of its
Subsidiaries is obligated to withhold from amounts owing to any employee,
creditor or third party have been paid over to the proper Governmental
Authority in a timely manner, to the extent due and payable, (D) the Tax
Returns referred to in clause (A) have been examined by the Internal
Revenue Service or the appropriate Tax authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required
to be filed has expired, (E) all deficiencies asserted or assessments made
as a result of such examinations have been paid in full, (F) no issues that
have been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (A) are
currently pending, and (G) no extensions or waivers of statutes of
limitation have been given by or requested with respect to any of its Taxes
or those of its Subsidiaries. It has made available to the other party
hereto true and correct copies of the U.S. federal income Tax Returns filed
by it and its Subsidiaries for each of the three most recent fiscal years
ended on or before December 31, 1997. It has made provision in accordance
with GAAP, in the financial statements included in the Regulatory Filings
filed prior to the date hereof, for all Taxes that accrued on or before the
end of the most recent period covered by its Regulatory Filings filed prior
to the date hereof. Neither it nor any of its Subsidiaries is a party to
any Tax allocation or sharing agreement, is or has been a member of an
affiliated group filing consolidated or combined Tax returns (other than a
group over which it is or was the common parent) or otherwise has any
liability for the Taxes of any person (other than its own Taxes and those
of its Subsidiaries). As of the date hereof, neither it nor any of its
Subsidiaries has any reason to believe that any conditions exist that could
reasonably be expected to prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code. No Liens
for Taxes exist with respect to any of its assets or properties or those of
its Subsidiaries, except for statutory Liens for Taxes not yet due and
payable or that are being contested in good faith and reserved for in
accordance with GAAP. Neither it nor any of its Subsidiaries has been a
party to any
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distribution occurring during the last three years in which the parties to
such distribution treated the distribution as one to which Section 355 of
the Code applied.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(r) Derivative Instruments. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for its own account, or for
the account of one or more of its Subsidiaries or their customers, if any,
were entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each
of them constitutes the valid and legally binding obligation of such party
or one of its Subsidiaries, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles), and are in full force and effect. Neither it
nor its Subsidiaries, nor to its knowledge, any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement.
(s) Books and Records. Its books and records and those of its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein.
(t) Insurance. It has made available to the other party hereto all of
the insurance policies, binders, or bonds maintained by it or its
Subsidiaries (its "Insurance Policies"). It and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts as
its management reasonably has determined to be prudent in accordance with
industry practices. All of its Insurance Policies are in full force and
effect; it and its Subsidiaries are not in material default thereunder; and
all claims thereunder for which a basis is known, or reasonably should be
known, by it have been filed in due and timely fashion.
(u) Accounting Treatment. As of the date hereof, to its knowledge,
there is no reason why the Merger will fail to qualify for
"pooling-of-interests" accounting treatment.
(v) Takeover Laws. It has taken all action required to be taken by it
in order to exempt this Agreement and the Zions Option or the First
Security Option, as applicable, and the transactions contemplated hereby
and thereby from, and this Agreement, the Zions Option or the First
Security Option, as applicable, and the transactions contemplated hereby
and thereby are exempt from, the requirements of any "moratorium", "control
share", "fair price", "affiliate transaction", "business combination" or
other antitakeover laws and
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regulations of any state (collectively, "Takeover Laws"), including,
without limitation, the State of Delaware in the case of First Security and
the State of Utah in the case of Zions.
(w) Rights Agreement. It has taken all action necessary such that the
Zions Rights or the First Security Rights, as the case may be, will not
become separable, distributable, unredeemable or exercisable as a result of
the approval, execution or delivery of this Agreement or the Option
Agreements or the consummation of the transactions contemplated hereby or
thereby.
(x) Year 2000. To its knowledge, the mission critical computer
software operated by it and/or any of its Subsidiaries is currently capable
of providing, or is being adapted to provide, uninterrupted millennium
functionality to record, store, process and present calendar dates falling
on or after January 1, 2000 in substantially the same manner and with
substantially the same functionality as such mission critical software
records, stores, processes and presents such calendar dates falling on or
before December 31, 1999. To its knowledge, the costs of adaptations
referred to in this clause will not have a Material Adverse Effect with
respect to it. Neither it nor any of its Subsidiaries has received, nor to
its knowledge are there facts that would reasonably be expected to form the
basis for the issuance of, a "Year 2000 Deficiency Notification Letter" (as
such term is employed in the Federal Reserve's Supervision and Regulatory
Letter No. SR 98-3 (SUP), dated March 4, 1998) or similar notice from any
state banking authority. It has made available to the other party hereto a
complete and accurate copy of its and its Subsidiaries' plan, including an
estimate of anticipated associated costs, for addressing the issues set
forth in the Year 2000 guidance papers issued by the Federal Financial
Institutions Examination Council, including the statements dated May 5,
1997, entitled "Year 2000 Project Management Awareness," December 17, 1997,
entitled "Safety and Soundness Guidelines Concerning the Year 2000 Business
Risk," and October 14, 1998, entitled "Interagency Guidelines Establishing
Year 2000 Standards for Safety and Soundness," as such issues affect any of
it or its Subsidiaries. Between the date of this Agreement and the
Effective Time, it shall use commercially reasonable and practicable
efforts to implement such plan.
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Zions and First Security agrees to use its respective
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
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6.02 Stockholder Approvals. (a) Each of Zions and First Security agrees
to take in accordance with applicable law and its respective Constituent
Documents all action necessary to convene a meeting of its respective
stockholders (including any adjournment or postponement, the "Zions Meeting" and
the "First Security Meeting", respectively), as promptly as practicable, to
consider and vote upon (i) the approval of the issuance of Surviving Corporation
Common Stock as contemplated by this Agreement, the Reverse Stock Split and the
amendment and restatement of the First Security Certificate contemplated by
Section 2.05, in the case of the First Security Meeting, and (ii) the approval
and adoption of this Agreement, as well as any other matters required to be
approved by such entity's stockholders for consummation of the Merger, in the
case of both the Zions Meeting and the First Security Meeting.
(b) The boards of directors of Zions and First Security have adopted
resolutions recommending to the shareholders of Zions and the stockholders of
First Security, respectively, adoption of this Agreement and the other matters
required to be approved or adopted in order to carry out the intentions of this
Agreement. Such boards of directors shall at all times continue such
recommendations in effect without qualification and shall use, and cause Zions
and First Security, respectively, to use reasonable best efforts to obtain such
adoption (it being understood and agreed that the obligations under this
sentence shall not be altered by the commencement, proposal, disclosure or
communication of any Acquisition Proposal).
6.03 Registration Statement and Joint Proxy Statement. (a) The parties
agree jointly to prepare a registration statement on Form S-4 or other
applicable form (the "Registration Statement") to be filed by First Security
with the SEC in connection with the issuance of Surviving Corporation Common
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of Zions and First Security constituting a part
thereof (the "Joint Proxy Statement") and all related documents). The parties
agree to cooperate, and to cause their Subsidiaries to cooperate, with the other
party, its counsel and its accountants, in the preparation of the Registration
Statement and the Joint Proxy Statement; and provided that both parties and
their respective Subsidiaries have cooperated as required above, First Security
and Zions agree to file the Joint Proxy Statement in preliminary form with the
SEC as promptly as reasonably practicable, and First Security agrees to file the
Registration Statement with the SEC as soon as reasonably practicable after any
SEC comments with respect to the preliminary Joint Proxy Statement are resolved.
Each of Zions and First Security agrees to use all reasonable efforts to cause
the Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. Zions also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Zions agrees to furnish to First Security all information
concerning Zions, its Subsidiaries, officers, directors and stockholders as may
be reasonably requested in connection with the foregoing.
(b) Each of Zions and First Security agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in
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(i) the Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Joint Proxy Statement and any
amendment or supplement thereto will, at the date of mailing to stockholders and
at the time of the Zions Meeting or the First Security Meeting, as the case may
be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which such statement was made,
not misleading. Each of Zions and First Security further agrees that if it shall
become aware prior to the Effective Date of any information furnished by it that
would cause any of the statements in the Joint Proxy Statement or the
Registration Statement to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the statements
therein not false or misleading, to promptly inform the other party thereof and
to take the necessary steps to correct the Joint Proxy Statement or the
Registration Statement.
(c) First Security agrees to advise Zions, promptly after First
Security receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of First
Security Common Stock for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose, or of any request
by the SEC for the amendment or supplement of the Registration Statement or for
additional information.
6.04 Press Releases. Zions and First Security shall consult with each
other before issuing any press release with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party (but after prior consultation, to the extent
practicable in the circumstances) issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of NASDAQ. Zions and First Security shall cooperate to
develop all public announcement materials and make appropriate management
available at presentations related to the transactions contemplated by this
Agreement as reasonably requested by the other party.
6.05 Access; Information. (a) Each of Zions and First Security agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, it shall afford the other party, and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as any party may reasonably request and, during such period,
it shall furnish promptly to such other party (i) a copy of each material
report, schedule and other document filed by it pursuant to the
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requirements of federal or state securities or banking laws, and (ii) all other
information concerning the business, properties and personnel of it as the other
may reasonably request.
(b) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.05 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Agreement)
unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the providing party or (iv) is or becomes readily ascertainable from
publicly available sources. In the event that this Agreement is terminated or
the transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or extracts
thereof containing information and data as to the other party to be returned to
the other party.
(c) No investigation by either party of the business and affairs of the
other party, pursuant to this Section 6.05 or otherwise, shall affect or be
deemed to modify or waive any representation, warranty, covenant or agreement in
this Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.06 Acquisition Proposals. Each of Zions and First Security agrees
that it shall not, and shall cause its Subsidiaries and its and its
Subsidiaries' officers, directors, agents, advisors and affiliates not to,
solicit or encourage inquiries or proposals with respect to, or engage in any
negotiations concerning, or provide any confidential information to, or have any
discussions with, any Person relating to, any Acquisition Proposal or waive any
provision of or amend the terms of the Zions Rights Agreement or the First
Security Current Rights Agreement or the First Security Replacement Rights
Agreement, respectively, in respect of an Acquisition Proposal. Each of Zions
and First Security shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any Persons other than First Security or Zions, as the case may
be, with respect to any of the foregoing and shall use its reasonable best
efforts to enforce any confidentiality or similar agreement relating to an
Acquisition Proposal. Each of Zions and First Security shall promptly (within 24
hours) advise the other party following the receipt by Zions or First Security,
as the case may be, of any Acquisition Proposal and the substance thereof
(including the identity of the person making such Acquisition Proposal), and
shall keep such other party apprized of any developments in respect thereof on a
constant basis.
6.07 Affiliate Agreements. (a) Not later than the 15th day prior to the
mailing of the Joint Proxy Statement, (i) Zions shall deliver to First Security
a schedule of each Person that, to
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the best of its knowledge, is or is reasonably likely to be, as of the date of
the Zions Meeting, deemed to be an "affiliate" of Zions (each, a "Zions
Affiliate"), as that term is used in SEC Accounting Series Releases 130 and 135;
and (ii) First Security shall deliver to Zions a schedule of each Person that,
to the best of its knowledge, is or is reasonably likely to be, as of the date
of the First Security Meeting, deemed to be an "affiliate" of First Security
(each, an "First Security Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Each of Zions and First Security shall use its respective
reasonable best efforts to cause each Person who may be deemed to be a Zions
Affiliate or a First Security Affiliate to execute and deliver to Zions and
First Security on or before the date of mailing of the Joint Proxy Statement an
agreement in substantially the form attached hereto as Exhibit C or Exhibit D,
respectively.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Option Agreements
to be subject to requirements imposed by any Takeover Law, and each of them
shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 NASDAQ. First Security shall use commercially reasonable efforts
to cause the Surviving Corporation Common Stock to be issued in the Merger to be
approved for quotation on the NASDAQ, subject to official notice of issuance, as
promptly as practicable after the date hereof, and in any event prior to the
Effective Date.
6.10 Regulatory Applications. (a) Zions and First Security and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare as promptly as possible all documentation, to effect all
filings and to obtain all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement and First Security shall make all
necessary regulatory filings as soon as practicable. Each of Zions and First
Security shall have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to applicable
laws relating to the exchange of information, with respect to all material
written information submitted to any third party or any Governmental Authority
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that it will
consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
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(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries with or to any third party or
Governmental Authority.
6.11 Indemnification. (a) Following the Effective Date, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
directors and officers of Zions, First Security and their respective
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") as incurred, in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that Zions,
First Security and their respective Subsidiaries are permitted to indemnify (and
advance expenses to) their respective directors and officers under the laws of
their respective jurisdictions of incorporation, their respective charters and
their respective by-laws.
(b) For a period of six years from the Effective Time, the Surviving
Corporation shall use its reasonable best efforts to provide director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of Zions, First Security or any of their respective
Subsidiaries (determined as of the Effective Time) with respect to claims
against such directors and officers arising from facts or events occurring at or
prior to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) which insurance shall contain at least the same
coverage and amounts, and contain terms and conditions no less advantageous, as
that coverage currently provided by Zions or First Security, as the case may be.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.11(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify the Surviving Corporation
thereof; provided that the failure so to notify shall not affect the obligations
of the Surviving Corporation under Section 6.11(a) unless and to the extent that
the Surviving Corporation is actually and materially prejudiced as a result of
such failure.
(d) If the Surviving Corporation or any of its successors or assigns
shall consolidate with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or shall transfer
all or substantially all of its assets to any other entity, then and in each
case, the Surviving Corporation shall cause proper provision to be made so that
the successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 6.11.
(e) The provisions of this Section 6.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
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6.12 Benefit Plans. (a) The Surviving Company shall, from and after the
Effective Time, (i) comply with the Benefit Plans of Zions (the "Zions Benefit
Plans") in accordance with their terms, (ii) provide former employees of Zions
who remain as employees of the Surviving Corporation with employee benefit plans
no less favorable in the aggregate than those provided to similarly situated
employees of First Security, (iii) provide employees of Zions who remain as
employees of the Surviving Corporation credit for years of service with Zions or
any of its Subsidiaries prior to the Effective Time for the purpose of
eligibility and vesting (iv) cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under comparable Zions Benefit Plans) and eligibility waiting periods
under group health plans of First Security to be waived with respect to former
employees of Zions who remain as employees of the Surviving Corporation (and
their eligible dependents) and who become participants in such group health
plans and (v) cause to be credited to any deductible or out-of-pocket expense of
First Security Benefit Plans any deductibles or out-of-pocket expenses incurred
by employees of Zions and their beneficiaries and dependents during the portion
of the calendar year prior to their participation in First Security Benefit
Plans.
(b) Zions and First Security shall, and shall cause the Surviving
Corporation to, honor in accordance with their terms, all vested or accrued
benefit obligations to, and contractual rights of, current and former employees
of Zions and First Security and their respective Subsidiaries, including,
without limitation, any benefits or rights under the agreements listed on
Section 6.12 of the Zions Disclosure Schedule or the First Security Disclosure
Schedule, as the case may be, or that arise as a result of the transactions
contemplated by this Agreement (either alone or in combination with any other
event). The First Security Board or the appropriate committee for First Security
responsible for the interpretation of the Benefit Plans of First Security (the
"First Security Benefit Plans") and agreements of First Security has determined
that the transactions contemplated by this Agreement constitute a "change of
control" for purposes of all First Security Benefit Plans and agreements of
First Security. Zions and First Security shall, and shall cause the Surviving
Corporation to, take the actions necessary to effectuate the agreements and
understandings set forth on Section 6.12 of the First Security Disclosure
Schedule.
(c) Notwithstanding anything contained herein to the contrary, prior to
the Effective Time, Zions and First Security shall take all actions necessary
with respect to the Zions Stock Plans and Zions Benefit Plans or the First
Security Stock Plans and First Security Benefit Plans, as the case may be, and
the rights thereunder to the extent required in order for the Merger to qualify
for pooling-of-interests accounting treatment.
6.13 Accountants' Letters. Each of Zions and First Security shall use
its respective reasonable best efforts to cause to be delivered to the other
party a letter of KPMG LLP and Deloitte & Touche LLP, respectively, independent
auditors, dated (i) the date on which the Registration Statement shall become
effective and (ii) a date shortly prior to the Effective Date, and addressed to
such other party, in form and substance customary for "comfort" letters
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delivered by independent accountants in accordance with Statement of Accounting
Standards No. 72.
6.14 Notification of Certain Matters. Each of Zions and First Security
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 Financial Statements. The Surviving Corporation shall file as
promptly as practicable, and in any event within 30 days after the end of the
first full calendar month following the Effective Date, financial statements
containing at least 30 days of combined operations in form and substance
sufficient to enable Zions Affiliates to sell Surviving Corporation Common Stock
within the requirements of Accounting Series Releases 130 and 135 and Staff
Accounting Bulletin 65.
6.16 Rights Agreements. Each of Zions and First Security agrees that it
shall maintain (i) the Zions Rights Agreement and (ii) the First Security
Current Rights Agreement and the First Security Replacement Rights Agreement,
respectively, and shall not redeem the rights issued pursuant to such agreement
or agreements, as the case may be, or modify such agreement or agreements, as
the case may be, except as required to consummate the Merger and fulfill its
obligations pursuant to this Agreement, the Option Agreements and the
transactions contemplated hereby and thereby.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Zions and First Security to consummate the
Merger is subject to the fulfillment or written waiver by Zions and First
Security prior to the Effective Time of each of the following conditions:
(a) Stockholder Approvals. (i) This Agreement and the Merger shall have
been duly adopted by the requisite vote of the stockholders of Zions and First
Security.
(ii) The issuance of Surviving Corporation Common Stock as contemplated
by this Agreement, the Reverse Stock Split and the amendment and restatement of
the First Security Certificate contemplated by Section 2.05 hereof shall have
been duly adopted by the requisite vote of the stockholders of First Security.
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(b) Regulatory Approvals. Any consents, waivers, clearances, approvals
and authorizations of Governmental Authorities that are necessary to permit
consummation of the Merger shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
Merger. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Authority
which prohibits or makes illegal the consummation of the Merger.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and be in
effect and no proceedings for that purpose shall have been initiated by the SEC
and not withdrawn.
(e) Listing. The Surviving Corporation Common Stock to be issued in the
Merger shall have been approved for quotation on NASDAQ.
(f) Pooling-of-Interests. Each of Zions and First Security shall have
received a letter from its respective independent public accountants, dated the
Closing Date, in form and substance reasonably satisfactory to Zions and First
Security, respectively, to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
(g) Reverse Stock Split. The Reverse Stock Split shall have become
effective.
7.02 Conditions to Obligation of First Security. The obligation of
First Security to consummate the Merger is also subject to the fulfillment or
written waiver by First Security prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Zions set forth in this Agreement shall be true and correct in all respects
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; provided, however, that for purposes of
determining the satisfaction of this condition, no effect shall be given to any
exception in such representations and warranties relating to materiality or a
Material Adverse Effect, and provided, further, however, that, for purposes of
this condition, such representations and warranties (other than the
representations and warranties contained in Section 5.03(c), which shall be true
and correct in all material respects) shall be deemed to be true and correct in
all respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate, results
or would reasonably be expected to result in a
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Material Adverse Effect on Zions and its Subsidiaries taken as a whole. First
Security shall have received a certificate signed on behalf of Zions by the
Chief Executive Officer and Chief Financial Officer of Zions to the foregoing
effect.
(b) Performance of Obligations of Zions. Zions shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and First Security shall have
received a certificate, dated the Effective Date, signed on behalf of Zions by
the Chief Executive Officer and the Chief Financial Officer of Zions to such
effect.
(c) Opinion of First Security's Counsel. First Security shall have
received an opinion of Wachtell, Lipton, Rosen & Katz, special counsel to First
Security, dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger will
be treated as a reorganization within the meaning of Section 368(a) of the Code,
(ii) Zions and First Security will each be a party to that reorganization within
the meaning of Section 368(b) of the Code and (iii) no gain or loss will be
recognized by holders of First Security Common Stock who receive shares of
Surviving Corporation Common Stock in the Reverse Stock Split, except with
respect to cash received in lieu of a fractional share interest in Surviving
Corporation Common Stock. In rendering its opinion, such counsel may require and
rely upon representations contained in letters from First Security, Zions and
shareholders of Zions.
7.03 Conditions to Obligation of Zions. The obligation of Zions to
consummate the Merger is also subject to the fulfillment, or written waiver by
Zions, prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of First Security set forth in this Agreement shall be true and correct in all
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date; provided, however, that for
purposes of determining the satisfaction of this condition, no effect shall be
given to any exception in such representations and warranties relating to
materiality or a Material Adverse Effect, and provided, further, however, that,
for purposes of this condition, such representations and warranties (other than
the representations and warranties contained in Section 5.03(b), which shall be
true and correct in all material respects) shall be deemed to be true and
correct in all respects unless the failure or failures of such representations
and warranties to be so true and correct, individually or in the aggregate,
results or would reasonably be expected to result in a Material Adverse Effect
on First Security and its Subsidiaries taken as a whole. Zions shall have
received a certificate signed on behalf of First Security by the Chief Executive
Officer and Chief Financial Officer of First Security to the foregoing effect.
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(b) Performance of Obligations of First Security. First Security shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Zions shall
have received a certificate, dated the Effective Date, signed on behalf of First
Security by the Chief Executive Officer and the Chief Financial Officer of First
Security to such effect.
(c) Opinion of Zions' Counsel. Zions shall have received an opinion of
Sullivan & Cromwell, counsel to Zions, dated the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion, (i) the Merger will be treated as a reorganization within the meaning
of Section 368(a) of the Code, (ii) Zions and First Security will each be a
party to that reorganization within the meaning of Section 368(b) of the Code
and (iii) no gain or loss will be recognized by shareholders of Zions who
receive shares of Surviving Corporation Common Stock in exchange for Zions
Common Stock. In rendering its opinion, Sullivan & Cromwell may require and rely
upon written representations from First Security, Zions and shareholders of
Zions.
(d) First Security Certificate and First Security By-laws. The First
Security Certificate and the First Security By-laws shall have been amended and
restated substantially as contemplated by Section 2.05 hereof.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Merger may
be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Zions and First Security, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Zions or First
Security, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the other
party of any representation or warranty contained herein, which breach cannot be
or has not been cured within 30 calendar days after the giving of written notice
to the breaching party of such breach; or (ii) a breach by the other party of
any of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 calendar days after the giving of written notice to
the breaching party of such breach, provided that any such breach under clause
(i) or (ii) would entitle the non-breaching party not to consummate the Merger
under Article VII hereof.
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(c) Delay. At any time prior to the Effective Time, by Zions or First
Security, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated by
March 31, 2000, except to the extent that the failure of the Merger then to be
consummated arises out of or results from the knowing action or inaction of the
party seeking to terminate pursuant to this Section 8.01(c), which action or
inaction is in violation of its obligations under this Agreement.
(d) No Approval. By First Security or Zions, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board, in the
event the approval of any Governmental Authority required for consummation of
the Merger and the other transactions contemplated by this Agreement shall have
been denied by final nonappealable action of such Governmental Authority.
(e) Zions Stock Option Agreement and First Security Stock Option
Agreement. By Zions or First Security if the other party shall not have executed
and delivered to Zions or First Security, as the case may be, in exchange for
the Zions Stock Option Agreement or the First Security Stock Option Agreement,
as the case may be, a stock option agreement in the form of Exhibit E hereto,
with respect to the stock option agreement to be delivered by Zions, and in the
form of Exhibit F hereto, with respect to the stock option agreement to be
delivered by First Security, by the close of business on the second business day
following the date of this agreement.
8.02 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to the other party hereto except as set forth below and except that termination
will not relieve a breaching party from liability for any breach of this
Agreement giving rise to such termination and except that Sections 6.05, 8.02
and Section 9.05 shall survive any termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.11 and 6.12 and this Article IX which shall survive the Effective
Time).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (a) waived by the party benefitted by the provision, or
(b) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that (i)
after the Zions Meeting, this Agreement may not be
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amended if it would violate Utah law or reduce the consideration to be received
by Zions shareholders in the Merger and (ii) after the First Security Meeting,
this Agreement may not be amended if it would violate Delaware law.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Utah applicable to
contracts made and to be performed entirely within such State (except to the
extent that mandatory provisions of federal law or of the DGCL are applicable).
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing expenses and SEC fees shall be shared equally between First
Security and Zions.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Zions Bancorporation, to:
Zions Bancorporation
One South Main, Suite 1830
Salt Lake City, Utah 84111
Attention: Harris H. Simmons
Facsimile: (801) 524-2129
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067
Attention: Stanley F. Farrar
Facsimile: (310) 712-8800
If to First Security Corporation, to:
First Security Corporation
79 South Main Street, Second Floor
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<PAGE>
Salt Lake City, Utah 84111
Attention: Spencer F. Eccles
Facsimile: (801) 359-6928
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Craig M. Wasserman
Facsimile: (212) 403-2000
9.07 Entire Understanding; No Third Party Beneficiaries. This
Agreement, including the Exhibits and Schedules to this Agreement, represents
the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements heretofore made. No representation,
warranty, inducement, promise, understanding or condition not set forth in this
Agreement has been made or relied on by any party in entering into this
Agreement. Except for Section 6.11, nothing in this Agreement expressed or
implied is intended to confer upon any Person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08 Effect. No provision of this Agreement shall be construed to
require Zions, First Security or any of their respective Subsidiaries,
affiliates or directors to take any action or omit to take any action which
action or omission would violate applicable law (whether statutory or common
law), rule or regulation.
9.09 Severability. Except to the extent that application of this
Section 9.09 would have a Material Adverse Effect on either party or the
Surviving Corporation, any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.10 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, the parties may
mutually agree to revise the structure of the Merger and related transactions
provided that each of the transactions comprising such revised structure shall
(i) not change the amount or form of consideration to be received by the
shareholders of Zions and the holders of Zions Common Stock Options, (ii) be
capable of consummation in as timely a manner as the structure contemplated
herein and (iii) not otherwise
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be prejudicial to the interests of the stockholders of either party. This
Agreement and any related documents shall be appropriately amended in order to
reflect any such revised structure.
9.11 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
ZIONS BANCORPORATION
By: /s/ Harris H. Simmons
--------------------------------
Name: Harris H. Simmons
Title: President and Chief
Executive Officer
FIRST SECURITY CORPORATION
By: /s/ Spencer F. Eccles
--------------------------------
Name: Spencer F. Eccles
Title: Chairman of the Board
and Chief Executive
Officer
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 8, 1999, between Zions
Bancorporation, a Utah corporation ("Grantee"), and First Security Corporation,
a Delaware 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"), which
agreement has been executed by the parties hereto immediately prior to this
Stock Option 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
38,798,410 fully paid and nonassessable shares of the common stock, par value
$1.25 per share, of Issuer ("Common Stock") at a price per share equal to the
average of the last reported sale prices per share of Common Stock as reported
on the NASDAQ National Market (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source) on June 4, 1999 and June 7,
1999; 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.
<PAGE>
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). 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 stockholders 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
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<PAGE>
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 Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iii) The stockholders 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.
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(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
(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.
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(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 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)
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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
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.
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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 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
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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 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.
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(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 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
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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 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
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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.
(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
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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 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
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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 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
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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.
(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.
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(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 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
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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 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 Delaware, 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/ Spencer F. Eccles
---------------------------------
Name: Spencer F. Eccles
Title: Chairman of the Board and
Chief Executive Officer
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