<PAGE>
As filed with the Securities and Exchange Commission on April 8, 1994.
Registration No. 33-52609
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
PRE-EFFECTIVE AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
FIRST SECURITY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 6711 87-6118148
-------- ---- ----------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
No.)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 350-5706
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------
SCOTT C. ULBRICH
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(Address, including zip code, and telephone number, including
area code, of agent for service)
---------------
Copies To:
A. ROBERT THORUP, ESQ. STANLEY F. FARRAR,ESQ.
RAY, QUINNEY & NEBEKER SULLIVAN & CROMWELL
79 South Main Street 444 South Flower Street
Salt Lake City, Utah 84111 Los Angeles, California 90071
(801) 532-1500 (213) 955-8000
---------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement as
determined by market conditions.
---------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /x/
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 11, 1994
PROSPECTUS
$ 300,000,000
[LOGO]
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK, AND WARRANTS TO PURCHASE COMMON
STOCK
-------------------------------------------------------
First Security Corporation (the "Company") may from time to time issue and
offer (a) its notes, debentures or other unsecured evidences of indebtedness
in one or more series ("Debt Securities"), which may be either senior ("Senior
Debt Securities") or subordinated ("Subordinated Debt Securities") in priority
of payment; (b) shares of one or more series of its Preferred Stock
("Preferred Stock"); (c) shares of its Common Stock (par value $1.25) ("Common
Stock"); and (d) warrants to acquire Common Stock ("Common Stock Warrants")
either directly or in conversion or exchange for other securities. (When
appropriate, all of the foregoing types of securities are referred to herein
as "the Securities".)
THE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
The Senior Debt Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Debt Securities will
be subordinated to all of the Company's existing and future Senior Debt, as
defined. See "Description of Debt Securities."
The Company may offer the Securities up to an aggregate initial offering price
not to exceed US$300,000,000 or, as to Debt Securities, its equivalent based
on the applicable exchange rate at the time of offering in such foreign
currencies or units of two or more currencies thereof as may be designated by
the Company at the time of such an offering. Debt Securities or Preferred
Stock of each series will be offered on terms determined at the time of sale.
When any of the Securities is offered, a supplement to this Prospectus (the
"Prospectus Supplement") setting forth certain terms of the offered Securities
will be delivered together with this Prospectus. With regard to Debt
Securities or Preferred Stock in respect of which this Prospectus is being
delivered, the Prospectus Supplement will set forth, if applicable, the
specific designation, aggregate principal amount or redemption value, rate (or
method of calculation) or dividend and time of payment of any interest or
dividend, maturity, initial public offering price, place or places of payment
of interest or dividends, redemption terms and other terms of such Securities.
The Securities may be sold to underwriters for public offering pursuant to the
terms of offering fixed at the time of sale. Such underwriters may include
J.P. Morgan Securities Inc. and CS First Boston, or may be a group of
underwriters represented by such firms. In addition, any of the Securities
may be sold to the public by the Company directly or through agents or
dealers. J.P. Morgan Securities Inc. and CS First Boston may also act as
agent. If any underwriters or agents are involved in the sale of any
Securities, their names and any applicable fee, commission, purchase price or
discount arrangements with them will be set forth, or will be calculated from
the information set forth, in a Prospectus Supplement. See "Plan of
Distribution."
This Prospectus may not be used to consummate sales of any securities
unless accompanied by a Prospectus Supplement.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
J.P. MORGAN SECURITIES INC. CS FIRST BOSTON
THE DATE OF THIS PROSPECTUS IS ____________, 1994.
<PAGE>
No dealer, salesman or other person has been authorized to give
any information or to make any representation not contained in this Prospectus
or any Prospectus Supplement in connection with the offer made by this
Prospectus and any such Prospectus Supplement and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company or any Underwriter. Neither this Prospectus nor any
Prospectus Supplement constitutes an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer in such jurisdiction.
Neither the delivery of this Prospectus or any Prospectus Supplement nor any
sale made hereunder shall, under any circumstances, create an implication that
the information herein is correct as of any time subsequent to the date hereof
or that there has been no change in the affairs of the Company since such
date.
FOR NORTH CAROLINA RESIDENTS:
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THIS OFFERING, NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information can be inspected and copies obtained at the
offices of the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; at Public Reference Facilities at the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and at the New York Regional Office, Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement under the Securities Act of 1933 (the "Securities Act")
with respect to the Securities. As permitted by the rules and regulations of
the Commission, this Prospectus does not contain all the information set forth
in the Registration Statement, including the exhibits thereto, which may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the prescribed fees.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents
of the Company heretofore filed by it with the Commission:
(a) Annual Report on Form 10-K for the year ended December 31,
1993; and
(b) Current Report on Form 8-K dated January 24, 1994.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities made
hereby are incorporated herein by reference, and such documents shall be
deemed to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom
this Prospectus is delivered, upon request of any such person, a copy of any
or all of the foregoing documents incorporated herein by reference (other than
the exhibits to such documents). Written requests should be directed to:
Scott C. Ulbrich
Executive Vice President
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
Telephone requests may be directed to (801) 246-5706.
3
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FIRST SECURITY CORPORATION
GENERAL
The Company is a Delaware incorporated multi-bank holding company
headquartered in Salt Lake City, Utah. At December 31, 1993, the Company and
its subsidiaries had total consolidated assets and shareholders' equity of
$10.21 billion and $836 million, respectively.
The principal banking subsidiaries of the Company are First
Security Bank of Utah N.A. ("First Security Utah"), First Security Bank of
Idaho, N.A. ("First Security Idaho"), and First Security Bank of New Mexico,
N.A. ("First Security New Mexico"), all of which are commercial banking
institutions providing a broad range of banking, fiduciary, financial and
other services. The Company also operates banks in Wyoming ("First Security
Wyoming"), Oregon ("First Security Oregon") and Nevada ("First Security
Nevada") (all of the Company's banking subsidiaries will be referred to
hereafter as "the Banks"). Nonbank subsidiaries owned by the Company include
a leasing company, a mortgage company, a securities broker-dealer, an
investment adviser, an insurance agency, a credit life insurance company and a
management and services company.
In addition to its equity investments in its subsidiaries, the
Company directly or indirectly raises funds principally to finance the
operations of its nonbank subsidiaries. A substantial portion of the
Company's cash flow is typically derived from dividends directly from its bank
and nonbank subsidiaries, and from interest on loans to the Company's nonbank
subsidiaries. Various statutory provisions limit the amount of dividends
subsidiary Banks and certain nonbank subsidiaries can pay to the Company
without regulatory approval. In addition, because any obligations issued by
the Company hereunder will only be obligations of the Company, not of any of
its subsidiary Banks or nonbanking operations, the holders of obligations
issued by the Company hereunder will be subordinated to certain prior claims
by creditors of the Company's subsidiaries. See "Supervision and Regulation."
The Company maintains its executive offices at 79 South Main
Street, Salt Lake City, Utah 84111, telephone 801-246-6000.
COMPETITION
Based on deposits, at December 31, 1993, First Security Utah was
the largest bank in the State of Utah. Based on deposits, at December 31,
1993, First Security Idaho was the second largest bank in the State of Idaho.
In Wyoming and Oregon, FSC's banks are smaller, more localized competitors.
First Security Oregon, at March 31, 1993, was the 12th largest bank in Oregon.
First Security Wyoming, at December 31, 1993, was the 18th largest bank in
Wyoming.
Of the Company's new subsidiaries, First Security New Mexico is
the second largest bank in the Albuquerque area and the third largest bank in
New Mexico.
The Company's banks compete with other banking organizations in
the states in which they operate on the basis of price, service and
convenience. Other types of financial institutions, such as savings banks,
savings and loan associations and credit unions offer a wide range of deposit
and loan services (including commercial loans) and, in some instances,
fiduciary services. The Company's banks also compete with brokerage firms,
insurance companies and mutual funds which provide investment products and, in
many cases, the substantial equivalent of checking accounts, credit cards and
similar products traditionally provided by commercial banks. Major retailers
compete with the Company's lending operations by offering credit cards and
retail installment contracts. It is anticipated that competition from nonbank
organizations will continue to grow.
4
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RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
For the fiscal years ended December 31, 1993, 1992, 1991, 1990 and
1989 the Company's consolidated ratios of earnings to combined fixed charges
and preferred stock dividends, and its ratio of earnings to fixed charges,
excluding interest on deposits were 4.62, 4.54, 2.28, 1.33, and 1.72,
respectively; and such ratios including interest on deposits were 1.71, 1.54,
1.23, 1.08, and 1.19, respectively. For purposes of computing the
consolidated ratio of earnings to combined fixed charges and preferred stock
dividends, earnings represent net income plus income taxes and fixed charges.
Fixed charges, excluding interest on deposits, include interest expense
(except interest paid on deposits), capitalized interest, an amount equal to
the pretax earnings required to meet applicable preferred stock dividend
requirements and the interest factor included in rents. Fixed charges,
including interest on deposits, include all interest expense, capitalized
interest, an amount equal to the pretax earnings required to meet applicable
preferred stock dividend requirements and the interest factor included in
rents.
SUPERVISION AND REGULATION
REFERENCES IN THIS SECTION TO APPLICABLE STATUTES AND REGULATIONS
ARE BRIEF SUMMARIES ONLY, AND DO NOT PURPORT TO BE COMPLETE. THE READER
SHOULD CONSULT SUCH STATUTES AND REGULATIONS THEMSELVES FOR A FULL
UNDERSTANDING OF THE DETAILS OF THEIR OPERATION.
BANK HOLDING COMPANY REGULATION
The Company is a bank holding company registered under Bank
Holding Company of 1956 (the "BHC Act"), and is subject to supervision and
regulation by the Federal Reserve Board. Federal laws subject bank holding
companies to particular restrictions on the types of activities in which they
may engage, and to a range of supervisory requirements and activities,
including regulatory enforcement actions for violation of laws and policies.
In addition, Utah law authorizes the state bank regulators to supervise and
regulate under limited circumstances a holding company controlling a Utah
domiciled bank.
- ACTIVITIES "CLOSELY RELATED" TO BANKING. The BHC Act prohibits a
bank holding company, with certain limited exceptions, from acquiring direct or
indirect ownership or control of any voting shares of any company which is not a
bank or from engaging in any activities other than those of banking, managing or
controlling banks and certain other subsidiaries, or furnishing services to or
performing services for its subsidiaries. One principal exception to these
prohibitions allows the acquisition of interests in companies whose activities
are found by the Federal Reserve Board to be so closely related to banking,
managing, or controlling banks as to be a proper incident thereto. Such
activities include making or servicing loans, performing certain data processing
services, acting as an investment or financial advisor to certain investment
trusts and investment companies, and providing securities brokerage services.
- SECURITIES ACTIVITIES. The Federal Reserve Board has
approved applications by bank holding companies to engage, through nonbank
subsidiaries, in certain securities underwriting activities, provided that the
affiliates would not be "principally engaged" in such activities for purposes
of Section 20 of the Glass-Steagall Act. In very limited situations, holding
companies have been permitted to underwrite and deal in corporate debt and
equity securities through such subsidiaries.
- SAFE AND SOUND BANKING PRACTICES. Bank holding companies
are not permitted to engage in unsafe and unsound banking practices. The
Federal Reserve Board may order a bank holding
5
<PAGE>
company to terminate an activity or control of a nonbank subsidiary if such
activity or control constitutes a significant risk to the financial safety,
soundness or stability of a subsidiary bank and is inconsistent with sound
banking principles.
The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA") expanded the Federal Reserve Board's authority to prohibit
activities of bank holding companies and their nonbanking subsidiaries which
represent unsafe and unsound banking practices or which constitute violations
of laws or regulations. Notably, FIRREA increased the amount of monetary
penalties which the Federal Reserve Board can assess for such practices or
violations to as high as $1 million per day. FIRREA also expanded the scope
of individuals and entities against which such penalties may be assessed.
- ANTI-TYING RESTRICTIONS. Bank holding companies and their
bank and nonbank affiliates are prohibited from tying the provision of certain
services, such as extensions of credit, to other services offered by a holding
company or its affiliates.
- ANNUAL REPORTING; EXAMINATIONS. The Company is required to
file an annual report with the Federal Reserve Board and such additional
information as the Federal Reserve Board may require pursuant to the BHC Act.
The Federal Reserve Board may examine a bank holding company or any of its
subsidiaries, and charge the company for the cost of such an examination.
- CAPITAL ADEQUACY REQUIREMENTS. The Federal Reserve Board
monitors the capital adequacy of bank holding companies. The Federal Reserve
Board uses a combination of risk-based guidelines and leverage ratios to
evaluate capital adequacy. The Federal Reserve Board has adopted a system
based upon the Basle Accord, an international standard for risk-based capital
guidelines, to evaluate the capital adequacy of bank holding companies. Under
the risk-based capital guidelines, different categories of assets are assigned
different risk weights, based generally on the perceived credit risk of the
asset. These risk weights are multiplied by corresponding asset balances to
determine a "risk-weighted" asset base. Certain off-balance sheet items,
which previously were not expressly considered in capital adequacy
computations, are added to the risk-weighted asset base by converting them to
a balance sheet equivalent and assigning to them the appropriate risk weight.
Total capital is defined as the sum of "Tier 1" and "Tier 2" capital elements,
with "Tier 2" being limited to 100% of "Tier 1." For bank holding companies,
"Tier 1" capital includes, with certain restrictions, common stockholders'
equity, retained earnings, non-cumulative perpetual preferred stock and
minority interests in consolidated subsidiaries less certain intangibles.
"Tier 2" capital includes, with certain limitations, certain forms of
non-qualifying perpetual preferred stock, maturing capital instruments (such
as qualifying convertible and/or subordinated debt), the reserve for possible
loan losses and specified levels of certain intangibles.
In addition to the risk-based capital guidelines, the Federal
Reserve Board has adopted the use of a leverage ratio as an additional tool to
evaluate the capital adequacy of banks and bank holding companies. The
leverage ratio is a company's "Tier 1" capital divided by its adjusted total
assets. This leverage ratio must be at least 3.0% for institutions with the
Federal Reserve's highest asset rating, called "CAMEL 1". Institutions which
are not CAMEL 1 rated are expected to maintain a leverage ratio of 4.0% to
5.0%, and institutions planning acquisitions are expected to maintain higher
ratios.
The following table sets forth the current regulatory requirements for
capital ratios of bank holding companies as compared with the Company's
capital ratios at December 31, 1993:
6
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<TABLE>
<CAPTION>
TIER 1 TOTAL
CAPITAL TO CAPITAL TO
LEVERAGE RISK-WEIGHTED RISK-WEIGHTED
RATIO(1) ASSETS(2) ASSETS(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
REGULATORY MINIMUM 4.00-5.00% 4.00% 8.00%
- --------------------------------------------------------------------------------
THE COMPANY'S ACTUAL 8.08% 11.82% 14.15%
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<FN>
(1) THE LEVERAGE RATIO IS DEFINED AS THE RATIO OF TIER 1 CAPITAL (USING
FINAL 1992 RISK-BASED CAPITAL GUIDELINES TO DEFINE TIER 1 CAPITAL) TO AVERAGE
ASSETS, NET OF GOODWILL. FEDERAL RESERVE BOARD GUIDELINES PROVIDE THAT ALL
BANK HOLDING COMPANIES (OTHER THAN THOSE THAT MEET CERTAIN CRITERIA) MAINTAIN
A MINIMUM LEVERAGE RATIO OF 3%, PLUS AN ADDITIONAL CUSHION OF 100 TO 200 BASIS
POINTS. THE GUIDELINES ALSO STATE THAT BANKING ORGANIZATIONS EXPERIENCING
INTERNAL GROWTH OR MAKING ACQUISITIONS WILL BE EXPECTED TO MAINTAIN "STRONG
CAPITAL POSITIONS" SUBSTANTIALLY ABOVE THE MINIMUM SUPERVISORY LEVELS WITHOUT
SIGNIFICANT RELIANCE ON INTANGIBLE ASSETS.
(2) SHAREHOLDERS' EQUITY LESS GOODWILL (TIER 1 CAPITAL) DIVIDED BY
RISK-WEIGHTED ASSETS.
(3) TIER 1 CAPITAL PLUS RESERVE FOR POSSIBLE LOAN LOSSES (LIMITED TO 1.25%
OF TOTAL RISK-WEIGHTED ASSETS) PLUS QUALIFIED SUBORDINATED AND CONVERTIBLE
DEBT (TIER 2 CAPITAL) DIVIDED BY RISK-WEIGHTED ASSETS.
</TABLE>
Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
Management cannot predict whether these capital requirements will change or
whether they will materially affect the Company's financial position or
operating ability.
- IMPOSITION OF LIABILITY FOR UNDERCAPITALIZED SUBSIDIARIES.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
requires each federal banking agency to revise its capital standards to
reflect the risk-weighting discussed above. The new law also requires each
federal banking agency to specify the levels at which an insured institution
would be considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." Under the regulations adopted by the banking agencies,
each of the Company's subsidiary banks was "well capitalized" as of December
31, 1993.
FDICIA requires bank regulators to take "prompt corrective action"
to resolve problems associated with insured depository institutions. In the
event an institution becomes "undercapitalized," it must submit a capital
restoration plan. If an institution becomes "significantly undercapitalized"
or "critically undercapitalized," additional and significant limitations are
placed on the institution. The capital restoration plan of an
undercapitalized institution will not be accepted by the regulators unless
each company "having control of" the undercapitalized institution "guarantees"
the subsidiary's compliance with the capital restoration plan until it becomes
"adequately capitalized." The Company controls each of its subsidiaries for
purposes of this statute and therefore is required to ensure that each
subsidiary remains adequately capitalized.
The "PROMPT CORRECTIVE ACTION" provisions of FDICIA reflect the
same concerns which gave rise to a position adopted by the Federal Reserve
Board known as the "source of strength doctrine," which is based on the
Federal Reserve Board's Regulation Y. Regulation
7
<PAGE>
Y directs bank holding companies to "serve as a source of financial and
managerial strength" to their subsidiary banks, and bars them from engaging in
unsafe and unsound practices.
In addition, FIRREA also contains a "cross-guarantee" provision
which makes commonly controlled insured depository institutions liable to the
FDIC for any losses incurred in connection with the failure of an affiliated
insured depository institution.
- AUDIT REPORTS. Beginning January 1, 1994, FDICIA requires
insured depository institutions with $500 million or more in total assets,
such as the Company and each of its First Security Utah, First Security Idaho
and First Security New Mexico subsidiaries, to submit annual audit reports
prepared by independent auditors to federal and state regulators. In most
cases, the audit report of the institution's holding company can be used to
satisfy this requirement. The annual audit report shall include financial
statements prepared in accordance with generally accepted accounting
principles, statements concerning management's responsibility for the
financial statements, internal controls and compliance with legal requirements
designated by the FDIC, and an attestation by the auditor regarding the
statements of management. FDICIA requires that independent audit committees
be formed, consisting of outside directors only. The committees of
institutions with assets of $3 billion or more, such as the Company, must
include members with experience in banking or financial management, must have
access to outside counsel, and must not include representatives of large
customers. The Company's Board of Directors includes an independent audit
committee which complies with these requirements.
- ACQUISITIONS BY BANK HOLDING COMPANIES. The BHC Act requires
every bank holding company to obtain the prior approval of the Federal Reserve
Board before it may acquire all or substantially all of the assets of any
bank, or ownership or control of any voting shares of any bank, if after such
acquisition it would own or control, directly or indirectly, more than 5% of
the voting shares of such bank.
The Federal Reserve Board will only allow the acquisition by a bank
holding company of an interest in any bank located in another state if the
state in which the target bank is located expressly authorizes such
acquisition. Utah banking laws permit, in certain circumstances, out-of-state
bank holding companies to acquire certain existing banks and bank holding
companies in Utah.
In addition, FDICIA has eased restrictions on cross-industry mergers
between commercial banks and savings institutions. Members of the Bank
Insurance Fund ("BIF"), such as the Company, and the Savings Association
Insurance Fund are generally allowed to merge, assume each other's deposits,
and transfer assets in exchange for an assumption of deposit liabilities.
SUBSIDIARY BANK REGULATION
Three of the Company's bank subsidiaries are national banks, which
are subject to regulation and supervision by the Office of the Comptroller of
the Currency (the "Comptroller"). The other banks are each subject to
regulation by regulators in their respective states and the FDIC. Bank
regulations on both the federal and state levels are broad in their scope and
materially affect the business of the Company and its banks.
8
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All of the Company's subsidiary banks are subject to the
requirements and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
thereon, and limitations on the types of investments that may be made and the
types of services that may be offered. Various consumer laws and regulations
also affect the operations of the banks. In addition to the impact of
regulation, commercial banks are affected significantly by actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability.
- PERMISSIBLE ACTIVITIES FOR STATE-CHARTERED
INSTITUTIONS/EQUIVALENCE TO NATIONAL BANK POWERS. FDICIA provides that,
effective December 19, 1992, no state bank or subsidiary thereof may engage as
principal in any activity not permitted for national banks, unless the
institution complies with applicable capital requirements and the FDIC
determines that the activity poses no significant risk to the insurance fund.
In general, statutory restrictions on the activities of banks are aimed at
protecting the safety and soundness of depository institutions. Many of the
statutory restrictions limit the participation of such institutions in the
securities and insurance product markets. Each of the state-chartered banking
subsidiaries of the Company is in compliance with the restrictions imposed by
FDICIA.
- RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES. Section 23A of
the Federal Reserve Act imposes quantitative and qualitative limits on loan
transactions between a bank and its affiliates, and also requires certain
levels of collateral for such loans. It also limits the amount of advances to
third parties which are collateralized by the securities or obligations of the
Company or its subsidiaries. Section 23B of the Federal Reserve Act requires
that certain transactions between the Company's subsidiary banks and their
affiliates must be on terms at least as favorable to the Company or its
subsidiaries as those prevailing for comparable transactions with other
nonaffiliated companies. In the absence of such comparable transactions, any
transaction between the Company and its affiliates must be on terms and under
circumstances, including credit standards, that in good faith would be offered
to or would apply to nonaffiliated companies. The Company is currently in
material compliance with the requirements of Sections 23A and 23B.
- RESTRICTIONS ON SUBSIDIARY BANK DIVIDENDS. The Federal Reserve
Board, the Comptroller and the FDIC have each issued policy statements to the
effect that bank holding companies and member banks, national banks and state
banks should generally only pay dividends out of current operating earnings.
The prior approval of the Comptroller is required if the total of all dividends
declared by the board of directors of a national bank, such as First Security
Utah, First Security Idaho and First Security New Mexico, in any calendar year
will exceed the aggregate of the bank's net profits (as defined by regulatory
authorities) for that year and its retained net profits for the preceding two
years. Similar restrictions govern the other banking subsidiaries of the
Company. In addition, national banks can pay dividends only to the extent that
retained net profits exceed "bad debts", which are generally defined to include
the principal amount of loans that are in arrears as to interest by nine months
or more and that are not secured and that are not in the process of collection.
As of December 31, 1993, the Company's banks could have declared additional
dividends to the Company of approximately $119.97 million without regulatory
approval or restriction. Federal banking regulators also may prohibit federally
insured banks from paying dividends if the payment of such dividend would leave
the bank "undercapitalized" as defined in FDICIA and the
9
<PAGE>
implementing regulations, or the payment of dividends would, in light of the
financial condition of such bank, constitute an unsafe or unsound practice.
Applicable Nevada, Wyoming and Oregon law place similar restrictions on the
payment of dividends by the Company's banks organized under the laws of those
states.
- EXAMINATIONS. The FDIC periodically examines and evaluates
insured banks. Based upon such an evaluation, the FDIC may revalue the assets
of an insured institution and require that it establish specific reserves to
compensate for the difference between the FDIC-determined value and the book
value of such assets. FDICIA requires that these on-site examinations be
conducted every 12 months, except that certain well capitalized banks may be
examined every 18 months. The rules and regulations of the Comptroller, which
regulates the Company's national banks, and the various state banking
authorities regulating the Company's state-chartered banks also provide for
periodic examinations by those agencies.
- STANDARDS FOR SAFETY AND SOUNDNESS. As part of FDICIA's
efforts to promote the safety and soundness of depository institutions and
their holding companies, the Federal Reserve Board issued for public comment
on April 19, 1993, proposed regulations on standards of safety and soundness
which specify operational and management standards (addressing internal
controls, loan documentation, credit underwriting and interest rate risk),
asset quality and earnings. The impact of these regulations cannot be
determined until final regulations are issued.
- DEPOSIT INSURANCE ASSESSMENTS. FDIC-insured depository
institutions that are members of the BIF must pay insurance premiums at rates
between 23 and 31 basis points on insured deposits depending on the bank's
capital category and bank regulators' supervisory category. Institutions
assigned to higher-risk categories--that is, institutions that pose a greater
risk of loss to their respective deposit insurance funds--would pay
assessments at higher rates than would institutions that pose a lower risk.
The FDIC can impose special assessments on member institutions, such as each
of the Company's Bank subsidiaries, to cover the cost of borrowings from the
U.S. Treasury, the Federal Financing Bank, and BIF member banks. The
semiannual assessment is based on: (1) the probability of a loss to the BIF;
(2) the potential magnitude of the loss; and (3) the revenue and reserve needs
of the fund.
- FIRREA'S IMPACT. FIRREA's primary purpose was to restructure
the statutory and regulatory framework applicable to savings associations, and
establish a mechanism for resolving insolvent thrift institution cases.
Certain provisions of FIRREA, however, affect the bank subsidiaries of holding
companies, including the Company. Among the most significant of these
provisions are those which: (1) clarify the powers and duties of the FDIC as
receiver or conservator of a bank; (2) enhance the enforcement powers of the
federal banking regulators; (3) establish new reporting requirements under the
Home Mortgage Disclosure Act designed to prevent discriminatory lending
practices; (4) require the federal banking agencies to make public a rating of
a bank's performance under the Community Reinvestment Act; and (5) prohibit
banks from entering into contracts with persons providing goods, products or
services if the performance of such contracts would adversely affect the
bank's safety and soundness. FIRREA's primary impact on commercial banks has
been to increase the enforcement authority of federal regulators and to expand
the scope of potential targets of enforcement actions.
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- EXPANDING ENFORCEMENT AUTHORITY. One of the major additional
burdens imposed on the banking industry by FDICIA is the increased ability of
banking regulators to monitor the activities of banks and their holding
companies. In addition, the Federal Reserve Board, Comptroller and FDIC are
given extensive authority to police unsafe or unsound practices and violations
of applicable laws and regulations by depository institutions and their
holding companies. For example, the FDIC may terminate the deposit insurance
of any institution which it determines has engaged in an unsafe or unsound
practice. The agencies can also assess civil money penalties of up to $1
million per day, issue cease and desist or removal orders, seek injunctions,
and publicly disclose such actions. FDICIA, FIRREA and other laws have
expanded the agencies' authority in recent years, and the agencies have not
yet fully tested the limits of their powers.
- CURRENT REGULATORY STRUCTURE. The laws and regulations
affecting banks and bank holding companies are under continual review. For
example, recent federal legislative proposals include bills which would
consolidate all banking regulators into one or two regulatory agencies and
others which would permit interstate branching to various degrees. The rules
and the regulatory agencies in this area have changed significantly over recent
years, and there is reason to expect that similar changes, including changes
which may materially affect the Company's operations, will continue in the
future.
USE OF PROCEEDS
Unless otherwise set forth in the Prospectus Supplement, the net
proceeds from the sale of the Securities will be applied to the Company's
general funds to be utilized for such corporate purposes as may be determined
by management, including payment of cash amounts due upon completion of
acquisitions, funding of investments in or extensions of credit to the
Company's subsidiaries, and repayment of borrowings. Except as otherwise
described in the Prospectus Supplement, specific allocations of the proceeds
to such purposes will not have been made at the date of the Prospectus
Supplement, although management of the Company will have determined that funds
should be raised at that time in anticipation of future funding requirements.
The precise amounts and timing of payments due upon completion of
acquisitions, of investments in and extensions of credit to the subsidiaries,
and the repayment of borrowings will depend upon funding requirements and the
availability of other funds. Pending such application, net proceeds may be
temporarily invested or applied to the reduction of short-term indebtedness.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets
forth certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by a Prospectus Supplement and the extent, if any, to which such
general provisions may not apply thereto will be described in the Prospectus
Supplement relating to such Debt Securities.
The Debt Securities may be Senior Debt Securities or Subordinated
Debt Securities (both including but not limited to Medium-Term Notes). The
Senior Debt Securities will be
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issued under an Indenture to be dated as of March 1, 1994 (the "Senior
Indenture") between the Company and The First National Bank of Chicago, as
Trustee (together with its successor trustee, if any, the "Senior Trustee"), and
the Subordinated Debt Securities will be issued under an Indenture to be dated
as of March 1, 1994 (the "Subordinated Indenture") between the Company and The
First National Bank of Chicago, as Trustee (together with its successor trustee,
if any, the "Subordinated Trustee"). The Senior Indenture and the Subordinated
Indenture are collectively referred to herein as the "Indentures," copies of the
forms of which are filed as exhibits to the Registration Statement of which this
Prospectus is a part. References to the "Trustee" below shall mean the Senior
Trustee or the Subordinated Trustee. The following summaries of certain
provisions of the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture applicable to a particular series of Debt Securities (the "Applicable
Indenture"), including the definitions therein of certain terms. Wherever
particular sections, articles or defined terms of the Indentures are referred
to, it is intended that such sections, articles or defined terms shall be
incorporated herein by reference. Section and article references used herein are
references to the Applicable Indenture. Capitalized terms not otherwise defined
herein shall have the meaning given them in the Applicable Indenture.
GENERAL
Neither Indenture limits the amount of Debt Securities which may be
issued thereunder, and Debt Securities of any series may be issued thereunder
up to the aggregate principal amount which may be authorized from time to time
by the Company. Neither the Indentures nor the Debt Securities will limit or
otherwise restrict the amount of other indebtedness which may be incurred or
the other securities which may be issued by the Company or any of its
Subsidiaries. The Debt Securities will be unsecured direct obligations of the
Company.
Because the Company is a holding company, its rights and the rights
of its creditors, including the holders of the Debt Securities, to participate
in the assets of any Subsidiary upon the latter's liquidation or
recapitalization would be subject to the prior claims of such Subsidiary's
creditors except to the extent that the Company may itself be a creditor with
claims against the Subsidiary that are recognized by a court having
jurisdiction over such claims.
Unless otherwise indicated in the Prospectus Supplement, principal
of and any premium and interest on the Debt Securities will be payable, and
the transfer of the Debt Securities will be registrable, at the currently
designated office of the Trustee at One First National Plaza, Chicago,
Illinois 60670. In addition, payment of interest on Debt Securities may, at
the option of the Company, be made by check mailed to the address of the
person entitled thereto as it appears on the Security Register. (Sections
301, 305 and 1002). Acting in accordance with each Indenture, the Company
intends also to designate the principal office of First Security Utah as an
office where principal, premium, and interest may be paid and the transfer of
the Debt Securities may be registered. (Sections 301, 305 and 1002)
Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. (Section 302) No
service charge will be made for any registration
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of transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Section 302) The Indentures also provide
that the Debt Securities of any series, if so specified with respect to a
particular series, may be issued in permanent global form. See "Global Debt
Securities."
Reference is made to the Prospectus Supplement for a description of
the following terms, where applicable, of each series of Debt Securities in
respect of which this Prospectus is being delivered: (1) the title of the
Debt Securities of the series; (2) any limit on the aggregate principal amount
of the Debt Securities of the series; (3) the date or dates on which the
principal of the Debt Securities of the series will be payable; (4) the rate
or rates (which may be fixed or variable) at which the Debt Securities of the
series will bear interest, if any, the date or dates from which such interest
shall accrue, the Interest Payment Dates on which such interest will be
payable, and the Regular Record Dates for such Interest Payment Dates; (5) the
place or places where the principal of, premium, if any, and interest on the
Debt Securities of the series shall be payable; (6) the period or periods
within which, the price or prices at which and the terms and conditions upon
which the series of Debt Securities may be redeemed, in whole or in part, at
the option of the Company; (7) the obligation, if any, of the Company to
redeem or purchase the Debt Securities of the series pursuant to any sinking
fund or analogous provision or at the option of the Holders thereof and the
period or periods within which, the price or prices at which and the terms and
conditions upon which Debt Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation; (8) the
denomination or denominations in which such Debt Securities are authorized to
be issued; (9) the currency of payment of principal of, premium, if any, and
interest on the Debt Securities of the series; (10) any index or formula used
to determine the amount of payment of principal of, premium, if any, and
interest on the Debt Securities of the series; (11) if other than the
principal amount thereof, the portion of the principal amount of Debt
Securities of the series which shall be payable upon declaration of
acceleration of the Maturity thereof; (12) whether the Debt Securities of the
series shall be issued in whole or in part in the form of one or more Global
Securities and, if so, the Depositary for such Global Security or Securities;
(13) the portion of the principal amount of such Debt Securities which will be
payable upon declaration of acceleration of the Maturity thereof, if other
than the principal thereof; (14) any additional Events of Default or, in the
case of Subordinated Debt Securities, Default, solely with respect to the Debt
Securities; (15) whether the provisions of the applicable Indenture described
under "Defeasance and Covenant Defeasance" will be applicable to such Debt
Securities; (16) any additional restrictive covenants included solely for the
benefit of the Debt Securities; (17) if the Debt Securities are Subordinated
Debt Securities, whether the provisions in the Subordinated Indenture
described under "Subordination of Subordinated Debt Securities" or other
subordination provisions will be applicable to such Subordinated Debt
Securities; and (18) any other terms of the series of Debt Securities not
inconsistent with the provisions of the Applicable Indenture.
The Debt Securities may be issued as Original Issue Discount Debt
Securities, to be offered and sold at a discount below their stated principal
amount. Any such Original Issue Discount Debt Securities will be described in
the Prospectus Supplement related thereto, which description will include a
discussion of the material federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Debt
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Securities. An "Original Issue Discount Security" is generally a Debt Security
which provides for an amount less than the principal amount thereof to be due
and payable upon the declaration of acceleration of the Maturity thereof upon
the occurrence of an Event of Default and the continuation thereof.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are
convertible into or exchangeable for shares of Common Stock, Preferred Stock
or Warrants will be set forth in the Prospectus Supplement related thereto.
Such terms may include provisions for conversion or exchange, either
mandatory, at the option of the holder, or at the option of the Company, in
which the number of shares of Common Stock, Preferred Stock or Warrants to be
received by the holders of Debt Securities would be calculated according to
the market price of Common Stock, Preferred Stock or Warrants as of a time
stated in the Prospectus Supplement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The payment of the principal of and interest on the Subordinated
Debt Securities will, to the extent set forth in the Subordinated Indenture,
be subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Subordinated Indenture). In certain events of
insolvency, the payment of the principal of and interest on the Subordinated
Debt Securities will, to the extent set forth in the Subordinated Indenture,
also be effectively subordinated in right of payment to the prior payment in
full of all Other Financial Obligations (as defined in the Subordinated
Indenture and defined below). Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency or similar proceedings of the Company, the holders of
all Senior Indebtedness will first be entitled to receive payment in full of
all amounts due or to become due thereon before the Holders of the
Subordinated Debt Securities will be entitled to receive any payment in
respect of the principal of or interest on the Subordinated Debt Securities.
If upon any such payment or distribution of assets to creditors, there remain,
after giving effect to such subordination provisions in favor of
the holders of Senior Indebtedness, any amounts of cash, property or
securities available for payment or distribution in respect of Subordinated
Debt Securities (as defined in the Subordinated Indenture and defined below,
"Excess Proceeds") and if, at such time, any Entitled Persons in respect of
Other Financial Obligations have not received payment in full of all amounts
due or to become due on or in respect of such Other Financial Obligations,
then such Excess Proceeds shall first be applied to pay or provide for the
payment in full of such Other Financial Obligations before any payment or
distribution may be made in respect of the Subordinated Debt Securities. In
the event of the acceleration of the maturity of any Debt Securities, the
holders of all Senior Indebtedness will first be entitled to receive payment
in full of all amounts due thereon before the Holders of the Subordinated Debt
Securities will be entitled to receive any payment upon the principal of or
interest on the Subordinated Debt Securities. No payments on account of
principal of or interest on the Subordinated Debt Securities or on account of
the purchase or acquisition of Subordinated Debt Securities may be made if
there shall have occurred and be continuing a default in any payment with
respect to Senior Indebtedness, or if any judicial
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proceeding shall be pending with respect to any such default. (Article Thirteen
of the Subordinated Indenture)
By reason of such subordination in favor of the holders of
Senior Indebtedness, in the event of insolvency, creditors of the Company who
are not holders of Senior Indebtedness or of the Subordinated Debt Securities
may recover less, ratably, than Holders of Senior Indebtedness and may recover
more, ratably, than the Holders of the Subordinated Debt Securities. By
reason of the obligation of the Holders of Subordinated Debt Securities to pay
over any Excess Proceeds to Entitled Persons in respect of Other Financial
Obligations, in the event of insolvency, holders of Existing Subordinated
Indebtedness (as defined in the Subordinated Indenture and defined below) may
recover less, ratably, than Entitled Persons in respect of Other Financial
Obligations and may recover more, ratably, than the Holders of Subordinated
Debt Securities.
Unless otherwise specified in the Prospectus Supplement relating
to the particular series of Subordinated Debt Securities offered thereby, Senior
Indebtedness is defined in the Subordinated Indenture as (a) the principal of
(and premium, if any), and interest on all indebtedness of the Company for money
borrowed, whether outstanding on the date of execution of the Subordinated
Indenture or thereafter created, assumed or incurred, except (i) such
indebtedness as is by its terms expressly stated to be junior in right of
payment to the Subordinated Debt Securities and (ii) such indebtedness as is by
its terms expressly stated to rank PARI PASSU with the Subordinated Debt
Securities and (b) any deferrals, renewals or extensions of any such Senior
Indebtedness; PROVIDED, HOWEVER, that Senior Indebtedness shall not include
Existing Subordinated Indebtedness. (Section 101 of the Subordinated Indenture)
The term "indebtedness for money borrowed" when used with respect to the Company
is defined to mean any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, and any deferred obligation of,
or any such obligation guaranteed by, the Company for the payment of the
purchase price of property or assets. (Section 101 of the Subordinated
Indenture)
Unless otherwise specified in the Prospectus Supplement
relating to the particular series of Subordinated Debt Securities offered
thereby, Existing Subordinated Indebtedness means the Company's 7.50%
Subordinated Notes due 2002 issued under an Indenture, dated as of August 1,
1991, between the Company and Norwest Bank Minnesota, N.A., as trustee.
Unless otherwise specified in the Prospectus Supplement
relating to the particular series of Subordinated Debt Securities offered
thereby, Other Financial Obligations means (a) obligations of the Company
under direct credit substitutes, (b) obligations of, or any such obligation
directly or indirectly guaranteed by, the Company for purchased money or
funds, (c) any deferred obligation of, or any such obligation directly or
indirectly guaranteed by, the Company for the payment of the purchase price of
property or assets, (d) any obligation of, or any such obligation directly or
indirectly guaranteed by, the Company for the payment of rent or other amounts
under a lease of property or assets which obligation is required to be
classified and accounted for as a capitalized lease on the balance sheet of
the Company under generally accepted accounting principles, and (e) all
obligations of the Company to make payment pursuant to the terms of financial
instruments, such as
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(i) securities contracts and foreign currency exchange contracts, (ii)
derivative instruments, such as swap agreements (including interest rate and
foreign exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange rate agreements, options,
commodity futures contracts, commodity option contracts and (iii) in the case of
both (i) and (ii) above, similar financial instruments, other than (A)
obligations on account of Senior Indebtedness and (B) obligations on account of
indebtedness for money borrowed ranking PARI PASSU with or subordinate to the
Subordinated Debt Securities. Unless otherwise specified in the Prospectus
Supplement relating to the particular series of Subordinated Debt offered
thereby, Entitled Persons means any person who is entitled to payment pursuant
to the terms of Other Financial Obligations. (Section 101 of the Subordinated
Indenture)
Indebtedness of the Company senior to the Subordinated Debt
Securities, at March 1, 1994, totalled approximately $319 million ($244 million
if the currently outstanding subordinated debt securities are ranked PARI PASSU
with the new Subordinated Debt Securities).
The Company's obligations under the Subordinated Debt
Securities shall rank PARI PASSU in right of payment with each other and
with the Existing Subordinated Indebtedness, subject to the obligations of the
Holders of Subordinated Debt Securities to pay over any Excess Proceeds to
Entitled Persons in respect of Other Financial Obligations as provided in the
Subordinated Indenture.
The Subordinated Indenture does not limit or prohibit the
incurrence of additional Senior Indebtedness, which may include indebtedness
that is senior to the Subordinated Debt Securities, but subordinate to other
obligations of the Company, including obligations of the Company in respect of
Other Financial Obligations. The Senior Debt Securities, when issued, will
constitute Senior Indebtedness.
The Prospectus Supplement may further describe the provisions,
if any, applicable to the subordination of the Subordinated Debt Securities of
a particular series.
CERTAIN COVENANTS IN THE SENIOR INDENTURE
RESTRICTIONS ON CERTAIN DISPOSITIONS OF MAJOR CONSTITUENT BANKS.
The Senior Indenture provides that, except as described below under
"Consolidation, Merger and Sale of Assets", the Company will not (a) sell,
assign, transfer, or otherwise dispose of any shares of, or securities
convertible into, or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock of a Major Constituent Bank (as defined below) (or a
Subsidiary owning Voting Stock of a Major Constituent Bank) or permit a Major
Constituent Bank (or a Subsidiary owning Voting Stock of a Major Constituent
Bank) to issue any shares of, or securities convertible into or options,
warrants or rights to subscribe for or purchase shares of such Voting Stock,
if, in each case, after giving effect to any such transaction and to the
issuance of the maximum number of shares of Voting Stock of such Major
Constituent Bank (or Subsidiary) issuable upon the exercise of all such
convertible securities, options, warrants or rights, the Major Constituent
Bank would cease to be a Controlled Subsidiary, or (b) permit a Major
Constituent Bank (or a Subsidiary owning Voting Stock of a Major Constituent
Bank) to (i) merge or consolidate with or into any other corporation, unless
the surviving corporation
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is, or upon consummation of the merger or consolidation will become, a
Controlled Subsidiary; or (ii) lease, sell or transfer all or substantially all
of its properties and assets to any Person, except to a Controlled Subsidiary or
a Person that, upon such lease, sale or transfer, will become a Controlled
Subsidiary. The Senior Indenture, however, provides that any such sale or other
disposition of securities, any such merger or consolidation or any such lease,
sale or transfer of properties and assets will not be prohibited (i) if required
by any law or any rule, regulation or order of any governmental agency or
authority, (ii) if required as a condition imposed by any law or rule,
regulation or order of any governmental agency or authority to the acquisition
by the Company, directly or indirectly, of any Person, provided that, after
giving effect to such other prohibited transaction and such acquisition, (A)
such Person will be a Controlled Subsidiary and (B) the Consolidated Banking
Assets (as defined below) of the Company will be at least equal to the
Consolidated Banking Assets of the Company prior thereto, or (iii) if the
proceeds from such otherwise prohibited transaction are within 180 days after
such transaction, or such longer period of time as may be necessary to obtain
regulatory approval in connection therewith, invested by the Company, pursuant
to an understanding or agreement in principle reached at the time of such
otherwise prohibited transaction, in one or more Controlled Subsidiaries
(including any Person which upon such investment becomes a Controlled
Subsidiary) engaged in the banking business or any other business then legally
permissible for bank holding companies. (Section 1008)
"Major Constituent Bank" means (i) First Security Utah, First
Security Idaho and First Security New Mexico or (ii) any Subsidiary Bank the
Consolidated Banking Assets of which constitute 20% or more of the aggregate
Consolidated Banking Assets of all Subsidiary Banks. As of December 31, 1993,
First Security Utah, First Security Idaho and First Security New Mexico were
the only Major Constituent Banks. "Controlled Subsidiary" means any
Subsidiary more than 80% of the outstanding shares of the Voting Stock of
which is at the time owned directly or indirectly by the Company or by one or
more Controlled Subsidiaries or by the Company and one or more Controlled
Subsidiaries. "Consolidated Banking Assets" of a Subsidiary Bank means all
assets owned directly or indirectly by such Subsidiary Bank and reflected on
the Company's consolidated balance sheet prepared in accordance with generally
accepted accounting principles. (Section 101)
RESTRICTIONS ON LIENS ON VOTING STOCK OF MAJOR CONSTITUENT BANKS. The
Senior Indenture provides that the Company will not create, assume, incur or
suffer to be created, assumed or incurred or to exist any pledge, encumbrance or
lien, as security for indebtedness for borrowed money, upon any shares of, or
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of a Major Constituent Bank now or hereafter
owned by the Company, directly or indirectly, without making effective provision
whereby any Debt Securities shall be equally and ratably secured with any and
all such indebtedness if, treating such pledge, encumbrance or lien as a
transfer of the shares of, or securities convertible into or options, warrants,
or rights to subscribe for or purchase shares of, Voting Stock subject thereto
to the secured party and after giving effect to the issuance of the maximum
number of shares of Voting Stock of such Major Constituent Bank issuable upon
the exercise of all such convertible securities, options, warrants or rights,
the Major Constituent Bank would not continue to be a Controlled Subsidiary.
(Section 1009)
Neither the Senior Indenture nor the Subordinated Indenture contain
any restriction on the Company's ability to enter into a highly leveraged
transaction or any provision affording
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any special protection to Holders in the event that the Company engages in a
highly leveraged transaction.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Indenture provides that the Company, without the consent of the
Holders of any of the Outstanding Debt Securities, may consolidate with or
merge into, or convey, transfer, or lease its properties and assets
substantially as an entirety to, any Person, provided that (a) the successor
is a Person organized under the laws of any domestic jurisdiction and assumes
the Company's obligations on the Debt Securities and under the Indenture, (b)
after giving effect to the transaction there exists no Event of Default or, in
the case of the Subordinated Indenture, Default, and no event which, after
notice or lapse of time would become an Event of Default or, in the case of
the Subordinated Indenture, Default, shall have occurred and be continuing,
and (c) certain other conditions are met. (Section 801)
GLOBAL DEBT SECURITIES
If any Debt Securities of a series are to be issued in permanent
global form, the Prospectus Supplement relating thereto will describe the
circumstances, if any, under which beneficial owners of interests in any such
permanent global Debt Security may exchange such interests for certificated
Debt Securities of such series and of like tenor and principal amount in any
authorized form and denomination. Principal of and any premium and interest
on a permanent global Debt Security will be payable in the manner described in
the Prospectus Supplement relating thereto. (Section 205).
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide under Article 13 (for the Senior Indenture) and
Article 14 (for the Subordinated Indenture), if such provision is made
applicable to the particular Debt Securities of any series pursuant to Section
301 of the Applicable Indenture (which will be indicated in the Prospectus
Supplement applicable thereto), that the Company may elect either (A) to defease
and be discharged from any and all obligations with respect to such Debt
Securities then outstanding (including, in the case of Subordinated Debt
Securities, the provisions described under "Subordination of Subordinated Debt
Securities" and except for the obligations to register the transfer or exchange
of such Debt Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B) to be
released from its obligations with respect to such Debt Securities then
outstanding under Sections 1006 through Section 1009 of the Senior Indenture and
Sections 1006 and 1007 of the Subordinated Indenture (and any other sections
applicable to such Debt Securities that are determined pursuant to Section 301
to be subject to covenant defeasance), the occurrence of an event of default
specified in, in the case of Senior Debt Securities, Section 501(4) of the
Senior Indenture, and in the case of Subordinated Debt Securities, Section
503(C) of the Subordinated Indenture (with respect to Sections 1006 through
Section 1009 of the Senior Indenture and Sections 1006 and 1007 of the
Subordinated Indenture or any other section applicable to such Debt Securities
that are determined pursuant to Section 301 to be subject to covenant
defeasance), or, in the case of Senior Debt Securities, Section 501(5) of the
Senior Indenture, and in the case of
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Subordinated Debt Securities, Section 503(D) of the Subordinated Indenture
(Section 1006 of the Indentures containing the covenant to maintain properties,
Section 1007 of the Indentures containing the covenant to pay taxes and other
claims, Section 1008 of the Senior Indenture containing the restrictions
described under "Restrictions on Certain Dispositions of Major Constituent
Banks", Section 1009 of the Senior Indenture containing the restrictions
described under "Restriction on Liens on Voting Stock of Major Constituent
Banks" and Sections 501(4) and 501(5) of the Senior Indenture and Sections
503(C) and 503(D) of the Subordinated Indenture containing the provisions
described under "Defaults" relating to covenant defaults and cross-defaults,
respectively) and, in the case of Subordinated Debt Securities, the provisions
described under "Subordination of Subordinated Debt Securities" ("covenant
defeasance"), upon the deposit with the Senior Trustee or Subordinated Trustee
(or other qualifying trustee), in trust for such purpose, of money, and/or U.S.
Government Obligations which through the payment of principal and interest in
accordance with their terms will provide money, in an amount sufficient, without
reinvestment, to pay the principal of (and premium, if any) and interest on such
Debt Securities to maturity or redemption, as the case may be, and any mandatory
sinking fund or analogous payments thereon. As a condition to defeasance or
covenant defeasance, the Company must deliver to the Senior Trustee or
Subordinated Trustee an Opinion of Counsel (as specified in the Applicable
Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance or covenant defeasance and will be subject to Federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred. Such
opinion, in the case of defeasance under clause (A) above, must refer to and be
based upon a ruling of the Internal Revenue Service issued to the Company or
published as a revenue ruling or upon a change in applicable Federal income tax
law, in any such case after the date of the Applicable Indenture.
Under current Federal income tax law, defeasance would likely be
treated as a taxable exchange of Debt Securities to be defeased for interests
in the defeasance trust. As a consequence a holder would recognize gain or
loss equal to the difference between the holder's cost or other tax basis for
such Debt Securities and the value of the holder's proportionate interest in
the defeasance trust, and thereafter would be required to include in income a
proportionate share of the income, gain and loss of the defeasance trust.
Under current Federal income tax law, covenant defeasance would ordinarily not
be treated as a taxable exchange of such Debt Securities. Purchasers of such
Debt Securities should consult their own advisors with respect to the tax
consequences to them of such defeasance and covenant defeasance, including the
applicability and effect of tax laws other than the Federal income tax law.
The Company may exercise its defeasance option with respect to such
Debt Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to the covenants noted under
clause (B) above. However, if such an acceleration were to occur, the
realizable value at the acceleration date of the money and U.S. Government
Obligations in the defeasance trust could be less than the principal and
interest then due on such Debt Securities, in that the required deposit in the
defeasance trust is based upon scheduled cash
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flows rather than market value, which will vary depending upon interest rates
and other factors. (Article 13 and Article 14 of the Senior Indenture and the
Subordinated Indenture, respectively).
The Prospectus Supplement may further describe the provisions, if
any, applicable to defeasance or covenant defeasance with respect to the Debt
Securities of a particular series.
DEFAULT
THE SENIOR INDENTURE
The following are Events of Default under the Senior Indenture with
respect to Senior Debt Securities of any series: (1) failure to pay principal
of or premium, if any, on any Debt Securities of that series when due; (2)
failure to pay any interest on any Senior Debt Securities of that series, when
due, continued for 30 days; (3) failure to deposit any sinking fund payment,
when due, in respect of any Senior Debt Securities of that series; (4) failure
to perform any other covenant of the Company in the Senior Indenture (other than
a covenant included in the Senior Indenture solely for the benefit of series of
Senior Debt Securities other than that series), continued for 60 days after
written notice as provided in the Senior Indenture; (5) failure to pay when due
the principal of or the acceleration of any indebtedness for borrowed money by
the Company or any Major Constituent Bank, in any individual instance or in the
aggregate in the principal amount in excess of $1,000,000, if such indebtedness
is not discharged or such acceleration is not annulled within 10 days after
written notice as provided in the Senior Indenture; (6) certain events in
bankruptcy, insolvency, or reorganization of the Company or any Major
Constituent Bank; and (7) any other Event of Default provided in any
supplemental indenture entered into with respect to Senior Debt Securities of a
particular series as described in the Prospectus Supplement. (Section 501)
If an Event of Default with respect to Senior Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in aggregate principal amount of the Outstanding Senior Debt
Securities of that series by notice as provided in the Indenture may declare
the principal amount to be due and payable immediately. At any time after a
declaration of acceleration with respect to Senior Debt Securities of any
series has been made, but before a judgment or decree for payment of money has
been obtained by the Trustee, the Holders of a majority in aggregate principal
amount of outstanding Senior Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Sections 502 and 503)
THE SUBORDINATED INDENTURE
The Subordinated Indenture defines an Event of Default with respect
to any series of Subordinated Debt Securities as being certain events
involving the bankruptcy, insolvency or reorganization of the Company or any
other Event of Default provided with respect to Securities of any series.
(Section 501) If any Event of Default with respect to Subordinated Debt
Securities of any series at the time Outstanding occurs and is continuing,
either the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding
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Subordinated Debt Securities of that series may declare the principal amount of
all Subordinated Debt Securities of that series to be due and payable
immediately (provided that no such declaration is required upon certain events
of bankruptcy, insolvency or reorganization), but upon certain conditions such
declaration may be annulled and past defaults (except, unless theretofore cured,
a default in payment of principal of (or premium, if any), or interest on the
Subordinated Debt Securities of that series and certain other specified
defaults) may be waived by the Holders of a majority in principal amount of the
Outstanding Subordinated Debt Securities of that series on behalf of the Holders
of all Subordinated Debt Securities of that series. (Sections 502 and 513)
The Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of Subordinated Debt
Securities upon a default in the payment of principal or interest or in the
performance of any covenant or agreement in the Subordinated Debt Securities
of the particular series or in the Subordinated Indenture. The Subordinated
Indenture defines a Default with respect to Subordinated Debt Securities of
any series as any one of the following events: (1) an Event of Default; (2)
failure to pay any interest on any Subordinated Debt Securities of that
series, when due, continued for 30 days; (3) failure to pay principal of (or
premium, if any), on any Subordinated Debt Securities of that series when due;
(4) failure to deposit any sinking fund payment, when due, in respect of any
Subordinated Debt Securities of that series; (5) failure to perform any other
covenant of the Company in the Subordinated Indenture (other than a covenant
included in the Subordinated Indenture solely for the benefit of a series of
Subordinated Debt Securities other than that series) continued for 60 days
after written notice as provided in the Subordinated Indenture; (6) failure to
pay when due the principal of or the acceleration on any indebtedness for
borrowed money by the Company or a Major Constituent Bank, in any individual
instance or in the aggregate in the principal amount in excess of $3,000,000,
if such indebtedness is not discharged or such acceleration is not annulled
within 10 days after written notice as provided in the Subordinated Indenture;
and (7) any other Default with respect to Subordinated Debt Securities of a
particular series as described in the Prospectus Supplement. In case a
Default shall occur and be continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders by
appropriate judicial proceeding as the Trustee deems most effectual. (Section
503)
THE SENIOR AND SUBORDINATED INDENTURES
Reference is made to the Prospectus Supplement for the particular
provisions relating to acceleration of the Maturity of any portion of the
principal amount of a series of Debt Securities upon the occurrence of an
Event of Default and the continuation thereof.
Each Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the
applicable Indenture at the request or direction of any of the Holders unless
such Holders shall have offered to the Trustee reasonable indemnity. (Section
603) Subject to such provisions for the indemnification of the Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series will have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debt Securities of that series. (Series 512)
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Under each Indenture the Company is required to furnish annually to
the Trustee a statement as to the performance by the Company of certain of its
obligations under such Indenture and as to any default in such performance.
(Section 1004)
MODIFICATION OF INDENTURES AND WAIVER OF CONDITIONS
Modifications and amendments of each Indenture may be made by the
Company and the Trustee with the consent of the Holders of 66-2/3% in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment, PROVIDED, HOWEVER, that no
such modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security of each series affected thereby, (1) change the
stated maturity date of the principal of, or any installment of principal of
or interest on, any Debt Securities; (2) reduce the principal amount of, the
rate of interest on or any premium payable upon the redemption of any Debt
Securities; (3) reduce the amount of the principal of any Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof; (4) change any Place of Payment where,
or the coin or currency in which, payment of principal of, or any premium or
interest on, any Debt Securities may be made; (5) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Debt Securities; or (6) in the case of the Subordinated Indenture, modify the
provisions thereof with respect to the subordination of the Subordinated Debt
Securities in a manner adverse to the Holders thereof; or (7) reduce the
percentage in principal amount of Outstanding Debt Securities of any series,
the consent of whose Holders is required for modification or amendment of the
applicable Indenture or for waiver of compliance with certain provisions of
the applicable Indenture or for waiver of certain defaults. (Section 902)
Each Indenture provides that the Holders of 66-2/3% in aggregate
principal amount of the Outstanding Debt Securities of any series may, on
behalf of all Holders of Debt Securities of that series, waive, insofar as
that series is concerned, compliance by the Company with certain restrictive
provisions of the applicable Indenture with respect to the Debt Securities of
such series. (Section 1010 of the Senior Indenture, Section 1008 of the
Subordinated Indenture) The Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series may, on behalf of all
Holders of Debt Securities of that series, waive any past default under the
applicable Indenture with respect to the Debt Securities of such series except
a default in the payment of principal or any premium or interest with respect
to the Debt Securities of such series or in respect of a covenant or provision
of the applicable Indenture which cannot be modified or amended without the
consent of the Holders of each Outstanding Debt Security of such series.
(Section 513)
REGARDING THE TRUSTEE
The First National Bank of Chicago is the Senior Trustee under the
Senior Indenture and the Subordinated Trustee under the Subordinated
Indenture. Certain of the Company's subsidiaries now, or in the future may,
maintain deposit accounts and/or other banking relationships with the Trustee.
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DESCRIPTION OF PREFERRED STOCK
The following statements are brief summaries of the material
provisions relating to the Company's Preferred Stock and are qualified in
their entirety by the provisions of the Company's Certificate of Incorporation
and Bylaws which have been filed with the Commission.
- SERIES A PREFERRED STOCK. The Company's Certificate of
Incorporation authorizes the issuance of 400,000 shares of preferred stock
with no par value. On December 31, 1993, there were 13,396 shares of $3.15
Cumulative Convertible Preferred Stock, Series "A" (the "Series A Preferred
Stock") outstanding. Holders of Series A Preferred Stock have the right to
receive semi-annual dividends at the annual rate of $3.15 per share. Such
right is cumulative and such dividends are payable before dividends may be
paid on the Company's Common Stock. Each shares of Series A Preferred Stock
is convertible into 12.15 shares of the Company's Common Stock. This
conversion right is subject to adjustment in certain events to protect against
dilution of the conversion rights attached to the Series A Preferred Stock.
In the event of a liquidation, dissolution or winding up of the Company, the
holders of Series A Preferred Stock are entitled to receive cash value of
$52.50 per share plus unpaid accumulated preferred dividends before any
distribution is made to holders of the Company's Common Stock. The Company
may, at the option of the Board of Directors, redeem all or any part of the
outstanding Series A Preferred Stock at the redemption price of $52.50 per
share plus unpaid accumulated preferred dividends. The Series A Preferred
Stock is currently not publicly traded.
Holders of the Company's Series A Preferred Stock are entitled to
one vote per share on all matters submitted to a vote of stockholders. Voting
for the election of directors is not cumulative. If at any time four or more
semi-annual dividends on the Series A Preferred Stock are in default, in whole
or in part, the holders of the Series A Preferred Stock as a class will be
entitled to elect four directors and the holders of the Company's Common Stock
will be entitled to elect the remaining directors. Holders of any additional
Preferred Stock hereafter issued may have such full or limited voting rights
as are provided by the Board of Directors.
- JUNIOR SERIES B PREFERRED STOCK. 48,437 shares of the Company's
Preferred Stock are reserved under the Rights Agreement between the Company and
First Security Bank of Utah, N.A., in connection with the Rights associated with
the Company's Common Stock. (SEE "DESCRIPTION OF COMMON STOCK -- Rights Plan")
- ADDITIONAL SERIES OF PREFERRED STOCK. The Board of Directors of
the Company is authorized by the Certificate of Incorporation to provide,
without further shareholder action, for the issuance of one or more series of
preferred stock. The Board of Directors has the power to fix various terms
with respect to each series, including voting powers, designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations, restrictions and redemption, conversion or
exchangeability provisions. Holders of any series of preferred stock issued
hereunder will have no pre-emptive rights.
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The applicable Prospectus Supplement will set forth the following
specific terms regarding the series of Preferred Stock offered thereby: (i)
the designation, number of shares and liquidation preference per share; (ii)
the initial public offering price; (iii) the dividend rate or rates; (iv) the
index, if any, upon which the amount of dividends, if any, is determined; (v)
the dates on which dividends, if any, will accrue and be payable and the
designated record dates for determining the holders entitled to such
dividends; (vi) any redemption or sinking fund provisions; (vii) any
conversion or exchange provisions; (viii) provisions for issuance of global
securities; (ix) the currency (which may be composite currency) in which
payment of dividends, if any, shall be payable if other than United States
dollars; (x) voting rights; and (xi) any additional terms, preferences or
rights.
Under regulations adopted by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), if the holders of shares of any
series of preferred stock of the Company become entitled to vote for the
election of directors because the Board of Directors of the Company has failed
to declare or pay dividends on such series, such series may then be deemed a
class of "voting securities" and a holder of 25 percent or more of such series
(or a holder of five percent or more if it otherwise exercises a "controlling
influence" over the Company) may then be subject to regulation as a bank
holding company in accordance with the Bank Holding Company Act of 1956, as
amended. In addition, at such time as such series is deemed a class of voting
securities, any other bank holding company may be required to obtain the prior
approval of the Federal Reserve Board to acquire five percent or more of such
series and any person other than a bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire ten percent
or more of such series.
The shares of Preferred Stock will, when issued, be fully paid and
nonassessable and will have no pre-emptive rights.
The transfer agent, registrar, dividend disbursing agent and
redemption agent for the Preferred Stock will be specified in the Prospectus
Supplement relating thereto.
Because the Company is a holding company, its rights, the rights of
its creditors and of its stockholders, including the holders of any shares of
Preferred Stock, to participate in any distribution of assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject
to the prior claims of the subsidiary's creditors, except to the extent that
the Company may itself be a creditor with recognized claims against the
subsidiary. The principal sources of the Company's revenues are dividends
received from its subsidiary Banks. Various statutory provisions limit the
amount of dividends the Company's subsidiary Banks and certain nonbank
subsidiaries can pay without regulatory approval, and various regulations can
also restrict the payment of dividends. Certain proposed regulations could
further limit the ability of the Company's subsidiary Banks to pay dividends
to the Company, and federal statutes limit the ability of subsidiary Banks to
make loans to the Company. See "Supervision and Regulation."
DIVIDENDS
The holders of the Preferred Stock of each series will be entitled
to receive, when, as and if declared by the Board of Directors of the Company,
out of funds legally available
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therefor, cumulative or non-cumulative cash or other dividends at such rate or
rates and on such dates as will be set forth in the Prospectus Supplement
relating to such series. Such rates may be fixed or variable or both. If
variable, the formula used for determining the dividend rate for each dividend
period will be set forth in the Prospectus Supplement. Dividends will be
payable to the holders of record as they appear on the stock books of the
Company on such record dates as will be fixed by the Board of Directors of the
Company and specified in the Prospectus Supplement. If the Board of Directors of
the Company fails to declare a dividend payable on a dividend payment date on
any series of the Preferred Stock for which dividends are noncumulative
("Noncumulative Preferred Stock"), then the holders of such series of the
Preferred Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and the Company will have
no obligation to pay a dividend for such period, whether or not dividends on
such series are declared payable on any future dividend payment dates.
No dividends may be declared in respect of any dividend period on any
other series or class of preferred stock ranking on a parity as to dividends
unless full cumulative dividends on all outstanding shares of each series of
Preferred Stock on which dividends are cumulative shall have been paid in full
or contemporaneously are declared and paid through the most recent dividend
payment date, unless otherwise indicated in the Prospectus Supplement. In the
event that full cumulative dividends on such Preferred Stock have not been
declared and paid or set apart when due, the Company may not declare or pay any
dividends on, or make other distributions on or make any payment on account of
the purchase, redemption, or other retirement, of its Common Stock or any other
stock of the Company ranking as to dividends or upon liquidations junior to such
Preferred Stock (other than, in the case of dividends or distributions,
dividends or distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Common Stock or such other junior ranking
stock), unless full cumulative dividends on such Preferred Stock are made or set
apart for payment, unless otherwise indicated in the Prospectus Supplement.
REDEMPTION
The shares of any series of Preferred Stock may be redeemable at the
option of the Company and may be subject to mandatory redemption pursuant to a
sinking fund or otherwise, in each case upon the terms, on the date or dates
and at the redemption price or prices set forth in the Prospectus Supplement
related to such series. If fewer than all shares of Preferred Stock are to be
redeemed, the shares to be redeemed shall be selected by the Company pro rata
or by lot, or by any other method determined by the Board of Directors to be
equitable. Under regulations of the Federal Reserve Board, any perpetual
preferred stock redeemable at the option of the Company may qualify as Tier 1
or Tier 2 capital only if the redemption is subject to prior approval of the
Federal Reserve Board. Therefore, any redemption of Preferred Stock at the
option of the Company will require the prior approval of the Federal Reserve
Board in order for the Preferred Stock to qualify as capital for bank
regulatory purposes.
If any dividends on shares of any series of Preferred Stock are in
arrears, no shares of Common Stock or shares of capital stock ranking junior
to or on parity with the Preferred Stock shall be redeemed and no shares of
such series of Preferred Stock shall be redeemed unless all outstanding shares
of such series are simultaneously redeemed, and the Company
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shall not purchase or otherwise acquire any shares of such series; provided,
however, that the foregoing shall not prevent the purchase or acquisition of
shares of such series pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of such series.
Notice of redemption shall be given by mailing to each record holder
of the shares to be redeemed, not less than 40 days nor more than 70 days prior
to the date fixed for the redemption thereof, to the respective addresses of
such holders as the same shall appear on the Company's stock books. Each such
notice shall state: (i) the redemption date; (ii) the number of shares and
series of the Preferred Stock to be redeemed; (iii) the redemption price and the
manner in which such redemption price is to be paid and delivered; (iv) the
place or places where certificates for such shares of Preferred Stock are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date. If fewer
than all shares of any series of the Preferred Stock held by any holder are to
be redeemed, the notice mailed to such holder shall also specify the number of
shares to be redeemed from such holder.
If notice of redemption has been given, from and after the
redemption date for the shares of the series of the Preferred Stock called for
redemption (unless default shall have occurred by the Company in providing
money for the payment of the redemption price of the shares so called for
redemption), dividends on the shares of Preferred Stock so called for
redemption will cease to accrue, any right to convert the shares of Preferred
Stock will terminate, such shares will no longer be deemed to be outstanding,
and all rights of the holders thereof as stockholders of the Company (except
the right to receive the redemption price) will cease. Upon surrender in
accordance with such notice of the certificates representing any shares so
redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Company will so require and the notice shall so state), the
redemption price set forth above will be paid out of funds provided by the
Company. If fewer than all of the shares represented by any such certificate
are redeemed, a new certificate will be issued representing the unredeemed
shares without cost to the holder thereof.
LIQUIDATION PREFERENCE
Upon any liquidation, dissolution or winding up of the Company, the
holders of shares of each series of Preferred Stock shall be entitled to receive
out of the assets of the Company available for distribution to stockholders,
before any distribution of assets is made to or set apart for the holders of
Common Stock or of any other shares of stock of the Company ranking as to such a
distribution junior to the shares of such series, with respect to the Preferred
Stock, an amount described in the Prospectus Supplement relating to such series
of Preferred Stock. If, in any case of any such liquidation, dissolution or
winding up of the Company, the assets of the Company or the proceeds thereof
shall be insufficient to pay in full the amounts payable with respect to shares
of each series of Preferred Stock, and any other shares of stock of the Company
ranking as to any such distribution on a parity therewith, the holders of shares
of such series of Preferred Stock and of such other shares will share ratably in
any such distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of shares of such series of Preferred Stock of the full preferential
amounts to which they are entitled, the holders of shares of such series of
Preferred Stock will not be entitled to any
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further participation in any distribution of assets by the Company, unless
otherwise provided in the Prospectus Supplement. A consolidation or merger of
the Company with one or more corporations shall not be deemed to be a
liquidation, dissolution or winding up of the Company.
The terms, if any, on which shares of any series of Preferred Stock
are convertible into or exchangeable for Debt Securities or Common Stock will
be set forth in the Prospectus Supplement relating thereto. Such terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holder, or at the option of the Company, in which the number of shares
of Common Stock to be received by the holders of Preferred Stock would be
calculated according to the market price of Common Stock as of a time stated
in the Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
The following description of the Common Stock sets forth certain
general terms and provisions of the Common Stock to which any Prospectus
Supplement may relate, including a Prospectus Supplement providing that Common
Stock will be issuable in conversion of or exchange for Debt Securities or
Preferred Stock issued by the Company. The statements below describing the
Common Stock are in general terms and are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of the
Company's Certificate of Incorporation and By-laws.
GENERAL
The Company is currently authorized to issue 150,000,000 shares of
Common Stock with a par value of $1.25 per share. As of December 31, 1993,
there were outstanding 48,436,565 shares (net of shares held as Treasury
Stock) of the Company's Common Stock. At such date, there were an additional
416,350 shares reserved for issuance under the Company's Comprehensive
Management Incentive Plan as stock bonuses and other awards; 352,670 shares
reserved for issuance under the Company's Dividend Reinvestment Plan; 162,761
shares reserved for issuance upon the conversion of the Company's Series A
Preferred Stock, and 2,532,599 shares reserved for issuance upon exercise of
outstanding stock options.
The Company's Common Stock has no pre-emptive or conversion rights.
The Company's Common Stock is not subject to redemption by the
Company, and there is no restriction on the repurchase by the Company of
shares of the Company's Common Stock except for certain regulatory limits.
VOTING
The holders of the Company's Common Stock are entitled to voting
rights for the election of directors and for other purposes, subject to the
voting rights of the holders of Preferred Stock conferred by law and to the
specific voting rights granted to each series of
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Preferred Stock and to voting rights which may in the future be granted to
subsequently created series of Preferred Stock.
DIVIDENDS
Dividends will be determined by the Company's Board of Directors in
light of circumstances existing at the time, including the earnings and
financial condition of the Company, and there is no assurance that dividends
will continue to be paid at current levels. No material restrictions have
been imposed on the Company's ability to pay dividends from its earned surplus
by bank regulations or applicable law. As of December 31, 1993, approximately
$659.92 million could be applied to dividend payments to its shareholders and
certain other payments. Payment of dividends on the Company's Common Stock is
also subject to the prior rights of the Company's outstanding Preferred Stock.
RIGHTS PLAN
As of August 28, 1989, the Company adopted a Shareholder Rights
Agreement (the "Plan") and the Board of Directors of the Company on that date
(a) declared a dividend of one "Right" for each share of the Company's Common
Stock held of record as of the close of business on September 8, 1989, and (b)
authorized the issuance of one Right in respect of each share of the Company's
Common Stock issued after September 8, 1989 and prior to the occurrence of
certain events described in the Plan, primarily involving the acquisition of
target levels of the Company's shares by persons not then holding such
amounts. Each Right entitles the registered holder to purchase from the
Company a unit consisting of one-thousandth of a share of Junior Series B
Preferred Stock at a purchase price of $44.44 per unit. The Rights are
attached to all shares of the Company's Common Stock that were outstanding on
September 8, 1989 or have been issued since that date, and no separate Rights
Certificates have been or will be distributed until the occurrence of certain
events described in the Rights Agreement. Until the occurrence of such
events, no Right may be exercised or traded separately from the Company's
Common Stock. Following separation, the Rights may, depending upon the
occurrence of certain events described in the Rights Agreement, entitle the
holders thereof to either purchase or receive additional shares of the
Company's Common Stock. The Rights will expire at the close of business on
August 28, 1999, unless earlier redeemed by the Company, which may be done at
$0.01 per Right, in accordance with the terms of the Plan.
The Plan is designed to protect the Company's stockholders' interests
in the event of an unsolicited attempt to acquire the Company, including a
gradual accumulation of shares in the open market. The Company believes that
the Plan provides protection against a partial or two-tier tender offer that
does not treat all stockholders equally and against other coercive takeover
tactics which could impair the Company's Board of Directors' ability to
represent the Company's stockholders fully. Management believes that the Rights
should also deter any attempt by a controlling stockholder to take advantage of
the Company through self-dealing transactions. The Plan is not intended to
prevent a takeover of the Company. Issuing the Rights has no dilutive effect,
does not affect reported earnings per share, and does not change the way in
which the Company's shares are traded. However, the exercise of Rights by some
but not all of the Company's stockholders would have a dilutive effect on
nonexercising stockholders. Moreover, some may argue that the Plan has the
potential for "entrenching"
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current management by allowing current voting stockholders to increase their
voting shares, thus making a tender offer more difficult and costly.
SUPERMAJORITY VOTE REQUIREMENT
The Company's Certificate of Incorporation provides that, in
general, an affirmative vote of not less than 80% of the outstanding shares of
the Company's Common Stock is required to approve or authorize certain major
corporate transactions involving the Company and holders of more than 15% of
the Company's Common Stock (including certain mergers, substantial
dispositions of assets, liquidation or dissolution, or recapitalization). The
80% vote is not required in some such circumstances, including certain
transactions which have been approved in advance by a majority of the Board of
Directors, or where holders of the Company's Common Stock receive a price per
share that satisfies the fairness criteria set forth in the Certificate of
Incorporation.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203 ("Section 203") of the Delaware General Corporation Law
(the "DGCL") applies to Delaware corporations with a class of voting stock
listed on a national securities exchange, authorized for quotation on an
inter-dealer quotation system or held of record by 2,000 or more persons. In
general, Section 203 prevents an "interested stockholder" (defined generally as
any person owning, or who is an affiliate or associate of the corporation and
has owned in the preceding three years, 15% or more of a corporation's
outstanding voting stock and the affiliates and associates of such person) from
engaging in a "business combination" (as defined) with a Delaware corporation
for three years following the date such person became an interested stockholder,
unless (i) before such person became an interested stockholder, the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder; (ii) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the corporation and by employee stock plans that do not provide employees
with the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (iii) on or subsequent
to the date such person became an interested stockholder, the business
combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of the holders
of two-thirds of the outstanding voting stock of the corporation not owned by
the interested stockholder. Under Section 203, the restrictions described above
also do not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of one of certain
extraordinary transactions involving the corporation and a person who had not
been an interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors.
Section 203 could have the effect of delaying, deferring or
preventing a change of control of the Company.
29
<PAGE>
LIMITATION OF DIRECTORS' LIABILITY
The DGCL authorizes corporations to limit or eliminate the personal
liability of directors, to the corporation and its stockholders, for monetary
damages in connection with the breach of a director's fiduciary duty of care.
The duty of care requires that, when acting on behalf of the corporation,
directors must exercise an informed business judgment based on all material
information reasonably available to them. Absent the limitation authorized by
the Delaware statute, directors could be accountable to corporations and their
stockholders for monetary damages for conduct that does not satisfy such duty
of care. Although the statute does not change a director's duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. The Company's Certificate of Incorporation limits
the liability of the Company's directors to the Company or its stockholders to
the fullest extent permitted by the Delaware statute as in effect from time to
time. Specifically, directors of the Company will not be personally liable
for monetary damages for breach of a director's fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the DGCL or (iv) for any transaction
from which the director derived an improper personal benefit.
The inclusion of this provision in the Certificate of Incorporation
may have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Company and its
stockholders. This provision does not affect a director's responsibilities
under certain other laws such as the federal securities laws or state or federal
environmental laws.
OFFICER AND DIRECTOR INDEMNIFICATION
The Company's Bylaws require indemnification of the Company's
directors and executive officers to the full extent permitted by the DGCL,
except in connection with an action initiated by such officer or director or
in an action against the Company, its directors, officers, employees or
agents, unless (i) such indemnification is expressly required by law, (ii) the
proceeding in question was authorized by the Board of Directors or (iii) such
indemnification is otherwise authorized by the DGCL. The Company's Bylaws
provide that the Company shall have the power, but shall not be required, to
indemnify its other officers, employees and agents as set forth in the DGCL.
The Company provides liability insurance for its officers and
directors for certain losses arising from claims or charges which may be made
against them while acting in their capacities as directors or officers of the
Company.
30
<PAGE>
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of a
particular series of Common Stock. The Common Stock Warrants are to be issued
under warrant agreements (each a "Common Stock Warrant Agreement") to be
entered into between the Company and First Security Bank, Utah, N.A., as
warrant agent (the "Common Stock Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of Common Stock
Warrants (the "Offered Common Stock Warrants"). A copy of the Common Stock
Warrant Agreement, including the form of common stock warrant certificate (the
"Common Stock Warrant Certificate") representing the Common Stock Warrants,
substantially in the form in which it will be executed, is filed as an exhibit
to the Registration Statement. The following summaries of certain provisions
of the Common Stock Warrant Agreement and Common Stock Warrant Certificates do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Common Stock Warrant
Agreement and the Common Stock Warrant Certificates, respectively, including
the definitions therein of certain terms.
GENERAL
If Common Stock Warrants are offered, the Prospectus Supplement will
describe the terms of the Offered Common Stock Warrants, and the Common Stock
Warrant Agreement relating to the Offered Common Stock Warrants and the Common
Stock Warrant Certificates representing the Offered Common Stock Warrants
including the following:
(i) the number of shares of Common Stock purchasable upon
exercise of Common Stock Warrants and the price at which such number
of shares of Common Stock may be purchased upon such exercise;
(ii) the date on which the right to exercise such Common
Stock Warrants shall commence and the date (the "Expiration Date")
on which such right shall expire;
(iii) United States Federal income tax consequences
applicable to such Common Stock Warrants; and
(iv) any other terms of such Common Stock Warrants.
Common Stock Warrants for the purchase of Common Stock will be
offered and exercisable for U.S. dollars only. Common Stock Warrants will be
issued in registered form only. The exercise price for Common Stock Warrants
will be subject to adjustment in accordance with the applicable Prospectus
Supplement.
EXERCISE OF COMMON STOCK WARRANTS
Each Common Stock Warrant will entitle the holder to purchase for
cash such number of shares (as applicable) of Common Stock, at such exercise
price as shall in each case be set forth in, or calculable from, the
Prospectus Supplement relating to the Offered Common Stock Warrants, which
exercise price may be subject to adjustment upon the
31
<PAGE>
occurrence of certain events as set forth in such Prospectus Supplement.
Offered Common Stock Warrants may be exercised at any time up to the close of
business of the Expiration Date set forth in the Prospectus Supplement relating
to the Offered Common Stock Warrants. After the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Company), unexercised Common Stock Warrants will become void.
The place or places where, and the manner in which, Common Stock Warrants may be
exercised shall be specified in the Prospectus Supplement relating to such
Common Stock Warrants.
Prior to the exercise of any Common Stock Warrants to purchase Common
Stock, holders of such Common Stock Warrants will not have any rights of holders
of the Common Stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through agents, (ii) through
underwriters, (iii) through dealers and (iv) directly to purchasers.
Securities may be offered and sold through agents designated by the
Company from time to time. Any such agent involved in the offer or sale of
the Securities will be named, and any commissions payable by the Company to
such agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a
best efforts basis for the period of its appointment. Any such agent may be
deemed to be an underwriter, as that term is defined in the Securities Act of
1933, as amended, of the Securities so offered and sold. Agents may be
entitled under agreements which may be entered into with the Company to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
If an underwriter or underwriters are utilized in the sale of the
Offered Securities, the Company will execute an underwriting agreement with
such underwriter or underwriters at the time an agreement for such sale is
reached, and the names of the specific managing underwriter or underwriters,
as well as any other underwriters, and the terms of the transaction, including
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement which will be used by the underwriters to make resales
of the Securities. Underwriters will acquire Securities for their own account
and may resell such Securities from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at
varying prices determined at the time of sale. Securities may be offered to
the public either through underwriting syndicates represented by managing
underwriters, or directly by the managing underwriters. The underwriters may
be entitled, under the relevant underwriting agreement, to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. If an underwriter is utilized in the sale
of the Securities, the underwriting agreement will provide that the
obligations of the underwriter is subject to certain conditions precedent and
that the underwriter with respect to a sale of Securities will be obligated to
purchase all such Securities if any are purchased.
32
<PAGE>
If a dealer is utilized in the sale of the Securities, the Company
will sell such Securities to the dealer, as principal. The dealer may then
resell such Securities to the public at varying prices to be determined by such
dealer at the time of resale. Any such dealer may be deemed to be an
underwriter, as such term is defined in the Securities Act of 1933, as amended,
of the Securities so offered and sold. Dealers may be entitled, under
agreements which may be entered into with the Company, to indemnification by the
Company against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. The name of the dealer and the terms of the
transaction will be set forth in the Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act of 1933, as amended, with respect to any sale thereof.
The terms of any such sales will be described in the Prospectus Supplement
relating thereto.
If so indicated in the Prospectus Supplement, the Company will
authorize agents and underwriters to solicit offers by certain institutions to
purchase Securities from the Company at the public offering price set forth in
the Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Each Contract will be for an amount not less than, and, unless
the Company otherwise agrees, the aggregate principal amount of Securities
sold pursuant to Contracts shall be not less nor more than, the respective
amounts stated in the Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions but shall in all cases be
subject to the approval of the Company.
Contracts will not be subject to any conditions except that any
related sale of Securities to underwriters shall have occurred and the
purchase by an institution of the Securities covered by its Contract shall not
at the time of delivery be prohibited under the laws of any jurisdiction in
the United States to which such institution is subject. A commission
indicated in the Prospectus Supplement will be paid to underwriters and agents
soliciting purchases of Offered Securities pursuant to Contracts accepted by
the Company.
The place and time of delivery of the Securities are set forth in
the accompanying Prospectus Supplement.
The offer and sale of the Securities by any affiliate of the Company
will comply with the requirements of Schedule E of the By-laws of the National
Association of Securities Dealers, Inc. regarding underwriting of securities
of an affiliate.
Certain of the underwriters or agents and their associates may be
customers of, engage in transactions with, and perform services for, the Company
in the ordinary course of business.
33
<PAGE>
EXPERTS
The consolidated financial statements as of December 31, 1993 and
1992, and for each of the three years in the period ended December 31, 1993
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K have been audited by Deloitte & Touche, independent auditors, as
stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon
for the Company by Ray, Quinney & Nebeker, 79 South Main Street, Salt Lake
City, Utah 84111; and for any underwriters by Sullivan & Cromwell, 444 South
Flower Street, Los Angeles, California 90071. Alonzo W. Watson and Brad D.
Hardy, both shareholders and directors of Ray, Quinney & Nebeker, are also
officers of the Company. As of December 31, 1993, Ray, Quinney & Nebeker
attorneys, together with their immediate families, beneficially owned less
than 4% of the then outstanding Common Stock of the Company. From time to
time, Sullivan & Cromwell has performed legal services for the Company.
34
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement or the Prospectus, and
if given or made, such information or representations must not be relied upon
as having been authorized. Neither the delivery of this Prospectus Supplement
or the Prospectus, nor any sale made hereunder and thereunder, shall under any
circumstances create an implication that there has been no change in the
affairs of First Security Corporation since the date hereof or thereof. This
Prospectus Supplement and the Prospectus do not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such offer
or solicitation.
-------------
TABLE OF CONTENTS
PAGE
Available Information............. 2
Incorporation of Certain
Documents by Reference.......... 2
First Security Corporation........ 3
Use of Proceeds................... 12
Description of Debt Securities.... 12
Description of Preferred Stock.... 22
Description of Common Stock....... 26
Description of Common
Stock Warrants.................. 29
Plan of Distribution.............. 30
Experts........................... 32
Validity of Securities............ 32
- -----------------------------------------------
[LOGO]
$ 300,000,000
PROSPECTUS
---------------------------------
<PAGE>
EDGAR
APPENDIX EXPLAINING DIFFERENCES BETWEEN PAPER AND ELECTRONIC FILING
On the Prospectus Front Cover a Red and Burgundy First Security
Corporation Logo appears where indicated.
On the Prospectus Back Cover a Red and Burgundy First Security
Corporation Logo appears where indicated.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
Registration Fee........................................$103,449
Rating Agency Fees..........................................50,000
Blue Sky Fees and Expenses..................................20,000
Accounting Fees and Expenses................................20,000
Legal Fees and Expenses.....................................75,000
Printing and Engraving Expenses.............................40,000
Trustee's Fees and Expenses.................................15,000
Miscellaneous Expenses......................................10,000
--------
$335,949
--------
--------
</TABLE>
ALL OF THE ABOVE ITEMS EXCEPT THE REGISTRATION FEE ARE ESTIMATED.
ITEM 15. Indemnification of Directors and Officers.
INDEMNIFICATION. Delaware law provides that a director,
employee, officer or agent of a corporation may be indemnified against liability
(other than in an action by or in the right of the corporation) and other costs
incurred by such person in connection with such proceeding, provided such person
acted in good faith and in a manner such person reasonably believed to be in,
and not opposed to, the best interests of the corporation, and, with respect to
any criminal proceeding, had no reason to believe the conduct was unlawful. For
actions or suits brought by or in the name of the corporation, Delaware provides
that a director, employee, officer or agent of a corporation may be indemnified
against expenses incurred by such person in connection with such proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in and not opposed to, the best interests of the corporation, except that
if such person is adjudged to be liable to the corporation, such person can be
indemnified if and only to the extent that a court determines that despite the
adjudication of liability, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court shall deem proper. On the other hand, if he/she prevails, indemnification
is mandatory. Under Delaware law, the determination of whether an officer or
director is entitled to indemnification (that is, whether or not the person has
met the statutory standard of conduct required for indemnification) is to be
made in certain circumstances by independent legal counsel. First Security
Corporation's Articles of Incorporation, as amended, provide for indemnification
of such persons to the full extent allowed by applicable law. The proposed
forms of Underwriting Agreement and Distribution Agreement, filed as Exhibits
1(a) and 1(b), respectively, to this Registration Statement provide for
indemnification of the Company's officers and directors
II - 2
<PAGE>
who signed the Registration Statement against certain liabilities, including
liabilities under the Securities Act of 1933.
DIRECTOR'S LIABILITY. Delaware allows a corporation to provide,
in its articles or certificate of incorporation, a provision which limits or
eliminates the personal liability of a director to the corporation and its
shareholders or stockholders for monetary damages for such person's breach of
fiduciary duty, provided that such provision may not so limit a director's
liability (i) for a breach of his or her duty of loyalty to the corporation;
(ii) for acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law; (iii) for unlawful payments of
dividends, certain stock repurchases or redemptions; or (iv) for any
transaction from which the director derived an improper personal benefit.
These provisions have the effect of protecting a corporation's
directors against personal liability from breaches of their duty of care.
First Security Corporation, with the approval of its stockholders, amended its
Certificate of Incorporation to include such provisions in 1988.
ITEM 16. Exhibits.
(1)(a) Form of Underwriting Agreement.
(1)(b) Form of Agency Agreement for Medium-Term Notes
(Incorporated by reference to Exhibit 1 of the
Company's Registration Statement on Form S-3 (No.
33-38483)).
(3)(a) Certificate of Incorporation of the Company, as
amended, (Incorporated by reference to Exhibit 4(a) of
the Company's Registration Statement on Form S-3 (No.
33-38483)).
(3)(b) By-laws of the Company (Incorporated by reference to
Exhibit 3(2) of the Company's Registration Statement
on Form S-4 (No. 33-30045)).
(4)(a) Form of Indenture, dated as of March 1, 1994, between
the Registrant and The First National Bank of Chicago,
as Trustee, including form of Debt Security, with
respect to the Senior Debt Securities.
(4)(b) Form of Indenture, dated as of March 1, 1994, between
the Registrant and The First National Bank of Chicago,
as Trustee, including form of Debt Security, with
respect to the Subordinated Debt Securities.
(4)(c) Shareholder Rights Agreement, dated as of August 26,
1989, between the Company and First Security Bank of
Utah, N.A., as Rights Agent (Incorporated by reference
to Exhibits 4(c) and 4(d) of the Company's
Registration Statement on Form S-3 (No. 33-42784)).
II - 3
<PAGE>
(4)(d) Form of Certificate of Designations with respect to
the Preferred Stock.
(4)(e) Form of specimen certificate representing the Common
Stock (Incorporated by reference to Exhibit 4(e) of
the Company's Registration Statement on Form S-3 (No.
33-42784)).
(4)(f) Form of specimen certificate representing the
Preferred Stock.
(4)(g) Form of Warrant Agreement for Common Stock (including
form of Common Stock Warrant Certificate).
(5) Opinion of Ray, Quinney & Nebeker.
(12) Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
(23)(a) Consent of Deloitte & Touche.
(24)(b) Consent of Ray, Quinney & Nebeker (included in Exhibit
(5)).
(25) Powers of Attorney (included in signature pages).
(26) Statement of Eligibility and Qualification of The First
National Bank of Chicago under Trust Indenture Act of
1939 on Form T-1.
ITEM 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
II - 4
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned registrant hereby further undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 and each filing of the
registrant's employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II - 5
<PAGE>
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II - 6
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Pre-Effective Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Salt Lake City, Utah,
on April 7, 1994.
FIRST SECURITY CORPORATION
By: /s/ MORGAN J. EVANS
------------------------------
Morgan J. Evans
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Pre-Effective Amendment No. 1 to Registration Statement has been signed
by the following persons in the capacities and on the date or dates indicated.
SIGNATURE TITLE DATE
/s/ SPENCER F. ECCLES* Chairman and Chief
- ---------------------------- Executive Officer, Director April 7, 1994
Spencer F. Eccles
/s/ MORGAN J. EVANS* President and Chief
- ---------------------------- Operating Officer, Director April 7, 1994
Morgan J. Evans
/s/ SCOTT C. ULBRICH* Executive Vice President April 7, 1994
- ---------------------------- and Chief Financial Officer
Scott C. Ulbrich (Principal Financial and
Accounting Officer)
/s/ JAMES C BEARDALL* Director April 7, 1994
- ----------------------------
James C. Beardall
/s/ RODNEY H. BRADY* Director April 7, 1994
- ----------------------------
Rodney H. Brady
/s/ JAMES E. BRUCE* Director April 7, 1994
- ----------------------------
James E. Bruce
II - 7
<PAGE>
/s/ Director
- ----------------------------
Thomas D. Dee II
/s/ DR. DAVID P. GARDNER* Director April 7, 1994
- ----------------------------
Dr. David P. Gardner
/s/ KENDALL D. GARFF* Director April 7, 1994
- ----------------------------
Kendall D. Garff
/s/ U. EDWIN GARRISON* Director April 7, 1994
- ----------------------------
U. Edwin Garrison
/s/ DAVID B. HAIGHT* Director April 7, 1994
- ----------------------------
David B. Haight
/s/ JAY DEE HARRIS* Director April 7, 1994
- ----------------------------
Jay Dee Harris
/s/ ROBERT T. HEINER* Director April 7, 1994
- ----------------------------
Robert T. Heiner
/s/ Director
- ----------------------------
Howard W. Hunter
/s/ KAREN H. HUNTSMAN* Director April 7, 1994
- ----------------------------
Karen H. Huntsman
/s/ G. FRANK JOKLIK* Director April 7, 1994
- ----------------------------
G. Frank Joklik
/s/ B. Z. KASTLER* Director April 7, 1994
- ----------------------------
B. Z. Kastler
/s/ JOSEPH G. MALOOF* Director April 7, 1994
- ----------------------------
Joseph G. Maloof
II - 8
<PAGE>
/s/ SCOTT S. PARKER* Director April 7, 1994
- ----------------------------
Scott S. Parker
/s/ DR. ARTHUR K. SMITH* Director April 7, 1994
- ----------------------------
Dr. Arthur K. Smith
/s/ JAMES L. SORENSON* Director April 7, 1994
- ----------------------------
James L. Sorenson
/s/ HAROLD J. STEELE* Director April 7, 1994
- ----------------------------
Harold J. Steele
*By /s/ A. ROBERT THORUP
--------------------------------
A. Robert Thorup
Attorney-in-Fact
II - 9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
CONSECUTIVE
EXHIBIT PAGE
NUMBER EXHIBIT DESCRIPTION NUMBER
- --------
<C> <S> <C>
(1)(a) Form of Underwriting Agreement. *
(1)(b) Form of Agency Agreement for Medium-Term Notes (Incorporated by
reference to Exhibit 1 of the Company's Registration Statement on
Form S-3 (No. 33-38483)). *
(3)(a) Certificate of Incorporation of the Company, as amended,
(Incorporated by reference to Exhibit 4(a) of the Company's
Registration Statement on Form S-3 (No. 33-42784)). *
(3)(b) By-laws of the Company (Incorporated by reference to Exhibit 3(2) of
the Company's Registration Statement on Form S-4 (No. 33- 30045)). *
(4)(a) Form of Indenture, dated as of March 1, 1994, between the Registrant
and The First National Bank of Chicago, as Trustee, including form
of Debt Security, with respect to the Senior Debt Securities. *
(4)(b) Form of Indenture, dated as of March 1, 1994, between the Registrant
and The First National Bank of Chicago, as Trustee, including form
of Debt Security, with respect to the Subordinated Debt Securities. *
(4)(c) Shareholder Rights Agreement, dated as of August 26, 1989, between
the Company and First Security Bank of Utah N.A. as Rights Agent
(Incorporated by reference to Exhibits 4(c) and 4(d) of the
Company's Registration Statement on Form S-3 (No. 33-42784)). *
(4)(d) Form of Certificate of Designations with respect to the Preferred
Stock. 48
(4)(e) Form of specimen certificate representing the Common Stock
(Incorporated by reference to Exhibit 4(e) of the Company's
Registration Statement on Form S-3 (No. 33-42784)). *
(4)(f) Form of specimen certificate representing the Preferred Stock. 71
(4)(g) Form of Warrant Agreement for Common Stock (including form of Common
Stock Warrant Certificate). *
(5) Opinion of Ray, Quinney & Nebeker. 75
</TABLE>
II - 10
<PAGE>
<TABLE>
<CAPTION>
CONSECUTIVE
EXHIBIT PAGE
NUMBER EXHIBIT DESCRIPTION NUMBER
- --------
<C> <S> <C>
(12) Computation of Ratios of Earnings to Fixed Charges and Earnings to SEPARATELY FILED BY
Combined Fixed Charges and Preferred Stock Dividends. Separately THE REGISTRANT VIA
EDGAR
(23)(a) Consent of Deloitte & Touche. 78
(23)(b) Consent of Ray, Quinney & Nebeker (included in Exhibit (5)). *
(25) Powers of Attorney (included in signature pages). *
(26) Statement of Eligibility and Qualification of The First National
Bank of Chicago under Trust Indenture Act of 1939 on Form T-1. *
<FN>
- --------------
*Filed previously with Registration Statement; incorporated herein by
reference.
</TABLE>
II - 11
<PAGE>
EXHIBIT(4)(d)
Form of Certificate of Designations with respect to the Preferred Stock.
<PAGE>
EXHIBIT 4(d)
FORM OF CERTIFICATE OF DESIGNATION
CERTIFICATE OF DESIGNATIONS
PURSUANT TO SECTION 151
OF
THE GENERAL CORPORATION LAW
OF
THE STATE OF DELAWARE
[INSERT TITLE OF SERIES OF PREFERRED STOCK]
OF
FIRST SECURITY CORPORATION
FIRST SECURITY CORPORATION, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES
that the following resolutions were duly adopted by and pursuant to the
authority of the Board of Directors of the Corporation, pursuant to authority
conferred upon the Board of Directors by the provisions of the Certificate of
Incorporation, as amended, of the Corporation, which authorizes the issuance
of up to 400,000 shares of preferred stock, no par value ("Preferred Stock"),
and pursuant to authority conferred upon the Board of Directors by Section
141(c) of the General Corporation Law of the State of Delaware, and by the
Bylaws of the Corporation.
The Board of Directors, on ______________, 199_, adopted the
following resolutions authorizing the issuance of shares of a series of the
Corporation's preferred stock, and the number and stated value of the shares
of such preferred stock, as well as other terms thereof:
RESOLVED, that, pursuant to the Delaware Corporation Law and the
Certificate of Incorporation of the Corporation, the Board of Directors of the
Corporation hereby authorizes the Corporation to issue a series of its
preferred stock, no par value (collectively, the "Preferred Stock") of the
Corporation, the number, preferences and privileges, stated value,
designations, relative, participating, voting, redemption, optional and other
special rights, and qualifications, limitations and restrictions of which, in
addition to those set forth in the Certificate of Incorporation, as amended,
of the Corporation, are hereby fixed as follows:
1. NUMBER OF SHARES. The series of preferred stock created
hereby shall comprise _______ shares designated as the [Insert title of series
of Preferred Stock] ("Preferred Stock"). The Preferred Stock is without par
value but with a stated value of $________ per share. The number of authorized
shares of each series of the Preferred Stock may be reduced by further
resolution duly adopted by or pursuant to authority conferred by the Board of
directors of the Corporation and by the filing of a Certificate Of Designations
pursuant to the
<PAGE>
provisions of the General Corporation Law of the State of Delaware stating that
such reduction has been so authorized, but the number of authorized shares of
the Preferred Stock shall not be increased.
2. [CUMULATIVE][NONCUMULATIVE] DIVIDENDS.
2.1 RIGHT TO RECEIVE CASH DIVIDENDS. The holders of shares of
the Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors of the Corporation or any duly authorized committee
thereof, out of funds legally available therefor, [cumulative] [noncumulative]
cash dividends, payable quarterly in arrears on [March 1, June 1, September 1
and December 1] of each year, commencing ___________________, ______________
(each a "Dividend Payment Date") at the rates per annum payable as set forth
in this Section 2. Each such dividend shall be paid to the holders of record
of shares of the Preferred Stock as they appear on the stock register of the
Corporation on such record date, not exceeding 30 days preceding the Dividend
Payment Date thereof, as shall be fixed by the Board of Directors of the
Corporation or by a committee of said Board of Directors duly authorized to
fix such date.
The amount of dividends per share payable for each Quarterly
Dividend Period shall be computed by dividing the dividend rate for such
Dividend Period by four and applying such rate against the stated value per
share of the Preferred Stock. Dividends payable on the Preferred Stock for
any period less than a full Quarterly Dividend Period, and for any portion of
any Initial Dividend Period occurring prior to ____________, shall be computed
on the basis of a 360-day year of four 90-day quarters and the actual number
of days elapsed in the period for which payable.
[IF CUMULATIVE, INSERT -- Dividends on the Shares of Series ____ Preferred
Stock shall be fully cumulative and shall accrue (whether or not declared) from
the first day of each quarter as to which such dividend may be payable as herein
provided, and shall be payable on the Dividend Payment Date first succeeding the
end of each such quarter, except that with respect to the first ______ dividend,
such dividend shall accrue from the date of issue of the Series ____ Preferred
Stock. For any quarter in which dividends are not paid in cash on the Dividend
Payment Date first succeeding the end of such quarter, such accrued dividends
shall be added (solely for the purpose of calculating dividends payable on the
Series ____ Preferred Stock) to the Liquidation Preference (as hereinafter
defined) of the Series ____ Preferred Stock effective at the beginning of the
quarter following the quarter as to which such dividends were not paid and shall
thereafter accrue additional dividends in respect thereof ("Additional
Dividends") from time to time until such unpaid dividends have been paid in
full.]
[IF NONCUMULATIVE, INSERT -- Dividends on the shares of Series
____ Preferred Stock shall be noncumulative so that if a dividend on the
shares of Series ____ Preferred Stock with respect to any quarter is not
declared by the Board of Directors of the Company, then the Company shall have
no obligation at any time to pay a dividend on the shares of Series ____
Preferred Stock in respect of such quarter. Holders of the shares of the
Series ____ Preferred
<PAGE>
Stock shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of the noncumulative dividends declared by the Board of
Directors as set forth herein.]
2.2 PRIORITY AS TO DIVIDENDS. No full dividends shall be
declared or paid or set apart for payment on Preferred Stock of any series
ranking, as to dividends, on a parity with or junior to the Series ____
Preferred Stock for any period unless full dividends on the Series ____
Preferred Stock for the immediately preceding Dividend Period have been or
contemporaneously are declared and paid (or declared and a sum sufficient for
the payment thereof set apart for such payment). When dividends are not paid
in full (or declared and a sum sufficient for such full payment so set apart)
upon the Series ____ Preferred Stock and any other Preferred Stock ranking on
a parity as to dividends with the Series ____ Preferred Stock, all dividends
declared upon shares of Series ____ Preferred Stock and any other Preferred
Stock ranking on a parity as to dividends shall be declared pro rata with
respect thereto, so that in all cases the amount of dividends declared per
share on the Series ____ Preferred Stock and such other Preferred Stock shall
bear to each other the same ratio that accrued dividends for the then-current
Dividend Period per share on the shares of Series ____ Preferred Stock (which
shall not include any accumulation in respect of unpaid dividends for prior
Dividend Periods) and for dividends, including accumulations, if any, of such
other Preferred Stock, bear to each other.
Except as provided in the preceding sentence, full dividends on the
Series ____ Preferred Stock must be declared and paid or set apart for payment
for the immediately preceding Dividend Period before (i) any cash dividend or
other distribution (other than in Common Stock or other Junior Stock)
shall be declared or paid or set aside for payment upon the Common Stock of
the Company or any other Junior Stock or (ii) any Common Stock or any other
Junior Stock is redeemed, purchased or otherwise acquired by the Company for
any consideration (or any moneys are paid to or made available for a sinking
fund for the redemption of any shares of any such stock) except by conversion
into or exchange for Junior Stock or (iii) any Series ____ Preferred Stock or
Parity Stock is redeemed, purchased or otherwise acquired by the Company for
any consideration (or any moneys are paid to or made available for a sinking
fund for the redemption of any shares of any such stock) otherwise than
pursuant to a pro rata offer to purchase or a concurrent redemption of all, or
a pro rata portion, of the outstanding shares of Series ____ Preferred Stock
and Parity Stock (except by conversion into or exchange for Junior Stock).
The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company if under the preceding paragraph, the Company would be prohibited from
purchasing or otherwise acquiring such shares at such time and in such manner.
[IF THE PREFERRED STOCK HAS A FIXED DIVIDEND RATE, INSERT THE FOLLOWING--
2.3 DIVIDEND RATE. The Dividend Rate on the shares of
Preferred Stock for the period (the "Initial Dividend Period") from the
respective dates of original issue thereof to and including
____________________, and for each quarterly Dividend Period thereafter shall
be ________________% per annum.]
<PAGE>
[IF PREFERRED STOCK HAS ADJUSTABLE DIVIDENDS, INSERT THE FOLLOWING--
2.3 DIVIDEND RATE. The dividend rates on the shares of
Preferred Stock shall be: (i) for the period (the "Initial Dividend Period")
from the respective dates of original issue thereof to and including
____________________, _____% per annum and (ii) for each quarterly Dividend
Period thereafter a rate per annum of the stated value thereof equal to the
Applicable Rate (as defined below).
Except as provided below in this paragraph, the "Applicable Rate" for
any Quarterly Dividend Period shall be (a) ____% [of] [more/less than] (b) the
highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate or the
Thirty Year Constant Maturity Rate (each as hereinafter defined) for such
Dividend Period. If the Corporation determines in good faith that for any
reason one or more of such rates cannot be determined for any Dividend Period,
then the Applicable Rate for such Dividend Period shall be ____% less than the
higher of whichever of such rates can be so determined. If the Corporation
determines in good faith that none of such rates can be determined for any
Dividends Period, then the Applicable Rate in effect for the preceding Dividend
Period shall be continued for such Dividend Period. [Anything herein to the
contrary notwithstanding, the Applicable Rate for any Quarterly Dividend Period
shall in no event be less than _____% per annum or greater than _____% per
annum.]
Except as provided below in this paragraph, the "Treasury Bill Rate"
for each Quarterly Dividend Period shall be the arithmetic average of the two
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the relevant
Calendar Period as provided below) for three-month U.S. Treasury bills, as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the March 1,
June 1, September 1 and December 1, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on the Preferred Stock is being
determined. If the Federal Reserve Board does not publish such a weekly per
annum market discount rate during such Calendar Period, then the Treasury Bill
Rate for such Dividend Period shall be the arithmetic average of the two
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the relevant
Calendar Period as provided below) for three-month U.S. Treasury bills, as
published weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation. If a
per annum market discount rate for three-month U.S. Treasury bills shall not
be published by the Federal Reserve Board or by any Federal Reserve Bank or by
any U.S. Government department or agency during such Calendar Period, then the
Treasury Bill Rate for such Dividend Period shall be the arithmetic average of
the two weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for all the U.S. Treasury bills
then having maturities of not less than 80 nor more than 100 days, as finally
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such rates, by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. If the Corporation determines in good faith that for any reason
no such U.S. Treasury bill rates are published as provided above during such
Calendar Period, then the Treasury Bill Rate for such Dividend Period shall
<PAGE>
be the arithmetic average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues of marketable
non-interest bearing U.S. Treasury securities with a maturity of not less than
80 nor more than 100 days from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at least
three recognized U.S. Government securities dealers selected by the Corporation.
If the Corporation determines in good faith that for any reason the Corporation
cannot determine the Treasury Bill Rate for any Quarterly Dividend Period as
provided above in this paragraph, the Treasury Bill Rate for such Dividend
Period shall be the arithmetic average of the per annum market discount rates
based upon the closing bids during such Calendar Period for each of the issues
of marketable interest-bearing U.S. Treasury securities with a maturity of not
less than 80 nor more than 100 days from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
Except as provided below in this paragraph, the "Ten Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two weekly per annum Ten Year Average Yields (or the one weekly
per annum Ten Year Average Yield, if only one such Yield shall be published
during the relevant Calendar Period as provided below), as published weekly by
the Federal Reserve Board during the Calendar Period immediately prior to the
ten calendar days immediately preceding the March 1, June 1, September 1 and
December 1, as the case may be, prior to the Quarterly Dividend Period for
which the dividend rate on the Preferred Stock is being determined. If the
Federal Reserve Board does not publish such a weekly per annum Ten Year
Average Yield during such Calendar Period, then the Ten Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the two
weekly per annum Ten Year Average Yields (or the one weekly per annum Ten Year
Average Yield, if only one such Yield shall be published during the relevant
Calendar Period as provided below), as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. If a per annum Ten Year Average Yield
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar
Period, then the Ten Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the two weekly per annum average yields to
maturity (or the one weekly average yield to maturity, if only one such yield
shall be published during the relevant Calendar Period as provided below) for
all of the actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) then having maturities of not less
than eight nor more than twelve years, as finally published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board
shall not publish such yields, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. If the
Corporation determines in good faith that for any reason the Corporation
cannot determine the Ten Year Constant Maturity Rate for any Quarterly
Dividend Period as provided above in this paragraph, then the Ten Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the per annum average yields to maturity based upon the closing
bids during such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities) with a final maturity date not less than eight nor more than
twelve years from the date of each such quotation, as chosen and quoted daily
for each business day in New York City (or less frequently if daily quotations
shall not be generally available) to the
<PAGE>
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
Except as provided below in this paragraph, the "Thirty Year Constant
Maturity Rate" for each quarterly Dividend Period shall be the arithmetic
average of the two weekly per annum Thirty Year Average Yields (or the one
weekly per annum Thirty Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below), as published
weekly by the Federal Reserve Board during the Calendar Period immediately prior
to the ten calendar days immediately preceding the March 1, June 1, September 1
and December 1, as the case may be, prior to the Quarterly Dividend Period for
which the dividend rate on the Preferred Stock is being determined. If the
Federal Reserve Board does not publish such a weekly per annum Thirty Year
Average Yield during such calendar period, then the Thirty Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic average of the
two weekly per annum Thirty Year Average Yields (or the one weekly per annum
Thirty Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. If a per annum Thirty Year Average Yield
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar Period,
then the Thirty Year Constant Maturity Rate for such Dividend Period shall be
the arithmetic average of the two weekly per annum average yields to maturity
(or the one weekly average yield to maturity, if only one such yield shall be
published during the relevant Calendar Period as provided below) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities (other
than Special Securities) then having maturities of not less than twenty-eight
nor more than thirty-two years, as finally published during such Calendar Period
by the Federal Reserve Board or, if the Federal Reserve Board shall not publish
such yields, by any Federal Reserve Bank of by any U.S. Government department or
agency selected by the Corporation. If the Corporation determines in good faith
that for any reason the Corporation cannot determine the Thirty Year Constant
Maturity Rate for any Quarterly Dividend Period as provided above in this
paragraph, then the Thirty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each of the issues
of actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) with a final maturity date not less than
twenty-eight nor more than thirty-two years from the date of each such
quotation, as chosen and quoted daily for each business day in New York City (or
less frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percentage point.
The Applicable Rate with respect to each Quarterly Dividend Period
will be calculated as promptly as practicable by the Corporation according to
the appropriate method described herein. The mathematical accuracy of each
such calculation will be confirmed in writing by independent accountants of
recognized standing. The Corporation will cause each
<PAGE>
Applicable Rate to be published in a newspaper of general circulation in The
City of New York and Los Angeles, California prior to the commencement of the
new Quarterly Dividend Period to which it applies and will cause notice of such
Applicable Rate to be enclosed with the dividend payment checks next mailed to
the holders of the Preferred Stock.
For purposes of this Section, the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can,
at the option of the holder, be surrendered at face value in payment
of any Federal estate tax or which provide tax benefits to the
holder and are priced to reflect such tax benefits or which were
originally issued at a deep or substantial discount;
(iii) "Ten Year Average Yield" shall mean the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of ten
years); and
(iv) "Thirty Year Average Yield" shall mean the average
yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of thirty
years).]
[IF PREFERRED STOCK HAS A FIXED DIVIDEND RATE WITH A CONTINGENT DIVIDEND RATE
ADJUSTMENT, INSERT THE FOLLOWING--
2.3 DIVIDEND RATE. (a) DEFINITIONS:
(1) "Contingent Dividend Disqualification Period" shall
mean any four consecutive fiscal quarters in which aggregate Earnings Per
Share, on a fully diluted basis, are greater than $_____________.
(2) "Contingent Dividend Qualification Period" shall mean
any four consecutive fiscal quarters [(other than any fiscal quarters
occurring within one year after a Contingent Dividend Disqualification
Period)] commencing on or after _________________, in which aggregate Earnings
Per Share, on a fully diluted basis, are less than $____________.
(3) "Earnings Per Share" shall mean earnings per common
share as reported in the Corporation's financial statements as publicly
announced on the respective Reporting Dates; provided, however, that if for
any Dividend Period earnings per share as reported in the Corporation's
financial statements filed with the Securities and Exchange Commission ("SEC")
in its Quarterly Reports on Form 10-Q and (for the fourth quarter) in its
<PAGE>
Annual Report on Form 10-K (or their successor forms), as the case may be,
including any amendments thereto filed with the SEC, vary from the earnings
per share announced on the Reporting Date, and, as a result, the dividend rate
must be adjusted up, such adjustment shall be made both retroactively and
prospectively, and any deficiency as a result of such a retroactive adjustment
shall be paid on the next Quarterly Payment Date that is not less than ____
days after the date of filing such amendment with the SEC and such deficiency
shall be paid to the persons entitled to receive any dividends otherwise
payable on that Quarterly Payment Date. If, as a result of an amendment to
Earnings Per Share filed with the SEC, a dividend rate must be adjusted down,
such adjusted dividend rate shall become effective on the first Quarterly
Dividend Period commencing after the amended earnings per share has been filed
with the SEC, and there shall be no retroactive adjustment.
(4) "Quarterly Payment Dates" shall mean March 1, June 1,
September 1 and December 1 of each year.
(5) "Reporting Date" shall mean the date on which the
Corporation first publicly announces its results of operations for an
immediately preceding fiscal quarter, but in no event later than the date on
which the Corporation's Quarterly Report on Form 10-Q or Annual Reports on
Form 10-K must be filed with the Securities and Exchange Commission with
respect to that fiscal quarter.
(b) RATE. The dividend rate on the shares of Preferred Stock
for the period (the "Initial Dividend Period") from the respective dates of
original issue thereof to and including _________________, shall be ____% per
annum. The dividend rate for each Quarterly Dividend Period thereafter shall
be _____% per annum; provided, however, that in the event of a Contingent
Dividend Qualification Period, the dividend rate shall be changed to _____%
per annum for the first Quarterly Dividend Period during which the first
Reporting Date after the Contingent Dividend Qualification Period occurs.
Such dividend rate shall remain in effect thereafter provided that, if a
Contingent Dividend Disqualification Period thereafter occurs, the dividend
rate shall again be _____% per annum, beginning with the first Quarterly
Dividend Period commencing four fiscal quarters after the Contingent Dividend
Disqualification Period. The dividend rate shall continue to be adjusted upon
the occurrence of any subsequent Contingent Dividend Qualification Periods and
Contingent Dividend Disqualification Periods as set forth above.]
[If the Preferred Stock has other variable dividend Rates (e.g. LIBOR) insert
appropriate provisions in lieu of Section 2.1 and 2.3.]
3. REDEMPTION.
3.1 REDEMPTION PRICES AND DATES. [The shares of the Preferred
Stock shall not be redeemable prior to _____________, _____. On [insert if
Adjustable Dividends--any Dividend Payment Date on] or after
__________________, ____, the Corporation, at its option,
<PAGE>
may redeem the shares of the Preferred Stock, as a whole or from time to time in
part, at a redemption price of $____________ per share, plus, in each case, all
accrued and unpaid dividends thereon (whether or not earned or declared) to the
date fixed for redemptions]. [If the Preferred Stock is convertible insert, --,
unless the closing price of the Common Stock on the New York Stock Exchange
shall have equaled or exceeded _____% of the conversion price then in effect for
at least 20 out of 30 consecutive trading days ending within five trading days
prior to the date notice of redemption is given. The "conversion price" shall
be the quotient of $________ divided by the then effective conversion rate]].
[IF THE PREFERRED STOCK IS REDEEMABLE BY THE CORPORATION AT A VARIABLE PRICE,
INSERT THE FOLLOWING IN LIEU OF ABOVE --
3.1 REDEMPTION. (a) The Corporation, at its option, may
redeem shares of the Preferred Stock, as a whole or in part, at any time or
from time to time, at a redemption price as set forth below, plus accrued and
unpaid dividends thereon to the date fixed for redemption:
DATE OF REDEMPTION REDEMPTION PRICE PER SHARE
On or after _________, _______________
but prior to ________.
On or after _________, _______________
but prior to ________.
On or after _________, _______________
but prior to ________.
Notwithstanding the foregoing, no shares of Preferred Stock shall be redeemed
hereunder prior to ________________ [if the Preferred Stock is convertible,
unless the closing price of the Common Stock on the New York Stock Exchange
shall have equaled or exceeded _____% of the conversion price then in effect
for at least 20 out of 30 consecutive trading days ending within five trading
days prior to the date notice of redemption is given]].
3.2 RESTRICTIONS. Notwithstanding the foregoing, if full
cumulative dividends on all outstanding shares of Preferred Stock of any
series have not been paid or contemporaneously declared and paid for all past
dividend periods, no shares of Preferred Stock of such series shall be
redeemed pursuant to this Section 3 unless all outstanding shares of Preferred
Stock of such series are simultaneously redeemed, and, unless the full
cumulative dividends on all outstanding shares of Preferred Stock of such
series and any other stock of the Corporation ranking on a parity with such
series as to dividends and upon liquidation shall have been paid or
contemporaneously are declared and paid for all past
<PAGE>
dividend periods, the Corporation shall not purchase or otherwise acquire any
shares of Preferred Stock of such series (except by conversion into or exchange
for shares of the Corporation ranking junior to the shares of the Preferred
Stock and the shares of such other series of preferred stock as to dividends and
upon liquidation); provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of the Preferred Stock or of shares of such
other series of preferred stock pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of the Preferred Stock or of
such other series.
3.3 PRO RATA REDEMPTION. In the event that fewer than all the
outstanding shares of a series of the Preferred Stock are to be redeemed, the
number of shares of such series to be redeemed shall be determined by the
Board of Directors or a duly authorized committee thereof and the shares to be
redeemed shall be redeemed pro rata from the holders of record of such shares
in proportion to the number of such shares held by such holders (with
adjustments to avoid fractional shares).
3.4 NOTICE. In the event the Corporation shall redeem shares
of a series of the Preferred Stock, notice of such redemption (a "Notice of
Redemption") shall be given by first class mail, postage prepaid, mailed not
less than 30 nor more than 45 days prior to the redemption date, to each
holder of record of the shares to be redeemed, at such holder's address as the
same appears on the stock register of the Corporation. Each such Notice of
Redemption shall state: (i) the redemption date; (ii) the number of shares of
such series of the Preferred Stock to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (iii) the redemption price (specifying the amount
of accrued and unpaid dividends to be included, therein); (iv) the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price; (v) that dividends on the shares to be redeemed will
cease to accumulate on such redemption date; and (vi) the provision hereunder
pursuant to which such redemption is being made.
3.5 CESSATION OF DIVIDENDS. If notice of redemption has been
given, from and after the redemption date for the shares of the series of
Preferred Stock called for redemption (unless default shall be made by the
Corporation in providing money for the payment of the redemption price of the
shares so called for redemption plus an amount equal to full cumulative
dividends thereon (whether or not earned or declared) to the date fixed for
redemption) dividends on the shares of Preferred Stock so called for redemption
shall cease to accrue and said shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive the redemption price plus an amount
equal to such accumulated and unpaid dividends) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of directors of the
Corporation shall so require and the notice shall so state), the redemption
price set forth above plus an amount equal to such accumulated and unpaid
dividends shall be paid by the Paying Agent. In the case that fewer than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the holder
thereof.
<PAGE>
3.6 STATUS OF REDEEMED SHARES. Shares of Preferred Stock
which have been redeemed shall, after such redemption, have the status of
authorized but unissued shares of preferred stock of the Corporation, without
designation as to series, until such shares are once more designated as part
of a particular series by or on behalf of the Board of Directors.
4. LIQUIDATION RIGHTS.
4.1 PAYMENT UPON LIQUIDATION. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of outstanding shares of the Preferred Stock shall be
entitled, before any payment or distribution shall be made on the Common Stock
or any other class of stock ranking junior to the Preferred Stock upon
liquidation, to be paid in full an amount equal to $________ per share, plus
an amount equal to all accumulated and unpaid dividends (whether or not earned
or declared). After payment of the full amount of such liquidation
distribution, the holders of the Preferred Stock shall not be entitled to any
further participation in any distribution of assets of the Corporation.
4.2 INSUFFICIENT ASSETS. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation,
or proceeds thereof, distributable among the holders of the shares of the
Preferred Stock and the holders of shares of all other stock of the
Corporation ranking, as to liquidation, dissolution or winding up, on a parity
with the Preferred Stock, shall be insufficient to pay in full the
preferential amount set forth in Section 4.1 and liquidating payments on all
such other stock ranking, as to liquidation, dissolution or winding up, on a
parity with the Preferred Stock, then such assets, or the proceeds thereof,
shall be distributed among the holders of the Preferred Stock and all such
other stock ratably in accordance with the respective amounts which would be
payable on such shares of the Preferred Stock and any such other stock if all
amounts payable thereon were paid in full (which, in the case of such other
stock, may include accumulated dividends).
4.3 PAYMENTS ON STOCK RANKING JUNIOR. In the event of any such
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, unless and until payment in full is made to the holders of all
outstanding shares of the Preferred Stock of the liquidation distribution to
which they are entitled pursuant to Section 4.1, no dividend or other
distribution shall be made to the holders of the Common Stock or any other class
of stock ranking upon liquidation junior to the shares of the Preferred Stock
and no purchase, redemption or other acquisition for any consideration by the
Corporation shall be made in respect of the shares of the Common Stock or such
other class of stock.
4.4 DEFINITION. Neither the consolidation nor merger of the
Corporation into or with another corporation or corporations shall be deemed
to be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 4.
<PAGE>
5. VOTING RIGHTS.
5.1 GENERALLY. Holders of the Preferred Stock shall not have any
voting rights except as hereinafter provided or as otherwise from time required
by law. If at any time of any annual meeting of stockholders for the election
of directors of the Corporation a default in preference dividends shall exist on
the Preferred Stock, or any shares of preferred stock ranking on a parity with
the shares of Preferred Stock as to dividends or upon liquidation (the Preferred
Stock and any such shares of preferred stock being herein referred to as the
"Parity Preferred Stock"), the maximum authorized number of members of the Board
of Directors shall automatically be increased by two. The two vacancies so
created shall be filled at such meeting by the vote of the holders of the
Preferred Stock and the holders of any other Parity Preferred Stock upon which
like voting rights have been conferred and are then exercisable (the Preferred
Stock and such other Parity Preferred Stock being herein referred to as "Voting
Parity Preferred Stock"), voting together as a single class without regard to
series, to the exclusion of the holders of the Common Stock of the Corporation
and any other class of capital stock that is not Voting Parity Preferred Stock.
the holders of the Common Stock of the Corporation and any other class of
capital stock which has the right to vote at such meeting (other than the Voting
Parity Preferred Stock) shall elect the remaining directors. Such right of the
holders of the Voting Parity Preferred Stock shall continue until there are no
preference dividends in arrears upon the Parity Preferred Stock of any series at
which time such right shall terminate, except as by law expressly provided,
subject to revesting in the event of each and every subsequent default of the
character above mentioned. Upon any such termination of the right of the holders
of shares of Voting Parity Preferred Stock as a class to vote for directors as
herein provided, the term of office of each director then in office elected by
such holders voting as a class (herein called a "Preferred Director") shall
terminate immediately. Any Preferred Director may be removed by, and shall not
be removed except by, the vote of the holders of record of the outstanding
shares of Voting Parity Preferred Stock, voting together as a single class
without regard to series, at a meeting of the stockholders, or of the holders of
shares of Voting Parity Preferred Stock, called for such purpose. So long as a
default in any preference dividends on the Parity Preferred Stock of any series
shall exist, (A) any vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (B)) by the person appointed by an
instrument in writing signed by the remaining Preferred Director and filed with
the Corporation and (B) in the case of the removal of any Preferred Director,
the vacancy may be filled by the person elected by the vote of the holders of
outstanding shares of Voting Parity Preferred Stock, voting together as a single
class without regard to series, at the same meeting at which such removal shall
be voted or at any subsequent meeting. Each director appointed as aforesaid by
the remaining Preferred Director shall be deemed to be a Preferred Director.
Whenever a default in preference dividends shall no longer exist: (i) the term
of office of the Preferred Directors shall end, (ii) the special voting powers
vested in the holders of the Voting Parity Preferred Stock as provided in this
resolution shall expire, and (iii) the number of members of the Board of
Directors shall be such number as may be provided for in the Corporation's
By-Laws irrespective of any increase made as provided in this resolution. A
"default in preference dividends" on the Parity Preferred Stock of any series
shall be deemed to have occurred whenever the amount of unpaid accrued dividends
upon any series of Preferred Stock through the last preceding dividend period
therefor shall be equivalent to six quarterly dividends (which, with respect to
Preferred Stock or any other series of Parity Preferred Stock, shall be deemed
to be dividends in respect of a number of dividend periods containing not less
than 540 days) or more, and having so occurred, such default shall be deemed to
exist thereafter until, but only until, full cumulative dividends on all shares
of Voting Parity
<PAGE>
Preferred Stock of each and every series then outstanding shall have been paid
to the end of the last preceding dividend period.
5.2 RANKING. So long as any shares of Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least two-thirds of the shares of each series of Preferred
Stock outstanding at the time, given in person or by proxy, either in writing or
at a meeting (voting separately as a class together with all other series of
Voting Parity Preferred Stock), (i) authorize, create or issue, or increase the
authorized or issued amount of, any class or series of stock ranking prior to
the Preferred Stock with respect to payment of dividends or the distribution of
assets on liquidation, or reclassify any authorized stock of the Corporation
into any such shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares; or (ii)
amend, alter or repeal the provisions of the Corporation's Certificate of
Incorporation, as amended, or of the resolutions contained in the Certificate of
Designations for such series of Preferred Stock, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of such Preferred Stock or the holders
thereof; provided, however, that any increase in the amount of the authorized
Preferred Stock or the creation or issuance of other series of preferred stock,
or any increase in the amount of authorized shares of such series or of any
other series of Preferred Stock, in each case ranking on a parity with or junior
to the Preferred Stock shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting powers.
5.3 APPLICABILITY. The foregoing voting provisions will not
apply if, at or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding shares of the
Preferred Stock shall have been redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect such redemption.
[IF PREFERRED STOCK IS SUBJECT TO A SINKING FUND REQUIREMENT INSERT --
6. MANDATORY REDEMPTION; SINKING FUND.
6.1 SINKING FUND. So long as any Preferred Stock shall be
outstanding, the Corporation shall, on each of the dates set forth in the
following schedule ("Sinking Fund Payment Dates") set aside as and for a
sinking fund for the redemption of the Preferred Stock (the "Sinking Fund"),
subject to the subsequent deferral provided for in Section 6.2 hereof, in cash
out of any funds legally available therefor, a sum equal to the product of (i)
the applicable Mandatory Redemption Price (as hereinafter defined) multiplied
by (ii) the number of shares of Series ___ Preferred Stock set forth opposite
such Sinking Fund Payment Date:
Number of Shares of
Sinking Fund Preferred Stock
Payment Date to be Redeemed
------------ -------------------
<PAGE>
Notwithstanding the foregoing, in no event shall the Corporation on any
Sinking Fund Payment Date be obligated to set aside in cash an amount with
respect to the Preferred Stock greater than a sum equal to the product of the
Mandatory Redemption Price for the Preferred Stock and the number of the then
outstanding shares of the Preferred Stock.
6.2 DEFERRAL. Notwithstanding Section 6.1 above, each
Mandatory Redemption Date (as hereinafter defined) for Preferred Stock may be
deferred for a period of one year by the holders of the then outstanding
shares of such series if the holders of at least 66 2/3% of shares of such
series consent thereto in writing at least ten days prior to such date. The
right to defer a Mandatory Redemption Date may be exercised any number of
times in the manner set forth herein.
6.3 MANDATORY REDEMPTION PRICE. The Mandatory Redemption
Price for each share of Preferred Stock shall be an amount in cash equal to
$__________, plus all accrued and unpaid dividends thereon, whether or not
earned or declared, to and including the date fixed for redemption.
6.4 SINKING FUND REQUIREMENT CUMULATIVE. If on any Sinking
Fund Payment Date the funds of the Corporation legally available therefor
shall be insufficient to discharge such Sinking Fund requirement in full,
funds to the extent legally available for such purpose shall be set aside for
the Sinking Fund. Such Sinking fund requirements shall be cumulative, so that
if for any year or years such requirements shall not be fully discharged as
they accrue, funds legally available therefor, after such payment or provision
for dividends, for each year thereafter shall be applied thereto until such
requirements are fully discharged.
6.5 USE OF SINKING FUND. Thirty days following each Sinking
Fund Payment Date (the "Mandatory Redemption Date"), the cash in the Sinking
Fund shall be used to acquire by redemption, in the manner provided below, the
number of shares of Preferred Stock specified opposite the Sinking Fund
Payment Date in the schedule appearing in Section 6.1.
6.6 PARTIAL REDEMPTION PRO RATA. In the event of the
redemption of only a part of the then outstanding Preferred Stock pursuant to
this Section 6, the Corporation shall effect such redemption ratably according
to the full amount each holder of the Preferred Stock is otherwise then
entitled to receive.
6.7 MANDATORY REDEMPTION NOTICE. In addition to the required
notice by publication, not less than 30 days nor more than 90 days prior to
the Mandatory Redemption Date, written notice (the "Mandatory Redemption
Notice"), shall be mailed, postage prepaid, to each holder of record of the
Preferred Stock to be redeemed at his post office address last shown on the
records of the Corporation. Such Mandatory Redemption Notice shall state:
<PAGE>
(i) Whether all or less than all of the outstanding shares
of Preferred Stock are to be redeemed and the total number of
shares being redeemed;
(ii) The number of shares of Preferred Stock held by the
holder that the Corporation intends to redeem;
(iii) the Mandatory Redemption Date and Mandatory Redemption
Price;
[(iv) The date upon which the holder's conversion rights (as
hereinafter described) as to such shares terminate;]
(v) That the holder is to surrender to the Corporation, in
the manner and at the price designated, his certificate or
certificates representing the shares of Preferred Stock to be
redeemed; and
(vi) That, with the written consent of the holder of
66-2/3% of the then-outstanding shares of such series, the
Mandatory Redemption Date for such series may be deferred for a
period of one year.
6.8 SURRENDER OF CERTIFICATES; PAYMENT. On or before the
Mandatory Redemption Date, each holder of shares of Preferred Stock to be
redeemed, [unless such holder has exercised his right to convert the shares as
provided in Section 6 hereof,] shall surrender the certificate or certificates
representing such shares to the Corporation, in the manner and at the places
designated in the Mandatory Redemption Notice, and thereupon the Mandatory
Redemption Price for such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof,
and each surrendered certificate shall be canceled and retired. In the event
less than all of the shares represented by such certificate are redeemed, a
new certificate representing the unredeemed shares shall be issued forthwith.
6.9 RIGHTS SUBSEQUENT TO MANDATORY REDEMPTION. If the
Mandatory Redemption Notice shall have been duly given, and if on the
Mandatory Redemption Date the Mandatory Redemption Price is either paid or
made available for payment through the deposit arrangement specified in
subparagraph (10) below, then notwithstanding that the certificates evidencing
any of the shares of Preferred Stock so called for redemption shall not have
been surrendered, the dividends with respect to such shares shall cease to
accrue after the Mandatory Redemption Date and all rights with respect to such
shares shall forthwith after the Mandatory Redemption Date terminate, except
only the right of the holders to receive the Mandatory Redemption Price
without interest upon surrender of their certificate or certificates
thereof.
<PAGE>
6.10 DEPOSIT OF FUNDS. On or prior to the Mandatory Redemption
Date, the Corporation shall deposit with any bank or trust company in either
The City of New York or Los Angeles, California, having a capital and surplus
of at least $50,000,000 as a trust fund, a sum equal to the aggregate
Mandatory Redemption Price of all shares of Preferred Stock called for
redemption and not yet redeemed or converted, with irrevocable instructions
and authority to the bank or trust company to pay, on and after the Mandatory
Redemption Date, the Mandatory Redemption Price to the respective holders upon
the surrender of their share certificates. From and after the date of such
deposit (but not prior to the Mandatory Redemption Date), the shares so called
for redemption shall be redeemed. The deposit shall constitute full payment
of the shares to their holders, and from and after the Mandatory Redemption
Date the shares shall be deemed to be no longer outstanding, and the holders
thereof shall cease to be shareholders with respect to such shares and shall
have no rights with respect thereto except the rights to receive from the bank
or trust company payment of the Mandatory Redemption Price of the shares,
without interest, upon surrender of their certificates therefor. Any funds so
deposited and unclaimed at the end of one year from the Mandatory Redemption
Date shall be released or repaid to the Corporation, after which the holders
of shares called for redemption shall be entitled to receive payment of the
mandatory Redemption Price only from the Corporation.]
(c) In no event shall the Corporation redeem less than all the
outstanding shares of Preferred Stock pursuant to this Section 6 unless full
cumulative dividends shall have been paid or declared and set apart for
payment upon all outstanding shares of Preferred Stock for all past Dividend
Periods, and unless all matured obligations of the Corporation with respect to
all sinking funds, retirement funds or purchase funds for all series of
Preferred Stock then outstanding have been met.
[IF THE PREFERRED STOCK IS NOT CONVERTIBLE, INSERT THE FOLLOWING --
7. CONVERSION OR EXCHANGE. The holders of shares of
Preferred Stock shall not have any rights herein to convert such shares into
or exchange such shares for shares of any other class or classes or of any
other series of any class or classes of capital stock of the Corporation.]
[IF THE PREFERRED STOCK IS CONVERTIBLE, INSERT THE FOLLOWING --
7. CONVERSION RIGHTS. (a) The holder of any share or shares
of Preferred Stock shall have the right, at any time, to convert any shares of
Preferred Stock (except any share of Preferred Stock which shall have been
called for redemption pursuant to the provisions hereof, the conversion right
with respect thereto shall terminate on the close of business of the date
fixed for redemption) into fully paid and non-assessable shares of the common
stock of the Corporation, at a conversion rate of _____ (_____) shares of
common stock for each share of Preferred Stock, subject to adjustment as
hereinafter provided. The conversion right herein granted shall be exercised
by the surrender of a certificate or certificates for Preferred Stock to be so
converted at the office of any transfer agent for the Preferred Stock, at any
time during its usual business hours, together with written notice that the
holder elects to convert the same, or stated number of shares thereof, which
notice shall
<PAGE>
state the name or names (with addresses) in which the certificate
or certificates of common stock shall be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Preferred Stock and the Corporation, whereby such holder shall be deemed to
subscribe for the amount of common stock which he will be entitled to receive
upon such conversion and, in payment and satisfaction of such subscription
(and any cash adjustment to which he may be entitled), to surrender such
Preferred Stock and to release the Corporation from all obligation on the
shares to be converted and whereby the Corporation shall be deemed to agree
that the surrender of such shares and the extinguishment of obligation thereon
shall constitute full payment for the common stock so subscribed for and to be
issued upon such conversion.
(b) As promptly as practicable after the surrender for conversion
of any Preferred Stock and the payment in cash of any amount required by
paragraph (i) of this Section 7, the Corporation shall deliver or cause to be
delivered to or upon the written order of the holder of such Preferred Stock
certificates representing the number of shares of common stock issuable upon
such conversion, issued in such name or names as such holder shall have
directed, together with cash in respect of any fractional interest in a share of
Common Stock issuable upon such conversion and, if only a part of such Preferred
Stock is converted, a certificate or certificates for the unconverted shares of
Preferred Stock. Such conversion shall be deemed to have been made at the close
of business on the day of surrender of the Preferred Stock for conversion, and
the rights of the holder of such stock as a Preferred Stockholder, in respect of
the stock surrendered for conversion, shall cease at such time and the person or
persons in whose name or names the certificates for such shares are to be issued
shall be treated for all purposes as having become the record holder or holders
of common stock at such time and such conversion shall be at the conversion rate
in effect at such time; provided, however, that no such surrender on any date
when the stock transfer books of the Corporation shall be closed shall be
effective to constitute the person or persons entitled to receive the shares of
common stock upon such conversion as the record holder or holders of such shares
on such date, but such surrender shall be effective to constitute the person or
persons entitled to receive such shares of common stock as the record holder or
holders thereof for all purposes at the opening of business on the next
succeeding day on which such stock transfer books are open and such conversion
shall be at the conversion rate in effect at the opening of business on such
next succeeding day.
If the last day for the exercise of the conversion is a legal
holiday in the city in which the transfer agent to which shares are presented
for conversion is located, then such conversion right may be exercised (at the
conversion rate in effect on such last day) upon the next succeeding day not
in such city a legal holiday.
(c) No payment or adjustment shall be made upon any conversion
in respect of dividends accrued and unpaid on the Preferred Stock to the date
of conversion or in respect of any dividends on the common stock issued upon
such conversion.
(d) The conversion rate shall be subject to adjustment from time
to time as follows:
<PAGE>
(i) In case the Corporation shall at any time (A) pay a
dividend or make a distribution on shares of its common stock in
shares of its capital stock (whether shares of common stock or of
capital stock of any other class), (B) subdivide or reclassify its
outstanding shares of common stock into a greater number of
securities (including shares of common stock), or (C) combine or
reclassify its outstanding shares of common stock into a smaller
number of shares (including shares of common stock), the
conversion rate in effect immediately prior thereto shall be
adjusted so that the holder of record of any shares of Preferred
Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of the Corporation which he would
have owned or have been entitled to receive after the happening of
any of the events described above had such shares of Preferred
Stock been converted immediately prior to the happening of such
event. an adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the record date in the case of a
dividend and shall become effective immediately after the effective
date in the case of a subdivision or combination. If, as a result
of an adjustment made pursuant to this subparagraph (i), the holder
of any Preferred Stock thereafter converted shall become entitled to
receive shares of two or more classes of capital stock of the
Corporation, the Board of Directors of the Corporation (whose
determination shall be conclusive) shall determine the allocation of
the adjusted conversion rate between or among shares of such classes
of capital stock.
In the event that at any time, as a result of an adjustment made
pursuant to this subparagraph (i), the holder of any Preferred
Stock thereafter converted shall become entitled to receive any
shares or other securities of the Corporation other than shares of
common stock, thereafter the number of such other shares so
received upon conversion of any Preferred Stock shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
shares of common stock contained in this Section 7(d), and other
provisions of this Section 7 with respect to the shares of common
stock shall apply on like term to any such other shares or other
securities.
(ii) In case the Corporation shall fix a record date for
the issuance of rights or warrants to all holders of its common
stock (or securities convertible into common stock) entitling them
(for a period expiring within 45 days after such record date) to
subscribe for or purchase common stock at a price per share (or a
conversion price per share) less than the current market price per
share of common stock (as defined in subparagraph (iv) below) at
such record date, the conversion rate in effect immediately prior
thereto shall be adjusted so that the same shall equal the price
determined by multiplying the conversion rate in effect
immediately prior to such record date by a fraction of which the
numerator shall be the number of shares of common stock
outstanding on such record date plus the number of additional
shares of common stock offered for subscription or purchase (or
into which the convertible securities so offered are initially
convertible), and of which the denominator shall be the number of
shares of common stock outstanding on such record date plus the
number of shares which the aggregate offering price of the total
number of shares so offered (or the aggregate initial conversion
price of the convertible securities so
<PAGE>
offered) would purchase at such current market price. Such
adjustment shall be made successively whenever such a record date is
fixed, and shall become effective immediately after such record
date. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of common stock at less
than such current market price, and in determining the aggregate
offering price of such shares, there shall be taken into account any
consideration received by the Corporation for such rights or
warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors of the Corporation. Common
stock owned by or held for the account of the Corporation or any
majority owned subsidiary shall not be deemed outstanding for the
purpose of any adjustment required under this subparagraph (ii).
(iii) In case the Corporation shall fix a record date for
making a distribution to all holders of its common stock evidences
of its indebtedness or assets (excluding regular quarterly or
other periodic or recurring cash dividends or distributions and
cash dividends or distributions paid from retained earnings or
referred to in subparagraph (i) above) or rights or warrants to
subscribe or purchase (excluding those referred to in subparagraph
(ii) above), then in each such case the conversion rate shall be
adjusted so that the same shall equal the rate determined by
multiplying the conversion rate in effect immediately prior to
such record date by a fraction of which the numerator shall be the
current market price (as defined in subparagraph (iv) below) per
share of the common stock on such record date, and the denominator
of which shall be such current market price per share of common
stock, less the then fair market value (as determined in good
faith by the Board of directors, whose determination shall be
conclusive) of the portion of the assets or evidences of
indebtedness so distributed or of such rights or warrants
applicable to one share of common stock. Such adjustment shall be
made successfully whenever such a record date is fixed and shall
become effective immediately after such record date.
Notwithstanding the foregoing, in the event that the Corporation
shall distribute any rights or warrants to acquire capital stock
("Rights") pursuant to this subparagraph (iii), the distribution
of separate certificates representing such Rights subsequent to
their initial distribution (whether or not such distribution shall
have occurred prior to the date of the issuance of such Preferred
Stock) shall be deemed to be the distribution of such Rights for
purposes of this subparagraph (iii); provided that the Corporation
may, in lieu of making any adjustment pursuant to this
subparagraph (iii) upon a distribution of separate certificates
representing such Rights, make proper provision so that each holder
of such Preferred Stock who converts such Preferred Stock (or any
portion thereof) (A) before the record date for such distribution of
separate certificates shall be entitled to receive upon such
conversion shares of common stock issued with Rights and (B) after
such record date and prior to the expiration, redemption or
termination of such Rights shall be entitled to receive upon such
conversion, in addition to the shares of common stock that issuable
upon such conversion, the same number of such Rights as would a
holder of the number of shares of common stock that such Preferred
Stock so converted would have entitled the holder thereof to
purchase in accordance with the terms and provisions of and
applicable to the Rights if such Preferred Stock were converted
immediately prior to the record date for such distribution. Common
<PAGE>
stock owned by or held for the account of the Corporation or any
majority owned subsidiary shall not be deemed outstanding for the
purpose of any adjustment required under this subparagraph (iii).
(iv) For the purpose of any computation under subparagraph
(ii) and (iii) above, the current market price per share of common
stock at any date shall be deemed to be the average of the daily
Closing Prices for the thirty consecutive business days commencing
forty-five business days before the day in question. The Closing
Price for any day shall be (A) if the common stock is listed or
admitted for trading on any national securities exchange, the last
sale price (regular way), or the average of the closing bid and
ask prices, if no sale occurred, of common stock on the principal
securities exchange on which the common stock is listed, (B) if
not listed as described in (A), the mean between the closing high
bid and low asked quotations of common stock in the National
Association of Securities Dealers, Inc., Automated Quotation
System, or any similar system or automated dissemination of
quotations of securities prices then in common use, if so quoted,
or (C) if not quoted as described in clause (B), the mean between
the high bid and low asked quotations for common stock as reported
by the National Quotation Bureau Incorporated if at least two
securities dealers have inserted both bid and asked quotations for
common stock on at least 5 of the 10 preceding days. If none of
the conditions set forth above is met, the Closing Price of common
stock on any day or the average of such Closing Prices for any
period shall be the fair market value of common stock as
determined by a member firm of the New York Stock Exchange
selected by the Corporation.
(v) (A) Nothing contained herein shall be
construed to require an adjustment in the conversion rate as a
result of the issuance of common stock pursuant to, or the
granting or exercise of any rights under, the Corporation's
Shareholder Investment Plan or any successor plans providing for
the purchase of shares of common stock by the Corporation's
shareholders or employees at a price not less than 90% of the
"average market price" during the "pricing period" as such terms,
or equivalent terms, are defined in, and as calculated pursuant
to, such plans from time to time.
(B) In addition, no adjustment in the conversion
rate shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this subparagraph
(v)(B) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment; further provided,
however, that any adjustments which by reason of this subparagraph
(v)(B) are not otherwise required to be made shall be made no
later than 3 years after the date on which occurs an event that
requires an adjustment to be made or carried forward.
(C) All calculations under this Section 7 shall be
made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Anything in this Section 7 to the
contrary notwithstanding, the Corporation shall be entitled to
make such increases in the conversion rate, in addition to
<PAGE>
those required by this paragraph (d), as it in its discretion shall
determine to be advisable in order that any stock dividends,
subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or
exchangeable for stock hereafter made by the Corporation to its
shareholders shall not be taxable.
(vi) In any case in which this paragraph (d) provides that
an adjustment shall become effective immediately after a record date
for an event, the Corporation may defer until the occurrence of such
event (A) delivering to the holder of any Preferred Stock converted
after such record date and before the occurrence of such event the
additional shares of common stock deliverable upon such conversion
by reason of the adjustment required by such event over and above
the common stock deliverable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any amount
in cash in lieu of any fraction pursuant to paragraph (e), provided,
however, that the corporation shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's rights
to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment. If such event
does not occur, no adjustments shall be made pursuant to this
paragraph (d).
(e) No fractional shares of stock shall be issued upon the
conversion of any Preferred Stock. If more than one share of Preferred Stock
shall be surrendered for conversion at one time by the same holder, the number
of full shares of common stock which shall be issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of Preferred
Stock so surrendered. Instead of any fractional share of common stock on the
business day which immediately precedes the day of conversion.
(f) In case any of the following shall occur while any Preferred
Stock is outstanding: (i) any reclassification or change of the outstanding
shares of common stock deliverable upon conversion of the Preferred Stock
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination, but
including any change in the shares of common stock into two or more classes or
series of securities); or (ii) any consolidation or merger to which the
Corporation is a party (other than a consolidation or a merger in which the
Corporation is the continuing corporation and which does not result in any
reclassification of, or change other than a change in par value, or from par
value to no par value, or from no par value to par value, or a s a result of a
subdivision or combination) in, the outstanding shares of common stock
issuable upon conversion of the Preferred Stock); or (iii) any sale or
conveyance to another corporation of the properties and assets of the
Corporation as an entirety or substantially as an entirety; then the
Corporation, or such successor or purchasing corporation, as the case may be,
shall make appropriate provision in its charter or otherwise so that the
holders of the Preferred Stock then outstanding shall have the right to any
time thereafter to convert such Preferred Stock into the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number shares of common stock issuable upon conversion of such
Preferred Stock immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such provision shall provide for
adjustments which shall be as nearly equivalent as may be
<PAGE>
practicable to the adjustments provided for in this Section 7. The above
provisions of this paragraph (f) shall similarly apply to successive
reclassification, changes, consolidations, mergers, sales or conveyances.
(g) The Corporation will at all times reserve and keep available
out of its authorized but unissued or treasury stock, solely for the purpose
of issue upon conversion of the Preferred Stock as provided in this Section 7,
such number of shares of common stock as shall from time to time be sufficient
to effect the conversion of all outstanding Preferred Stock.
(h) Before taking any action which would cause an adjustment
increasing the conversion rate so that the conversion price is below the then
par value of the shares of common stock, the Corporation will take any
corporation action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of common stock at the conversion rate as so adjusted.
(i) The issuance of certificates for shares of common stock upon
conversion of Preferred Stock shall be made without charge to the converting
stockholder for such certificates or for any tax in respect of the issuance of
such certificates, and such certificates shall be issued in the name of, or in
such name or names as may be directed by, the holder of the Preferred Stock
converted. However, if any such certificates is to be issued in a name other
than that of the holder of the converted Preferred Stock, the Corporation
shall not be required to issue or deliver any stock certificate or
certificates unless and until the holder has paid to the Corporation the
amount of any tax which may be payable in respect of any transfer involved in
such issuance or shall establish to the satisfaction of the Corporation that
such tax has been paid.
(j) Whenever the conversion rate then in effect is adjusted as
herein provided, the Corporation shall mail to each holder of the Preferred
Stock at such holder's address as it shall appear on the books of the
Corporation a statement setting forth the adjusted conversion rate, then and
thereafter effective under the provisions hereof together with the facts, in
reasonable detail, upon which such adjustment is based.
(k) In case (i) the Corporation shall declare a dividend (or any
other distribution) on its common stock other than in cash out of its current or
retained earnings, or (ii) the Corporation shall authorize the granting to the
holders of its common stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights or warrants, or
(iii) of any reclassification or change of the common stock of the Corporation
(other than a subdivision or combination of its outstanding shares of common
stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of the
Corporation is required or the sale or transfer of all or substantially all of
the assets of the Corporation, or (iv) of the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation; the Corporation shall
mail to each holder of Preferred Stock at such holder's address as it shall
appear on the books of the Corporation, at least fifteen days prior to the
applicable record date hereinafter specified, a notice stating (x) the record
date for such dividend, distribution or rights, or, if a record is not to be
taken, the date as of which the holders of common stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such
<PAGE>
reclassification, consolidation, merger, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of common stock of record shall be entitled to exchange their shares of
common stock for securities or other property deliverable upon such
reclassification, consolidation, merger, dissolution, liquidation or winding up.
No failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the legality or validity of any such transaction or any adjustment
in the conversion rate or conversion price required by this Section 7.]
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be signed by [Name/Title], and [Name/Title], whereby each such [Title] and
said [Title] affirms, under penalties of perjury, that this Certificate is the
act and deed of the Corporation and that the facts stated herein are true,
this _____ day of _______________, __________.
FIRST SECURITY CORPORATION
By:___________________________
[Name/Title]
ATTEST:
_____________________________
[NAME]
Assistant Secretary
<PAGE>
EXHIBIT(4)(f)
Form of specimen certificate representing the Preferred Stock.
<PAGE>
[NONCUMULATIVE CONVERTIBLE] [NONCUMULATIVE CONVERTIBLE]
PREFERRED STOCK, [SERIES "__"] PREFERRED STOCK, [SERIES "__"]
NO PAR VALUE NO PAR VALUE
FIRST SECURITY CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS SEE REVERSE FOR
TRANSFERABLE IN THE CERTAIN DEFINITIONS
CITIES OF NEW YORK AND CUSIP [ ]
SALT LAKE CITY
This Certifies that
[Name and address of holder]
is the owner of
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE [$____ CUMULATIVE CONVERTIBLE]
PREFERRED STOCK, SERIES ["__"], WITHOUT PAR VALUE OF
FIRST SECURITY CORPORATION
transferable only on the books of
the corporation in person or by duly
authorized attorney upon surrender
of this certificate
properly endorsed.
This certificate is not valid
until countersigned by the
Transfer Agent and registered
by the Registrar.
IN WITNESS WHEREOF said
corporation has caused this
certificate to be signed by its duly
authorized officers and
its corporation seal to be hereunto
affixed.
DATED:
SECRETARY CHAIRMAN AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION
FIRST SOUTH OFFICE-SALT LAKE CITY, UTAH
TRANSFER AGENT AND REGISTRAR
BY AUTHORIZED SIGNATURE
(i)
<PAGE>
FIRST SECURITY CORPORATION
The Company will furnish without
charge to each stockholder who so requests, the designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof of the Company and the qualifications, limitations or
restrictions of such preferences and/or rights. Such request may be made to
the Company at Suite 200, 79 South Main Street, Salt Lake City, Utah 84111 or
to the Transfer Agent.
__________________________________________________________________
The following abbreviations, when
used in the inscription on the fact of this certificate, shall be construed as
though they were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in commonUNIF GIFT MIN ACT - __________ Custodian _______
TEN ENT - as tenants by the entireties(Cust) (Minor)
JT TEN - as joint tenants with right of survivorship under Uniform
Gifts to Minors and not as tenants in common Act __________
(State)
Additional abbreviations may also be used though not in the above list.
__________________________________________________________________
For value received, ___________________________________ hereby sell, assign
and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
______________________________________________________________________________
______________________________________________________________________________
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint
______________________________________________________________________________
Attorney to transfer the said Shares on the books of the within named
Corporation with full power of substitution in the premises.
Dated________________________________
-------------------------------------
NOTICE:
THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
(ii)
<PAGE>
[NOTICE OF ELECTION TO CONVERT
(CONVERTIBLE INTO COMMON STOCK)
The undersigned hereby irrevocably elect to convert
______________________________________________________________________________
____ shares of [$_______] [Noncumulative Convertible] Preferred Stock, Series
___ represented by the within certificate into then-issuable shares of the
Common Stock of First Security Corporation in accordance with the provisions
of the Certificate of Incorporation, as amended, of the Corporation.
Dated________________________________
-------------------------------
Signature
(iii)
<PAGE>
EXHIBIT(5)
Opinion of Ray, Quinney & Nebeker.
<PAGE>
April 5, 1994
First Security Corporation
Suite 200
79 South Main Street
Salt Lake City, Utah 84111
Gentlemen:
At your request, we have examined the Registration Statement on
Form S-3 (the "Registration Statement") relating to the registration and sale
from time to time by you of up to an aggregate of $300,000,000 of (i) one or
more series of shares of preferred stock (the "Preferred Stock"), (ii) common
stock, $1.25 par value (the "Common Stock"), (iii) debt securities (the "Debt
Securities"), and (iv) warrants to purchase Common Stock (the "Warrants" and,
collectively with the Preferred Stock, the Common Stock and the Debt
Securities, the "Securities"). We have examined the proceedings heretofore
taken and are familiar with the procedures proposed to be taken by you in
connection with the authorization, issuance and sale of the Securities.
Capitalized terms used but not otherwise defined herein shall have the same
meanings ascribed to them in the Registration Statement.
Subject to (i) the proposed additional proceedings being taken as
now contemplated by us as your counsel prior to the issuance of any of the
Securities, (ii) the terms of the Securities being otherwise in compliance
with then applicable law, (iii) the effectiveness of the Registration
Statement under the Securities Act of 1933, as amended, (iv) the due
authorization, approval and filing by you of the Certificate of Designation(s)
setting forth the terms of the Preferred Stock, (v) the due authorization,
execution and delivery of the Indenture pursuant to which Debt Securities are
to be issued, (vi) the due execution, registration and delivery of the
certificate or certificates evidencing the Securities, and (vii) the
appropriate officers and/or directors having taken all necessary action to
approve the specific terms of the Securities to be issued, we are of the
opinion that:
1. The Preferred Stock to be issued by you under the
Registration Statement will be, when issued and paid for in the manner
specified by the Registration Statement and the exhibits thereto, legally
issued, fully paid and non-assessable;
<PAGE>
First Security Corporation
April 5, 1994
Page 2
2. The Common Stock to be issued by you, including any Common
Stock that may be issuable pursuant to the conversion of any Preferred Stock
or Debt Securities or upon exercise of any Warrants, will be, when issued and
paid for in the manner specified by the Registration Statement and the
exhibits thereto, legally issued, fully paid and non-assessable;
3. The Debt Securities to be issued by you under the Registration
Statement will be, when issued and paid for in the manner specified by the
Registration Statement and the exhibits thereto, legally issued and binding
obligations upon you, subject to the effect of (a) applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization or similar laws
and court decisions affecting creditors' rights and remedies generally and (b)
the application of general principles of equity (whether such enforceability
is considered in a proceeding in equity or at law); and
4. The Warrants to be issued by you will be, when issued and paid
for in the manner specified by the Registration Statement and the exhibits
thereto, legally issued, fully paid and non-assessable.
You have informed us that you intend to issue the Securities from
time to time on a delayed or continuous basis, and this opinion is limited to
the laws, including the rules and regulations of the Securities and Exchange
Commission and the applicable state securities regulations, as in effect on
the date hereof. We understand that prior to issuing any Securities you will
advise us in writing of the terms thereof, will afford us an opportunity to
review the operative documents pursuant to which such Securities are to be
issued (including the applicable Prospectus Supplement) and will file such
supplement or amendment to this opinion (if any) as we may reasonably consider
necessary or appropriate by reason of the terms of such Securities.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the references to us under the heading
"Validity of Securities" in the Prospectus which is a part thereof. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
RAY, QUINNEY & NEBEKER
A. Robert Thorup
<PAGE>
EXHIBIT(23)(a)
Consent of Deloitte & Touche.
<PAGE>
Exhibit 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Pre-Effective Amendment
No. 1 to Registration Statement No. 33-52609 of First Security Corporation on
Form S-3 of our report dated February 25, 1994, appearing in the Annual Report
on Form 10-K of First Security Corporation for the year ended December 31,
1993, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE
Salt Lake City, Utah
April 5, 1994
