<PAGE>
As filed with the Securities and Exchange Commission on June 28, 1995.
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 juris- (Primary Standard Industrial (I.R.S. Employer
diction of incorporation Classification Code Number) Identification No.)
or organization)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(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
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
-------------------------------
Copies To:
A. ROBERT THORUP, ESQ.
RAY, QUINNEY & NEBEKER
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 323-3359
(FAX) (801) 323-3630
------------------------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the Effective Time of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
-------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Title of each class of Amount to be registered Proposed Maximum Proposed Maximum Amount of registration
securities to be registered offering price per share aggregate offering price fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($1.25 98,500 shares $29.00(1) $2,856,500(2) $984.92
par value)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Rights (2) 98,500 rights None None None
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the registration fee, as determined on June 22, 1995.
(2) One Right to purchase Junior Series B Preferred Stock of FSC is associated with each share of Common Stock. The Rights are
not transferable separately from the Common Stock except in limited circumstances.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This Registration Statement consists of __________ consecutively numbered pages.
The Exhibit Index is on consecutively numbered page __________.
<PAGE>
CROSS-REFERENCE SHEET
FIRST SECURITY CORPORATION
<TABLE>
<CAPTION>
ITEM ITEM LOCATION IN PROSPECTUS
NO. ---- ----------------------
- ----
<S> <C> <C>
1 Forepart of Registration Facing page, cross-reference sheet;
Statement and Outside Front cover page of Prospectus
Cover Page of Prospectus
2 Inside Front and Outside Back Available Information; Incorporation
Cover Pages of Prospectus of Certain Documents by Reference
3 Summary Information, Risk Cover Page of Prospectus
Factors and Ration of Earnings
to Fixed Charges
4 Use of Proceeds Not Applicable
5 Determination of Offering Price Not Applicable
6 Dilution Not Applicable
7 Selling Security Holders Selling Shareholder
8 Plan of Distribution Not Applicable
9 Description of Securities to be Incorporation of Certain
Registered Documents by Reference
10 Interests of Named Experts and Counsel Experts
11 Material Changes Not Applicable
12 Incorporation of Certain Incorporation of Certain Documents
Information by Reference by Reference
13 Disclosure of Commission Disclosure of Commission Position
Position on Indemnification for on Indemnification for Securities
Securities Act Liabilities Act Liabilities
Exhibit Index Page II-6
</TABLE>
<PAGE>
PROSPECTUS
FIRST SECURITY CORPORATION
98,500 Shares of Common Stock
$1.25 Par Value
________________________________________
This Prospectus relates to up to 98,500 shares of common stock (the
"Shares") of First Security Corporation (the "Company") which may be offered
from time to time by the selling shareholder named herein (the "Selling
Shareholder"). The Company will not receive any of the proceeds from the sale
of the Shares. The Selling Shareholder will bear the costs relating to the
registration of the Shares.
All of the securities offered hereby are to be offered for the account of
an existing security holder.
The Shares may be offered for sale from time to time by the Selling
Shareholder named herein, or by their pledgees, donees, transferees or other
successors in interest, to or through underwriters or directly to other
purchasers or through agents in one or more transactions through the National
Market System of the National Association of Securities Dealers Automated
Quotation System (the "NASDAQ/NMS"), in the over-the-counter market, in one or
more private transactions, or in a combination of such methods of sale, at
prices and on terms then prevailing, at prices related to such prices, or at
negotiated prices. The Selling Shareholder may pledge all or a portion of the
Shares owned by him as collateral in loan transactions. Upon default by the
Selling Shareholder, the pledgee in such loan transaction would have the same
rights of sale as the Selling Shareholder under this Prospectus. The Selling
Shareholder may also transfer Shares owned by him by gift and upon any such
transfer the donee would have the same rights of sale as such Selling
Shareholder under this Prospectus. The Selling Shareholder and any brokers and
dealers through whom sales of the Shares are made may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended, and
the commissions or discounts and other compensation paid to such persons may be
regarded as underwriters' compensation.
The Shares are traded on the NASDAQ / NMS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
________________________________________
The date of this Prospectus is June 30, 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act"), and in
accordance therewith file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Copies of such reports, proxy statements and other information can be obtained,
upon payment of prescribed fees, at the Public Reference Room of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy
statements and other information can also be inspected at the Commission's
facilities referred to above and at the Commission's Regional Offices at Suite
1400, 500 West Madison Street, Chicago, Illinois 60621-2511, and Room 1228, 75
Park Place, New York, New York 10007. In addition, the Company's Common Stock
is included for quotation on the National Association of Securities Dealers
Automated Quotation/National Market System ("NASDAQ/NMS"), and such reports,
proxy statements and other information concerning FSC should be available for
inspection and copying at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with any amendments thereto, the "Registration Statement")
under the Securities Act of 1933, as amended ("Securities Act"), with respect to
the Company's Common Stock offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits
thereto, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. For further information, reference is made
to the Registration Statement, including the exhibits thereto.
Statements contained in this Prospectus or in any documents
incorporated in this Prospectus by reference as to the contents of any contract
or other document referred to herein or therein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
The Registration Statement may be inspected by anyone without charge at the
principal office of the Commission in Washington, D.C., and copies of all or any
part of it may be obtained from the Commission upon payment of the prescribed
fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents
filed with the Commission by the Company (File No. 1-6906):
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1994; and
<PAGE>
(b) The Company's Proxy Statement dated March 15, 1995; and
(c) The Company's Quarterly Reports on Form 10-Q for the
calendar quarter ended March 31, 1995; and
(d) The Company's Current Reports on Form 8-K dated January
31,1995 (as corrected on February 2, 1995); and
(e) Description of the Company's Capital Stock as included in
the Company's Registration Statement on Form S-3, filed with
the Commission on September 13, 1991, Commission File Number
33-42784.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus 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 herein or 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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER
THAN EXHIBITS TO SUCH DOCUMENTS, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO
WHOM THIS PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST DIRECTED TO FIRST
SECURITY CORPORATION, ATTENTION: SCOTT C. ULBRICH, EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER, SUITE 200, 79 SOUTH MAIN STREET, SALT LAKE CITY, UTAH
84111; TELEPHONE NUMBER (801) 246-5706.
No agent or officer of the Company, nor any other person, has been
authorized to give any information or to make any representations other than as
contained herein; and, if given or made, such information or representations
should not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sale or exchange made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs or operations of the Company since the date of this Prospectus, or that
the information herein is correct as of any time subsequent to such date.
<PAGE>
THE COMPANY
The Company is a Delaware incorporated multi-bank holding company
headquartered in Salt Lake City, Utah. At March 31, 1995, the Company and its
subsidiaries had total consolidated assets, deposits, and shareholders' equity
of $12.0 billion, $8.2 billion and $0.9 billion, respectively.
The Company maintains its executive offices at 79 South Main Street,
Salt Lake City, Utah 84111, telephone 801-246-6000.
The principal assets of the Company are the capital stock of (a) First
Security Bank of Utah, N.A. ("FSBU") (approximately 99.9% owned), (b) First
Security Bank of Idaho, N.A. ("FSBI") (100% owned), and (c) First Security Bank
of New Mexico, N.A. (100% owned) all of which provide a range of banking
services.
The Company also owns 99.9% of the outstanding capital stock of First
Security Bank of Wyoming, a Wyoming state bank, 100% of the outstanding capital
stock of First Security Bank of Nevada (Las Vegas), and 100% of the outstanding
capital stock of First Security Bank of Oregon, an Oregon savings bank. (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
subsidiary. The securities subsidiaries are subject to regulation and
supervision by the Commission and applicable state securities authorities. The
insurance agency and credit life insurance company are regulated by applicable
state insurance regulators.
In addition to its equity investment 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.
SELLING SHAREHOLDER
The 98,500 Shares of the Company's Common Stock described in this
Prospectus are owned by the person listed below. All of the shares offered
hereby were acquired by the listed person in connection with the acquisition of
Gaskill Insurance Agency by the Company, and the Shares are being registered by
the Company for resale by the Selling Shareholder pursuant to certain
registration rights agreed between the Company and the Selling Shareholder.
<PAGE>
Mr. Gaskill was a controlling shareholder of the Gaskill Insurance
Agency prior to the merger of the Gaskill Agency into First Security Insurance,
Inc., a wholly owned subsidiary of the Company. Mr. Gaskill participated
directly in the negotiation of the merger agreement.
In recognition of the fact that the Selling Shareholder may wish to be
legally permitted to sell his shares, other than in transactions exempt from
registration under the securities laws, when he deems appropriate, the Company
has filed with the Securities and Exchange Commission a Registration Statement
on Form S-3 under the Securities Act of 1933 (the "Securities Act"), of which
this Prospectus forms part, with respect to the resale of the Shares from time
to time. The Shares may be resold in transactions on the NASDAQ/NMS, on which
the Shares are included and traded, in other public securities markets or in
private transactions or other transactions exempt from registration under the
Securities Act. (SEE "Plan of Distribution.")
SHARES OWNED SHARES SHARES OWNED
PRIOR TO OFFERED AFTER
SELLING SHAREHOLDER THIS OFFERING HEREBY OFFERING
- ------------------- ------------- ------- ------------
Douglas C. Gaskill 98,500 98,500 0
7700 East Gainey Ranch Road
Scottsdale, Arizona 85258
Tax Id. Number: ###-##-####
TOTAL SHARES 98,500 98,500 0
- ------------------
Except as described above, the Selling Shareholder had no position,
office or other material relationship within the past three years with the
Company or any of its affiliates.
The information set forth above excludes shares of the Company's
Common Stock held by affiliates of the Selling Shareholder in his own right or
by the Selling Shareholder or his affiliates in investment accounts, trust
accounts, custody accounts or in other similar capacities. All of the shares
listed in the preceding table are offered hereby.
The Shares of Common Stock registered hereby were acquired by the
Selling Shareholder pursuant to the Merger Agreement, a copy of which was filed
as an exhibit to the Securities Act Registration Statement of which this
prospectus forms a part.
PLAN OF DISTRIBUTION
Any distribution of the Shares by the Selling Shareholder, or by
pledgees, donees, transferees or other successors in interest, may be effected
in one or more of the following transactions: (a) to underwriters who will
acquire the Shares for their own account
<PAGE>
and resell them in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale (any public offering price and any discount or concessions allowed or
reallowed or paid to dealers may be changed from time to time); (b) through
brokers, acting as principal or agent, in transactions (which may involve block
transactions) on the NASDAQ/NMS, in special offerings, or otherwise, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices; or (c) directly or
through brokers or agents in private sales at negotiated prices, or by any other
legally available means.
The Selling Shareholder and any such underwriters, brokers, dealers or
agents, upon effecting the sale of the Shares, may be deemed "underwriters" as
that term is defined by the Securities Act.
Underwriters participating in any offering made pursuant to this
Prospectus (as amended or supplemented from time to time) may receive
underwriting discounts and commissions, and discounts or concessions may be
allowed or reallowed or paid to dealers, and brokers or agents participating in
such transactions may receive brokerage or agent's commissions or fees.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless the Shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and complied with.
All costs, expenses and fees in connection with the registration of
the Shares will be borne by the Selling Shareholder. Commissions and discounts,
if any, attributable to the sale of the Shares will be borne by the Selling
Shareholder. The Selling Shareholder may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the Shares
against certain liabilities, including liabilities arising under the Securities
Act. The Company and the Selling Shareholder have agreed to indemnify each
other and certain other persons against certain liabilities in connection with
the offering of the Shares, including liabilities arising under the Securities
Act.
EXPERTS
The consolidated financial statements as of December 31, 1994 and
1993, and for each of the three years in the period ended December 31, 1994
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K, have been audited by Deloitte & Touche LLP, 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.
<PAGE>
LEGAL MATTERS
The legality of the Company's Common Stock offered hereby and certain
other matters with respect to this offering have been passed upon for the
Company by Ray, Quinney & Nebeker P.C. Alonzo W. Watson, who is Secretary of
the Company, and Brad D. Hardy, who is Assistant Secretary of the Company, are
members of the firm of Ray, Quinney & Nebeker. A daughter of the Chairman and
Chief Executive Officer of the Company is an associate attorney at Ray Quinney &
Nebeker. At March 31, 1995, attorneys at Ray Quinney & Nebeker, together with
their immediate families, beneficially owned less than 5% of the outstanding
shares of Common Stock of the Company.
INDEMNIFICATION
FOR SECURITIES LAW LIABILITIES
Section 145 of the Delaware General Corporation Law authorizes a
corporation to indemnify its directors and officers as well as other employees
and individuals in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. Article 10 of the Company's By-Laws
requires indemnification to the full extent permitted under Delaware law and
provides certain rights to indemnification for directors, officers and employees
of the Company.
The Company also maintains an insurance policy insuring its Directors
and Officers against liability for certain acts or omissions while acting in
their official capacities.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED
THAT IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION SUCH
INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT AND
IS THEREFORE UNENFORCEABLE. IN THE EVENT THAT A CLAIM FOR INDEMNIFICATION
AGAINST SUCH LIABILITIES (OTHER THAN THE PAYMENT BY THE COMPANY OF EXPENSES
INCURRED OR PAID BY A DIRECTOR, OFFICER OR CONTROLLING PERSON OF THE COMPANY 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 COMPANY 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 SECURITIES ACT AND WILL BE GOVERNED BY THE FINAL
ADJUDICATION OF SUCH ISSUE.
<PAGE>
98,500 Shares
FIRST SECURITY CORPORATION
Common Stock
PROSPECTUS
June 30, 1995
TABLE OF CONTENTS
PAGE
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain
Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Selling Shareholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indemnification for
Securities Law Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 7
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses relating to the registration of the Shares will be borne
by the registrant. Such expenses are estimated to be as follows:
<TABLE>
<CAPTION>
<S> <C>
Registration fee - Securities and
Exchange Commission $984.92
Accountant's fees $xxx.xx
Legal fees $xxx.xx
Miscellaneous $xxx.xx
-------
Total $xxx.xx
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware contains
detailed provisions on indemnification of directors and officers of a Delaware
corporation against expenses, judgments, fines and amounts paid in settlement,
actually and reasonably incurred in connection with litigation.
The Certificate of Incorporation of First Security Corporation
provides for indemnification of directors and officers to the full extent
permitted or allowed by the laws of the State of Delaware, as such laws exist or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the registrant to provide broader
indemnification rights than permitted or allowed by Section 145). The
registrant also insures its officers and directors to the full extent permitted
by Section 145.
The directors and officers of the Registrant are entitled to
indemnification by the Selling Shareholder against liability arising by reason
of action by the Selling Shareholder in connection with this registration
statement.
ITEM 16. LIST OF EXHIBITS
The Exhibits to this registration statement are listed in the Index to
Exhibits on page II-6.
<PAGE>
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
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(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;
Provided, however, that paragraphs (i) and (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.
(4) 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 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.
(5) 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 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange 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 offering therein, and the offering of such
<PAGE>
securities at that time 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.
[THIS SPACE LEFT BLANK INTENTIONALLY]
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, First
Security Corporation has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Salt Lake City,
Utah, on the 28th day of June, 1993.
FIRST SECURITY CORPORATION
By: /s/ Morgan J. Evans
-------------------
Morgan J. Evans
President and Chief Operating Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints A. Robert Thorup, Esq. and Brad D. Hardy, Esq. and each of them, his
true and lawful attorney-in-fact and agent, with full powers of substitution,
for him and in his name, place and stead, in any and all capacities, to sign and
to file any and all amendments, including pre- and/or post-effective amendments
to this Registration Statement, with the Securities and Exchange Commission,
granting to said attorney-in-fact full power and authority to perform any other
act on behalf of the undersigned required to be done in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this 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 June 28, 1995
Spencer F. Eccles
/s/ Morgan J. Evans President and Chief
- ----------------------- Operating Officer, Director June 28, 1995
Morgan J. Evans
<PAGE>
/s/ Scott C. Ulbrich Executive Vice President
- ----------------------- Chief Financial Officer June 28, 1995
Scott C. Ulbrich (Principal Financial and
Accounting Officer)
/s/ James C. Beardall
- -----------------------
James C. Beardall Director June 28, 1995
/s/ Rodney H. Brady
- -----------------------
Rodney H. Brady Director June 28, 1995
/s/ James H. Bruce
- -----------------------
James E. Bruce Director June 28, 1995
- -----------------------
Thomas D. Dee II Director June 28, 1995
/s/ Dr. David P. Gardner
- -----------------------
Dr. David P. Gardner Director June 28, 1995
/s/ Kendall D. Garff
- -----------------------
Kendall D. Garff Director June 28, 1995
/s/ U. Edwin Garrison
- -----------------------
U. Edwin Garrison Director June 28, 1995
/s/ David B. Haight
- -----------------------
David B. Haight Director June 28, 1995
/s/ Jay Dee Harris
- -----------------------
Jay Dee Harris Director June 28, 1995
/s/ Robert T. Heiner
- -----------------------
Robert T. Heiner Director June 28, 1995
<PAGE>
/s/ Karen H. Huntsman
- -----------------------
Karen H. Huntsman Director June 28, 1995
/s/
- -----------------------
G. Frank Joklik Director June 28, 1995
/s/ B.Z. Kastler
- -----------------------
B. Z. Kastler Director June 28, 1995
/s/ Joseph G. Maloof
- -----------------------
Joseph G. Maloof Director June 28, 1995
/s/ Scott S. Parker
- -----------------------
Scott S. Parker Director June 28, 1995
/s/ Dr. Arthur K. Smith
- -----------------------
Dr. Arthur K. Smith Director June 28, 1995
/s/ James L. Sorenson
- -----------------------
James L. Sorenson Director June 28, 1995
/s/ Harold J. Steele
- -----------------------
Harold J. Steele Director June 28, 1995
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
Number Description Numbered Page
- ------- ----------- -------------
4. Agreement and Plan of Merger,
dated as of January 9, 1995,
by and among First Security Corporation ("FSC"),
First Security Insurance, Inc. and
Gaskill Insurance Agency
5 Opinion of Ray Quinney & Nebeker
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Ray Quinney & Nebeker PC Included in
Exhibit 5
<PAGE>
EXHIBIT 4
MERGER AGREEMENT
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT"), is made and
entered into as of the 9th day of January, 1995, by and among First Security
Corporation, a Delaware corporation ("FSC"), First Security Insurance Inc., a
Utah corporation ("FSI"), Gaskill Insurance Agency, Inc., a Utah corporation
("GASKILL"), and Douglas C. Gaskill, as one of two shareholders of Gaskill
("SHAREHOLDER").
RECITALS
A. FSC is a multibank holding company.
B. FSI is a wholly owned subsidiary of FSC and is an insurance agency.
C. Gaskill is an insurance agency.
D. Gaskill is authorized by its Articles of Incorporation to issue 2,500
shares of common stock, par value $10.00 per share ("GASKILL COMMON STOCK"), of
which as of the date of this Agreement there were 1,150 shares issued and
outstanding, 575 of which are issued to Lyle L. Gaskill and held in escrow (the
"ESCROW") by First Security Bank of Utah, N.A., pursuant to that certain Stock
Purchase Agreement dated August 1, 1985 by and between Lyle Gaskill and Gaskill
(the "STOCK PURCHASE AGREEMENT"), and 575 of which are owned by the Shareholder.
E. Under the terms of the Stock Purchase Agreement, Gaskill has the right
to vote the 575 shares of Gaskill Common Stock issued to Lyle Gaskill.
F. The parties hereto desire that Gaskill be merged with and into FSI upon
the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
In consideration of the recitals listed above, and of the terms and mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which the parties hereby
acknowledge, the parties hereto covenant and agree, subject to the satisfaction
or waiver of the conditions contained herein, that Gaskill shall be merged with
and into FSI, in accordance with the laws of the State of Utah, and do hereby
agree, prescribe and set forth the terms and conditions of such merger (the
"MERGER"), and the mode of carrying the same into effect, as follows:
ARTICLE ONE - MERGER OF GASKILL INTO FSI
<PAGE>
SECTION 1.1 MERGER. Subject to the terms and conditions of this
Agreement, Gaskill shall be merged with and into FSI at the Closing (as defined
in Section 2.1 below), with FSI being the surviving corporation.
ARTICLE TWO - CLOSING OF THE MERGER
SECTION 2.1 CLOSING. Unless this Agreement is earlier terminated in
accordance with Article Eight, Gaskill shall be merged with and into FSI, with
FSI being the surviving entity, all as contemplated by this Agreement, at a
closing (the "CLOSING") to be held at the offices of Ray, Quinney & Nebeker, 79
South Main Street, Suite 400, Salt Lake City, Utah, on February 1, 1995, at
10:00 a.m. (the "CLOSING DATE") or at such other date and time as upon which the
parties may mutually agree.
SECTION 2.2 FILING OF ARTICLES OF MERGER AND PLAN OF MERGER. FSI and
Gaskill shall execute Articles of Merger in substantially the form attached to
this Agreement as Exhibit A. The Merger shall be effected by filing such
Articles of Merger with the Utah Department of Commerce, Division of
Corporations and Commercial Code (the "DIVISION"). The term "EFFECTIVE DATE"
shall mean the date on which the Articles of Merger are so filed, and the
"EFFECTIVE TIME" shall mean the time at which the Merger is effective under the
Utah Revised Business Corporation Act.
SECTION 2.3 EFFECT OF THE MERGER. At the Effective Time, Gaskill shall be
merged, in accordance with the Utah Revised Business Corporation Act, into FSI,
and FSI, as the surviving corporation, shall continue its corporate existence
under the laws of the State of Utah. The separate corporate existence of
Gaskill shall terminate at the Effective Date and all of the assets of Gaskill
shall become the property of FSI as the surviving corporation. The outstanding
shares of Gaskill Common Stock shall be converted into shares of FSC Common
Stock and cash, as provided in Section 2.4, below.
SECTION 2.4 CONVERSION OF SHARES.
2.4.1 BASIS FOR CONVERSION OF SHARES. The basis for converting and
exchanging the issued and outstanding shares of the stock of each of the
constituent corporations shall be as follows:
(a) FSI SHARES. All shares of common stock, par value $10.00
per share, of FSI ("FSI Common Stock") that are outstanding immediately
prior to the Effective Time of the Merger shall continue to be outstanding
immediately after the Effective Time of the Merger.
(b) GASKILL COMMON STOCK. Each share of common stock, par value
$10.00 per share, of Gaskill ("Gaskill Common Stock") which is outstanding
immediately prior to the Effective Time (which number shall be not more
than 575), other than shares as to which dissenters' rights are perfected,
and all rights in respect thereof, shall be converted, IPSO FACTO, and
without any action on the part of the holder thereof, into the right to
receive
<PAGE>
171.3044 shares (the "EXCHANGE RATIO") of the common stock, par value
$1.25, of FSC ("FSC COMMON STOCK").
2.4.2 SURRENDER OF CERTIFICATES.
(a) RIGHTS UPON SURRENDER. After the Effective Time of the
Merger, the sole holder of shares of Gaskill Common Stock outstanding
immediately prior to the Effective Time of the Merger shall, upon surrender
for cancellation of a certificate or certificates representing such shares
to FSC or its agent designated for such purpose, be entitled to receive a
certificate or certificates representing the number of shares of FSC Common
Stock into which such shares of Gaskill Common Stock shall have been
converted pursuant to the provisions of this Article (subject to Section
2.4.3 below).
(b) RIGHTS PENDING SURRENDER. Until so surrendered, the
certificates which prior to the merger represented shares of Gaskill Common
Stock, shall be deemed, for all corporate purposes, to evidence the right
to receive the shares of FSC Common Stock into which such shares of Gaskill
Common Stock shall have been converted; provided, however, that (i) no
dividends with respect to shares of Gaskill Common Stock so converted to
FSC Common Stock shall be paid until the holder shall have surrendered
certificates therefor, at which time the holder shall be paid the amount of
dividends, if any, without interest, which shall theretofore have become
payable with respect to the shares of FSC Common Stock into which such
shares shall have been converted, and (ii) no interest shall accrue or be
payable with respect to the amount of cash into which any fractional share
shall have been converted pursuant to Section 2.4.3 below.
(c) ISSUANCE OF CERTIFICATES IN DIFFERENT NAME. If any
certificate for shares of FSC Common Stock is to be issued in a name other
than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof that the
certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, and that the person requesting such exchange pay
to FSC or its agent designated for such purpose any transfer or other taxes
required by reason of the issuance of a certificate for shares of FSC
Common Stock in any name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of FSC or its
agent that such tax has been paid or is not payable.
2.4.3 FRACTIONAL SHARES. No fractional shares of FSC Common Stock
shall be issued in or as a result of the Merger, but, in lieu of any such
fractional shares, each holder of shares of Gaskill Common Stock who would
otherwise have been entitled to a fraction of a share of FSC Common Stock upon
surrender of stock certificates as provided in Section 2.4.2 above will, upon
such surrender, be paid an amount of cash (without interest) determined by
multiplying (a) the FSC Common Stock price determined as the average of the bid
and ask price of FSC Common Stock as quoted on NASDAQ, National Market System,
at closing on the day preceding the Effective Time, by (b) the fractional share
interest in FSC Common Stock to which the holder would otherwise be entitled.
<PAGE>
SECTION 2.5 ARTICLES OF INCORPORATION. The Articles of Incorporation of
FSI in effect immediately prior to the Effective Time of the Merger shall be and
constitute the Articles of Merger of FSI as the surviving corporation until
further amended in the manner provided by law.
SECTION 2.6 BYLAWS. The Bylaws of FSI as in effect immediately prior to
the Effective Time of the Merger shall be and constitute the Bylaws of FSI as
the surviving corporation, until further amended in the manner provided by law.
SECTION 2.7 DIRECTORS. The Board of Directors of FSI, and the members
thereof, immediately prior to the Effective Time, shall be and constitute the
Board of Directors and the members thereof of FSI as the surviving corporation.
SECTION 2.8 OFFICERS. The officers of FSI immediately prior to the
Effective Time shall be and constitute the officers of FSI as the surviving
corporation.
SECTION 2.9 SUBSEQUENT ACTIONS. If, at any time after the Effective Time,
FSI as the surviving corporation, or its successors or assigns, shall consider
or be advised that any deeds, bills of sale, assignments, assurances, or any
other actions or things are necessary or desirable to vest, perfect or confirm
of record or otherwise in FSI its rights, title or interest in, to or under any
of the rights, properties or assets of Gaskill acquired or to be acquired by FSI
as a result of, or in connection with, the Merger, or otherwise to carry out
this Agreement, the officers and directors of FSI shall be authorized to execute
and deliver, in the name and on behalf of Gaskill or otherwise, all deeds, bills
of sale, assignments and assurances, and to take and do, in the name and on
behalf of Gaskill or otherwise, all such actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties and assets of Gaskill or otherwise to
carry out this Agreement.
ARTICLE THREE - CONDITIONS OF CLOSING
SECTION 3.1 CONDITIONS OF CLOSING FOR ALL PARTIES. The consummation of
the transactions contemplated by this Agreement is conditioned upon the
following:
3.1.1 REGULATORY APPROVAL. All consents, approvals and permissions
and the satisfaction of all of the requirements prescribed by law, including but
not limited to, the consents, approvals and permissions of all applicable
regulatory authorities, which are necessary to the carrying out of the Merger as
described in this Agreement, shall have been procured; provided, however, the
approvals referred to in this subparagraph 3.1.1 shall not have imposed any
significant conditions which FSC and FSI reasonably deem to be materially
disadvantageous or burdensome.
3.1.2 NO INJUNCTION, ETC. There shall not have been instituted any
litigation, regulatory proceeding or other matter by any third party which
challenges the legality or effectiveness
<PAGE>
of the transactions contemplated hereby or seeks an order, decree or injunction
enjoining or prohibiting the consummation of the Merger.
3.1.3 TAX MATTERS. Gaskill and FSC shall have received (unless
otherwise dispensed with by them) an opinion from their respective counsel to
the effect (a) that the Merger will constitute a nontaxable reorganization in
accordance with Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code, and (b) that
any other matters agreed to by the parties will be favorably treated for tax
purposes.
3.1.4 STOCK PRICE. Unless waived by the parties, the closing sale
price of FSC Common Stock as quoted on NASDAQ during the twenty (20) trading
days ending on the fifth (5th) day preceding Closing, shall not have been higher
than $32.00 per share nor lower than $20.00 per share.
3.1.5 RELEASE OF CLAIMS BY C. BRETT NILSSON AND STUART P. YOUNG. C.
Brett Nilsson ("NILSSON") and Stuart P. Young ("YOUNG") shall each have executed
a release in favor of Gaskill, the Shareholder, FSC and FSI in connection with
an offer to each of them by the Shareholder for the purchase of shares of
Gaskill Common Stock and to the effect that neither has an ownership interest or
a right to ownership in Gaskill or a right to acquire an ownership interest in
either FSC or FSI.
SECTION 3.2 CONDITIONS OF CLOSING FOR FSC AND FSI. The obligation of FSC
and FSI, respectively, to consummate the transactions contemplated by this
Agreement is conditioned upon the following:
3.2.1 GASKILL RESOLUTIONS; CORPORATE DOCUMENTS. Gaskill shall have
delivered to FSI a certified copy of resolutions duly adopted by its Board of
Directors and its shareholder(s) approving this Agreement and the Merger as
contemplated hereby. Gaskill shall deliver to FSI (a) copies, certified by the
Division, of its Articles of Incorporation; (b) copies certified by its
Corporate Secretary of its Bylaws; and (c) a certificate of good standing as to
Gaskill, dated as of the Closing Date, issued by the Division.
3.2.2 GASKILL'S AND THE SHAREHOLDER'S REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS. Unless waived in writing by FSI and FSC in their sole
discretion, the respective representations and warranties of Gaskill and the
Shareholder contained in this Agreement shall be correct on and as of the
Closing Date with the same effect as though made on and as of such date. Except
as otherwise contemplated by this Agreement, Gaskill and the Shareholder shall
have performed in all material respects all of their respective obligations and
agreements hereunder theretofore to be performed by them. FSC and FSI shall
have received at the Closing a certificate to the foregoing effect, dated the
Closing Date, from Gaskill executed on its behalf by one of its duly authorized
executive officers, and from the Shareholder.
3.2.3 OPINION OF GASKILL'S COUNSEL. Unless waived in writing by FSC
and FSI in their sole discretion, FSC and FSI shall have received at the Closing
from Parsons Behle & Latimer,
<PAGE>
counsel to Gaskill, a written opinion, dated the Closing Date, substantially in
the form of Exhibit B hereto.
3.2.4 AFFILIATES LETTER. Unless waived in writing by FSC in its sole
discretion, FSC shall have received a letter from each person who, in the
opinion of Gaskill and its counsel (who shall be entitled to rely on written
certificates of such persons), is an "affiliate" (as that term is defined in
Rule 405 promulgated by the SEC under the Securities Act) of Gaskill, in the
form attached hereto as Exhibit C. Such "affiliates" letter shall include
covenants with respect to the continued ownership of the shares of FSC Common
Stock to be received in the Merger.
3.2.5 POOLING OF INTEREST. Unless waived in writing by FSC in its
sole discretion, FSC shall have received a letter from Deloitte & Touche, its
independent public accountants, in form and substance reasonably satisfactory to
FSC, that the transaction may be properly accounted for as a "pooling of
interest."
3.2.6 CONDITION OF GASKILL. FSI shall have determined, based on an
audit and review by its officers, accountants and legal counsel, conducted as
soon as possible after execution of this Agreement and updated as of the Closing
Date, that (a) the assets, books, records and operations of Gaskill are in
reasonably satisfactory condition and will not adversely impact FSI after
consummation of the Merger; (b) based on the review of the assets, books,
records and operations of Gaskill by FSI, there are no liabilities (existing,
threatened or contingent) which have not been disclosed pursuant to the
Disclosure Schedules or the Financial Statements delivered to FSC and FSI
pursuant to Section 5.1.6, below, which FSI, in its discretion, determines may
have a materially adverse impact on the operations or the business (financial or
otherwise) of Gaskill or FSI after consummation of the Merger, provided,
however, that the loss or prospective loss of any single account of Gaskill
shall be deemed not to be a materially adverse impact; (c) the assets identified
in Exhibit D attached hereto, are owned by Gaskill, free and clear of any claims
or encumbrances; (d) the net earnings before taxes of Gaskill for the years
ended 1993 and 1994 are as reported in the Financial Statements as delivered to
FSI pursuant to Section 5.1.6; and (e) as of the Closing Date, the net worth of
Gaskill, calculated in accordance with generally accepted accounting principles,
and after accrual or payment of its expenses incurred with respect to the
Merger, including but not limited to auditor's and attorneys' fees, will exceed
its net worth as set forth in the May 31, 1994 Financial Statements.
3.2.7 SHAREHOLDER NONCOMPETITION AGREEMENT. The Shareholder shall
have entered into a noncompetition agreement with FSI in a form mutually
acceptable to the parties which shall provide for a term of three (3) years from
and after the Effective Time and a geographical restriction limited to the
States of Utah and Idaho.
3.2.8 EMPLOYMENT AGREEMENTS. Nilsson and Young shall each have
entered into a three (3) year employment agreement with FSI in a form acceptable
to FSI, and their respective employment agreements shall include a compensation
matrix for the period January 1, 1995 to December 31, 1995 (the "MATRIX"), with
Nilsson's Matrix in the form attached hereto as Exhibit E-1 and Young's Matrix
in the form attached hereto as Exhibit E-2.
<PAGE>
3.2.9 NON-COMPETITION AGREEMENTS. Each licensed sales person
employed by Gaskill shall have entered into an agreement not to compete with FSI
substantially in the form of Exhibit F hereto.
3.2.10 RELEASE OF ENCUMBRANCES ON GASKILL COMMON STOCK. All
encumbrances or similar claims which may exist against Gaskill Common Stock,
including but not limited to the encumbrance set forth on Section 5.1.4 of the
Disclosure Schedule, shall be eliminated.
3.2.11 TERMINATION OF ESCROW AND TRANSFER OF STOCK FROM LYLE GASKILL
TO GASKILL. Lyle Gaskill shall have terminated the Escrow and transferred and
delivered to Gaskill, and Gaskill shall have cancelled, the 575 shares of
Gaskill Common Stock originally issued to him. Gaskill shall have delivered to
FSI and FSC in writing a release executed by Lyle Gaskill in favor of Gaskill,
FSI and FSC to the effect that Lyle Gaskill has no ownership interest in Gaskill
and in connection with the Stock Purchase Agreement.
3.2.12 TERMINATION OF GASKILL BENEFIT PLANS. Gaskill shall have
terminated its Flexible Benefits Plan, Management Incentive Compensation Plan
and Tuition Reimbursement Plan and shall have delivered to FSI an
acknowledgement in writing from Brenda Chavez to the effect that she will have
no rights with respect to the Management Incentive Compensation Plan from and
after the Effective Time.
SECTION 3.3 CONDITIONS OF CLOSING FOR GASKILL AND THE SHAREHOLDER. The
obligation of Gaskill and the Shareholder, respectively, to consummate the
transactions contemplated by this Agreement is conditioned upon the following:
3.3.1 FSC AND FSI REPRESENTATIONS AND WARRANTIES. Unless waived in
writing by Gaskill in its discretion, the representations and warranties of FSC
and FSI contained in this Agreement shall be correct on and as of the Effective
Time with the same effect as though made on and as of such date, except for
changes which are not, in the aggregate, material and adverse to the financial
condition, businesses, properties or operations of FSC and its consolidated
subsidiaries, and, except as otherwise contemplated by this Agreement, FSC and
FSI shall have performed in all material respects all of their obligations and
agreements hereunder theretofore to be performed by them. Gaskill shall have
received at the Closing a certificate to the foregoing effect dated the Closing
Date and executed on behalf of each of FSC and FSI by one of their duly
authorized executive officers.
3.3.2 OPINION OF FSC COUNSEL. Unless waived in writing by Gaskill,
Gaskill shall have received at the Closing from Ray, Quinney & Nebeker, counsel
to FSC, a written opinion, dated the Closing Date, substantially in the form of
Exhibit G hereto.
ARTICLE FOUR - COVENANTS OF GASKILL AND THE SHAREHOLDER
SECTION 4.1 COVENANTS OF GASKILL AND THE SHAREHOLDER. Gaskill and the
Shareholder hereby covenant and agree with FSC and FSI as follows:
<PAGE>
4.1.1 NEGATIVE COVENANTS. Except as otherwise specifically provided
in this Agreement, between the date hereof and the Effective Time (as defined in
Section 2.2, above) or the time when this Agreement terminates as provided
herein, neither Gaskill nor the Shareholder shall, without the prior written
authorization of the President of FSI:
(a) CHANGE IN CAPITAL STOCK; ISSUANCE OF SHARES. Make or
approve any change in Gaskill's authorized capital stock, or issue, agree
to issue or permit Gaskill to become obligated to issue any shares of
Gaskill's capital stock, or securities convertible into its capital stock,
or, with respect to the Shareholder, sell, agree to sell or become
obligated to sell any shares of Gaskill Common Stock.
(b) OPTIONS, WARRANTS, AND RIGHTS. Grant or issue any options,
warrants or other rights of any kind relating to the purchase of shares of
Gaskill Common Stock, or securities convertible into shares of Gaskill
Common Stock.
(c) DIVIDENDS. Declare or pay any dividends or other
distributions on any shares of Gaskill Common Stock.
(d) PURCHASE OF SHARES. Purchase or otherwise acquire, or agree
or become obligated to acquire, any shares of Gaskill Common Stock.
(e) BENEFIT PLANS. Except as required by law, enter into or
amend any pension, retirement, stock option, profit sharing, deferred
compensation, consultant, bonus, group insurance or similar benefit plan in
respect of any of its directors, officers or other employees.
(f) CONDUCT OF BUSINESS. Except as contemplated by this
Agreement, take or omit to take any action which (i) causes Gaskill not to
conduct its business in a manner consistent with normal business practices,
(ii) has or is likely to have a material and adverse effect on Gaskill's
financial condition (present or prospective), businesses, properties,
assets or operations (the parties hereto recognize that the operation of
Gaskill until the Effective Time is the responsibility of Gaskill and its
Board of Directors and officers; nevertheless, Gaskill shall keep FSI
advised of all important changes in its financial condition (present or
prospective), businesses, properties, assets or operations).
(g) ACQUISITIONS AND MERGERS. Acquire or merge with any other
company or acquire any significant part of the assets of any other company.
(h) LIENS; INDEBTEDNESS; INCREASE IN COMPENSATION, ETC. Except
in the ordinary course of business, mortgage, pledge or subject to a lien
or any other encumbrance any of Gaskill's assets, dispose of any of
Gaskill's assets, incur or cancel any of Gaskill's indebtedness or claims,
permit Gaskill to purchase or lease any assets having a purchase price or
lease cost, in the aggregate, of more than $5,000.00, or increase any
compensation or benefits payable to Gaskill's officers or employees, except
routine merit increases in accordance with past practices.
<PAGE>
(i) AMENDMENTS TO ARTICLES AND BYLAWS. Amend Gaskill's Articles
of Incorporation or Bylaws.
4.1.2 REPAYMENT OF LOANS. Within thirty (30) days after the Closing,
FSI shall have received payment in full of the outstanding principal and accrued
interest under those certain loans made by Gaskill to each of Douglas C.
Gaskill, Mary Gaskill and Aritha B. Gaskill (the "LOANS"), as described and in
the amounts set forth on Exhibit H.
4.1.3 ACTIONS; INVESTIGATION; ACCESS. Gaskill and the Shareholder
shall diligently endeavor to take or cause to be taken all action required under
this Agreement on their part to be taken as promptly as practicable so as to
permit the consummation of the transactions contemplated by this Agreement at
the earliest possible date, and cooperate fully with FSC and FSI to that end,
including, without limitation, by providing to FSC and FSI, and their employees,
agents, accountants and counsel, access to Gaskill's books, records, reports,
tax returns and facilities and to Gaskill's employees, agents, accountants and
counsel; provided, however, that FSC and FSI shall perform and conduct such
investigation in a manner that will not unreasonably interfere with Gaskill's
normal operations, customers or employee relations.
4.1.4 REGULATORY APPROVALS. Gaskill and the Shareholder shall (a)
use their best efforts in good faith to obtain all necessary regulatory
approvals and to take or cause to be taken all other action required under this
Agreement on its part to be taken as promptly as practicable so as to permit the
consummation of the transactions contemplated by this Agreement at the earliest
possible date, and cooperate fully with FSC and FSI to that end, and (b) furnish
all necessary information for inclusion in any applications relating to the
consents, approvals, and permissions of regulatory authorities referred to in
Article Three. Gaskill shall have the right to review all applications to such
regulatory authorities before the filing thereof and to comment upon the form of
such applications and the information contained therein.
4.1.5 NOTIFICATION OF ACTIONS. Gaskill shall immediately notify FSC
and FSI in the event of the breach of any of its covenants, or the covenants of
its Shareholder, as set forth in this Article Four.
4.1.6 CONDUCT AND PRESERVATION OF BUSINESS AND EMPLOYEE
RELATIONSHIPS. Between the date hereof and the Effective Time, Gaskill shall
conduct its business in the normal and regular manner and shall cooperate with
FSI in its efforts to retain for the benefit of FSC and FSI the continuing
service of the present officers and employees of Gaskill, and shall continue to
conduct business with the normal efforts to preserve the goodwill of customers
and others having business relations with Gaskill, to preserve the benefits of
all contractual relationships with others and to keep in force at least at their
present limits all policies of insurance currently in effect.
<PAGE>
ARTICLE FIVE - COVENANTS, REPRESENTATIONS AND WARRANTIES
OF GASKILL AND THE SHAREHOLDER
SECTION 5.1 COVENANTS, REPRESENTATIONS AND WARRANTIES OF GASKILL AND THE
SHAREHOLDER. Gaskill and the Shareholder jointly and severally covenant,
represent and warrant to, and agree with, FSC and FSI, and acknowledge, as of
the date of this Agreement and as of the Closing Date (as defined in Section
2.1, above) as follows:
5.1.1 DISCLOSURE SCHEDULE. Attached to this Agreement is a schedule
(the "DISCLOSURE SCHEDULE") which contains certain information regarding Gaskill
as referenced in various places in this Agreement. All information set forth in
the Disclosure Schedule shall be deemed for purposes of this Agreement to
constitute an integral part of this Agreement and of Gaskill's representations
and warranties under this Agreement. The Disclosure Schedule is arranged in
paragraphs corresponding to the lettered and numbered paragraphs within this
Section 5.
5.1.2 ORGANIZATION, CONDUCT OF BUSINESS, ETC. Gaskill (a) is duly
organized, validly existing and in good standing under the laws of the State of
Utah, (b) has all requisite power and authority (corporate and other) to own its
properties and conduct its businesses as now being conducted, and (c) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of the properties owned or leased by it therein or in which the
transaction of its businesses require such qualification, except where failure
to so qualify would not have a material adverse effect on such corporation or
its businesses, operations, properties, assets or condition (financial or
otherwise), and (d) is not transacting business, or operating any properties
owned or leased by it, in violation of any provision of federal or state law or
any rule or regulation promulgated thereunder, which violation would have a
material adverse effect on such corporation or its businesses, operations,
properties, assets or condition (financial or otherwise). The states in which
Gaskill is qualified to do business are listed in Section 5.1.2 of the
Disclosure Schedule. There has not been any claim by any other state or
jurisdiction to the effect that Gaskill is required to qualify or otherwise be
authorized to do business as a foreign corporation therein.
5.1.3 OPTIONS, WARRANTS, ETC. Except as set forth in Section 5.1.3
of the Disclosure Schedule, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, calls, units or other commitments of any kind relating to the issuance,
sale, purchase or redemption of, or securities convertible into, capital stock
of Gaskill, whether by Gaskill or the Shareholder.
5.1.4 CAPITAL STOCK. All the outstanding shares of Gaskill Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. Except as to the 575 shares issued to Lyle Gaskill as set forth
in Section 5.1.4 of the Disclosure Schedule, which shares Gaskill and the
Shareholder shall cause to be transferred and delivered to Gaskill for
cancellation prior to Closing, the Shareholder owns all the issued and
outstanding stock of Gaskill free and clear of any security interest, pledge,
lien, encumbrance or claim. Except as set forth in Section 5.1.4 of the
Disclosure Schedule, no shares of Gaskill Common Stock are subject to any voting
or shareholder's or similar agreement or arrangement restricting the
transferability thereof, granting to any person or entity a right of first
refusal with respect
<PAGE>
thereto, or restricting or controlling the voting thereof. No restrictive
legend appears on the face or back of any certificates representing Gaskill
Common Stock. Gaskill has no equity interest in any other business entity or
organization.
5.1.5 AUTHORIZATION; VALIDITY OF AGREEMENT. Gaskill has all
necessary corporate power and authority to execute and deliver this Agreement on
behalf of itself and as holder of the voting rights with respect to the 575
shares of Gaskill Common Stock issued to Lyle Gaskill. The Shareholder has all
necessary power and authority to execute and deliver this Agreement. This
Agreement has been duly and validly approved by all necessary corporate action
on the part of Gaskill, including by the Board of Directors and the
shareholder(s) of Gaskill, has been duly executed and delivered on Gaskill's
behalf, has been duly executed and delivered by the Shareholder, constitutes a
valid and binding agreement of each of Gaskill and of the Shareholder, and is
enforceable against each of them in accordance with its terms.
5.1.6 GASKILL FINANCIAL STATEMENTS.
(a) STATEMENTS. Except as set forth in Section 5.1.6 of the
Disclosure Schedule, Gaskill has delivered at its own cost and expense its
Balance Sheets as of May 31, 1993 and May 31, 1994, and its Statements of
Income and Statements of Cash Flow for the years ended May 31, 1993 and May
31, 1994, together with all related notes and schedules and with an
unqualified report thereon of independent certified public accountants
reasonably acceptable to FSC and FSI, and its unaudited interim Balance
Sheet and Statement of Income for the period ended November 30, 1994
(hereinafter the "GASKILL FINANCIAL STATEMENTS" or the "FINANCIAL
STATEMENTS"), which were prepared in accordance with generally accepted
accounting principles consistently applied (except for such interim
statements which require customary year-end adjustments and omit footnote
disclosures).
(b) ACCURACY. The Gaskill Financial Statements present fairly
Gaskill's financial condition, results of operations and changes in cash
flow as of such dates.
(c) INTERIM FINANCIAL STATEMENTS. Gaskill will provide to FSI
from time to time prior to the Effective Date all interim financial
statements relating to it that it customarily prepares.
5.1.7 GASKILL TAX RETURNS. Gaskill has delivered true and correct
copies of all tax returns filed by it for its fiscal years ending 1991, 1992,
1993 and 1994. Gaskill has filed all federal tax returns and all state and
local tax returns (whether relating to income, sales, franchise, real or
personal property or other types of taxes) required to be filed, and has paid
all taxes that have become due pursuant to such returns. No penalties or other
charges are, or will become, due with respect to the late filing of any such
return. Each such tax return heretofore filed by Gaskill correctly and
accurately reflects the amount of its tax liability thereunder. Gaskill has
also paid all other assessments or taxes to the extent that the same have become
due and payable. The reserve on its Balance Sheet as of August 31, 1994, which
has been delivered to FSC and FSI pursuant to Section 5.1.6 hereof, for accrued
and unpaid taxes is sufficient for the payment of all federal, state, local,
county and foreign
<PAGE>
taxes, whether disputed or not, which are hereafter found to be, or to have
been, due with respect to the conduct of Gaskill's business up to and through
the date of such Balance Sheet. None of Gaskill's federal, state or local
income or other tax returns has been audited. Except as set forth in Section
5.1.7 of the Disclosure Schedule, there are not in force any extensions of time
with respect to the dates on which any tax return was or is due to be filed by
Gaskill, or any waivers or agreements by it for the extension of time for the
assessment or payment of any tax.
5.1.8 OTHER LIABILITIES. Except as and to the extent reflected or
reserved against in Gaskill's Balance Sheet as at November 30, 1994, delivered
to FSC and FSI pursuant to Section 5.1.6 hereof, or set forth in Section 5.1.8
of the Disclosure Schedule, Gaskill has no liabilities or debts, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
including but not limited to, liabilities on account of taxes, other
governmental charges or lawsuits subsequently brought. Subsequent to the date
of such Balance Sheets, Gaskill has not incurred any liabilities or debts of any
nature whatsoever other than those incurred in the ordinary course of business
and which, individually or in the aggregate, do not exceed $5,000.00. Except as
set forth in Section 5.1.14 of the Disclosure Schedule, there are no suits,
actions or proceedings pending or, to the knowledge of Gaskill or any of its
directors, officers or the Shareholder, threatened, or any contingent liability,
which would give rise to any right of indemnification on the part of any
director or officer of Gaskill or his or her heirs, executors or administrators,
as against Gaskill or any successor to the business of Gaskill.
5.1.9 COMPLIANCE WITH ENVIRONMENTAL LAWS. To the best knowledge of
Gaskill and the Shareholder, Gaskill has not stored, disposed of or arranged for
the disposal of asbestos, ureaformaldehyde foam insulation, PCBs, dioxin,
mercury, lead or uranium (or other heavy metal or radioactive) product or
tailings, petroleum or petroleum products, or other "Toxic Materials,"
"Hazardous Substances," "Hazardous Waste" or radioactive material (together,
"REGULATED SUBSTANCES"), as such are defined in or governed by the Clean Air
Act, the Clean Water Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Superfund Amendment and Reauthorization Act
of 1986, the Atomic Energy Act or the Federal Energy Regulatory Act, or any
other applicable federal or state regulatory act, rule or regulation governing
the generation, use, handling, storage or disposal of chemical, hazardous or
radioactive materials (together, the "REGULATORY ACTS") in any regulated form or
quantity, at any facility, location or site, or permitted others to do so, so as
to be or become a potentially liable party for remedial action or response costs
in connection with such facility, location or site under any Regulatory Act, and
Gaskill has not received any notice of any potential claim under any Regulatory
Act. After due inquiry and investigation, no property owned, leased or operated
by Gaskill has been used or is being used by any person for the storage of any
Regulated Substance, including without limitation in construction or fill
materials, and Gaskill and the Shareholder jointly and severally agree that,
during the period up to and including the Effective Date, such materials will
not be located, stored or used on or in any of such properties without notifying
FSI in advance and obtaining its consent.
5.1.10 TITLE TO PROPERTIES. Except as reflected in the Financial
Statements delivered pursuant to Section 5.1.6 or set forth in Section 5.1.10 of
the Disclosure Schedule, Gaskill
<PAGE>
owns, free and clear of any security interest, lien, claim, charge, option, or
other encumbrance, all of the property, real, personal or mixed, reflected in
its Financial Statements or otherwise owned by it, and all property acquired
since such date. In Gaskill's opinion, all such properties which are material
to its business or operations are in a good state of maintenance and repair and
are adequate for their current uses and purposes. During each of the past three
calendar years, Gaskill and its properties have been insured for customary risks
with customary limits, deductibles, and exclusions, and such insurance
protection continues in effect as of the date hereof. Gaskill has delivered to
FSI true and correct copies of all deeds, title insurance policies and surveys
it has with respect to the real property owned by it, if any, and copies of all
leases with respect to real property leased by it.
5.1.11 ABSENCE OF DEFAULTS. Except as set forth in Section 5.1.11 of
the Disclosure Schedule, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will conflict with
or result in a breach of or constitute a default under any provision of
Gaskill's Articles of Incorporation or Bylaws, or any agreement to which Gaskill
is a party or by which it is bound or to which any of its properties is subject
or result in the creation of any liens or encumbrances upon its assets, and no
consents or waivers thereunder are required to be obtained in connection with
the transactions contemplated hereby, except for the approval of required
regulatory authorities.
5.1.12 LICENSES. All licenses, permits, and other governmental
authorizations that are required in connection with Gaskill's business have been
obtained, are in full force and effect as of the date hereof, and will be in
full force and effect on the Effective Date. Such licenses, permits, and
authorizations are valid and sufficient for all business presently carried on by
it, and no consents or waivers thereunder are required to be obtained in
connection with the transactions contemplated hereby, except for the approval of
required regulatory authorities. Section 5.1.12 of the Disclosure Schedule
contains a list of all such licenses, permits and authorizations and all
applications therefor.
5.1.13 ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth in
Section 5.1.13 of the Disclosure Schedule, since November 30, 1994, there has
been no material adverse change, and no development involving a reasonably
foreseeable prospective material adverse change, in or affecting the financial
condition (present or prospective), businesses, properties, assets or operations
(present or prospective) of Gaskill.
5.1.14 ACTIONS, PROCEEDINGS AND INVESTIGATIONS. Set forth on Section
5.1.14 of the Disclosure Schedule is a complete and accurate listing of all
litigation, administrative and other proceeding to which Gaskill is a party.
There are no actions, proceedings or investigations pending, or to the knowledge
of the Shareholder, the directors or the executive officers of Gaskill,
threatened or contemplated, against or relating to Gaskill or any of its
properties or assets (and none of such directors or officers nor the Shareholder
are aware of any facts that would give rise to any such claim), which would
materially and adversely affect the financial condition (present or
prospective), businesses, properties, assets or operations (present or
prospective) of Gaskill, or the ability of Gaskill to consummate the Merger as
contemplated hereby. Gaskill has previously delivered to FSI and FSC a copy of
a settlement agreement by and between Gaskill and Timothy Foley, an individual
previously associated with Gaskill, ("Foley") pursuant to which Foley fully
releases Gaskill from all liability in
<PAGE>
connection with certain claims and demands previously made or threatened against
Gaskill by Foley.
5.1.15 ABSENCE OF BROKERAGE COMMISSIONS, ETC. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by the Shareholder and Gaskill directly with FSC and FSI without the
participation or intervention of any other person, firm or corporation employed
or engaged by or on behalf of the Shareholder or Gaskill in such a manner as to
give rise to any valid claim against the Shareholder, Gaskill, FSC or FSI for a
brokerage commission, finder's fee or like payment.
5.1.16 MATERIAL CONTRACTS. Section 5.1.16 of the Disclosure Schedule
is a complete and accurate list of the following contracts, agreements, and
other legally binding arrangements (hereinafter collectively referred to as
"ARRANGEMENTS"), to which Gaskill is a party on the date hereof:
(a) any arrangement with any employee, agent or independent
contractor;
(b) any management incentive, bonus or compensation plans not
described in Section 5.1.18 of this Agreement;
(c) any arrangement or group of related arrangements (including
the lease of real or personal property from or to third parties) providing
for payments in excess of $5,000 per annum or in excess of $20,000 for the
remaining term of the arrangement;
(d) any arrangement in which Gaskill is participating as a
general partner or joint venturer;
(e) any arrangement which shall survive the Closing under which
Gaskill has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness for borrowed money (including
capitalized lease obligations) involving more than $20,000;
(f) any arrangement restricting the ability of Gaskill to
compete with others;
(g) any arrangement between the Shareholder, on the one hand,
and Gaskill, on the other hand;
(h) any arrangement pursuant to which the Shareholder has
promised to pay, or loan any amount to, or sold, transferred or leased any
property or assets to or from Gaskill;
(i) any arrangement requiring Gaskill to pay severance or
similar payments as a result of the transactions contemplated hereby;
(j) any other material arrangement which will survive the
Closing not entered into in the ordinary course of business;
<PAGE>
(k) any general power of attorney or similar arrangement;
(l) any arrangement for the sale of any of Gaskill's assets
other than in the ordinary course of business or for the grant of any
preferential rights to purchase any of its assets;
(m) any arrangement under which Gaskill agrees to indemnify any
party against tax liability;
(n) material arrangements that can be canceled without
liability, premium or penalty only on ninety days' or more notice; or
(o) any arrangement for data processing services providing for
payments in excess of $20,000 for the remaining term of the arrangement.
Gaskill has made available to FSC and FSI a correct and complete copy of each
written arrangement listed in Section 5.1.16 of the Disclosure Schedule. With
respect to each arrangement so listed, except for such of the following as to
which the failure to be true and correct would not have a material adverse
effect: (1) the arrangement is in full force and effect; (2) Gaskill is not in
breach or default, and no event has occurred which with notice or lapse of time
or both would constitute a breach or default by Gaskill, or permit termination,
modification, or acceleration against Gaskill under the arrangement applicable
to it; (3) Gaskill has not repudiated or waived any material provision of any
such arrangement; (4) no other party to any such arrangement is in default in
any respect thereunder; and (5) with respect to any lease disclosed pursuant to
this Section 5.1.16, all rents and other amounts currently due thereunder have
been paid; no waiver or indulgence or postponement of any obligation thereunder
has been granted by any lessor or sublessor; and Gaskill has not received any
notice that it has breached any term, condition or covenant.
5.1.17 COMPLIANCE WITH LAWS. Except as set forth in Section 5.1.17
of the Disclosure Schedule, the conduct by Gaskill of its business does not
violate or infringe any domestic or foreign laws, statutes, ordinances, rules or
regulations, the enforcement of which, individually or in the aggregate, would
materially and adversely affect the business, operations, properties, assets or
condition (financial or otherwise) of Gaskill.
5.1.18 ERISA.
(a) Section 5.1.18 of the Disclosure Schedule contains a true and
complete list of each material employee benefit, compensation or welfare
benefit plan, program or agreement maintained or contributed to or required
to be contributed to by Gaskill (the "PLANS"). Gaskill has no formal plan
or commitment, whether legally binding or not, to create any additional
Plan or modify or change any existing Plan that would affect any employee
or terminated employee of Gaskill.
(b) With respect to each of the Plans, Gaskill has heretofore
delivered to FSC and FSI true and complete copies of each of the following
documents: (i) each Plan and related trust, if any, (including all
amendments thereto), (ii) annual report and actuarial report, if required
to be filed under the Employee Retirement Income Security Act of 1974, as
<PAGE>
amended ("ERISA"), for the last two (2) years and the latest financial
statement, if any, for each such Plan, (iii) the most recent summary plan
description, together with each summary of material modifications, required
under ERISA, and (iv) the most recent determination letter received from
the IRS with respect to each Plan that is intended to be qualified under
Section 401 of the Code.
(c) All required contributions have been, or will be, made with
respect to each Plan on or prior to the date of this Agreement and have
been properly recorded on the Financial Statements.
(d) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including, but not
limited to, ERISA and the Code and each of the Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code is so
qualified.
(e) Except as set forth in Section 5.1.18 of the Disclosure Schedule,
no Plan provides benefits, including, without limitation, death or medical
benefits (whether or not insured), with respect to current or former
employees beyond their retirement or other termination of service (other
than (i) coverage mandated by applicable law, (ii) death benefits or
retirement benefits under any "employee pension plan," as that term is
defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of Gaskill, or (iv) benefits the full
cost of which is borne by the current or former employee (or his or her
beneficiary)).
(f) There are no pending or, to Gaskill's knowledge, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf
of or against any of the Plans or any trusts related thereto.
(g) Except as set forth in Section 5.1.18 of the Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will
not (either alone or upon the occurrence of any additional acts or events)
(i) entitle any current or former employee of Gaskill to severance pay,
employment compensation or any other payment, benefit or award or (ii)
accelerate or modify the time of payment or vesting, or increase the amount
of any benefit, award or compensation due any such employee.
5.1.19 BANK ACCOUNTS. Section 5.1.19 of the Disclosure Schedule
lists (a) the names of each bank, savings and loan, or other financial
institution in which Gaskill has an account, and the account numbers and names
of all persons authorized to draw thereon or have access thereto, and (b) the
location of all lockboxes and safe deposit boxes of Gaskill and the names of all
persons authorized to draw thereon or have access thereto. At the Closing Date,
Gaskill shall not have any such account, lockbox or safe deposit box other than
those listed in Section 5.1.19 of the Disclosure Schedule.
5.1.20 BOOK OF BUSINESS. Section 5.1.20 of the Disclosure Schedule
contains a complete and accurate listing of Gaskill's "book of business" (as
such term is used in the insurance industry), which identifies every policy that
is a part thereof and, for each insured thereunder: (a) the insured's name, (b)
premium, (c) the insuring company, (d) the term, and
<PAGE>
(e) the commission. Except as set forth in such Section, Gaskill has remitted
to the applicable carrier all premiums received on or before the date hereof.
5.1.21 ACCOUNTS RECEIVABLE. Section 5.1.21 of the Disclosure
Schedule contains a complete and accurate list of all accounts receivable held
by Gaskill on the date hereof with respect to business effective on or after the
Effective Date. All accounts receivable listed thereon (a) have arisen in the
ordinary course of business, (b) represent valid obligations due to Gaskill and
that are enforceable in accordance with their terms, except as enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditor's rights
generally or (ii) general principles of equity, and (c) will be collectible at
their face amounts, subject only to the normal allowance for doubtful accounts.
ARTICLE SIX - ACKNOWLEDGEMENTS BY GASKILL AND THE SHAREHOLDER
SECTION 6.1 ACKNOWLEDGEMENTS BY GASKILL AND THE SHAREHOLDER. Gaskill and
the Shareholder hereby acknowledge and agree as follows:
6.1.1 FSC STOCK NOT REGISTERED. The shares of FSC Common Stock to be
issued in the Merger have not, and at the time of issuance will not have been,
registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or under any state securities or "blue sky" laws, and are being offered and
issued to the Shareholder pursuant to exemptions from the registration
requirements of the Securities Act and applicable state securities laws; and
further acknowledge and agree that:
(a) such shares of FSC Common Stock may not be resold, pledged,
transferred, hypothecated or otherwise disposed except (i) pursuant to an
effective registration statement covering such shares under the Securities
Act and relevant state securities laws, as provided for under Section 7.2,
or (ii) upon delivery to FSC by the holders thereof of an opinion of
counsel reasonably acceptable to FSC that, with respect to such shares,
registration is not required under the Securities Act or under any state
securities laws; and
(b) a notation will be made upon the appropriate records of FSC
and its transfer agent and upon the certificate or certificates
representing such shares that transfer of such shares will not be permitted
without compliance with such restrictions and conditions.
6.1.2 FINANCIAL STATUS. The Shareholder has reached the age of
majority, has adequate means of providing for his current needs and personal
contingencies, is able to bear the economic risks of an investment in such
shares of FSC Common Stock, and has no need for liquidity in such investment.
6.1.3 INVESTMENT INTENT. The Shareholder is acquiring such shares of
FSC Common Stock for his own account and not with a view toward resale or
distribution thereof, and the Shareholder does not now have any reason to
anticipate any change in his respective
<PAGE>
circumstances or other particular occasion or event that would cause him to sell
any of such shares of FSC Common Stock.
6.1.4 ACCESS TO INFORMATION. The Shareholder has received and had an
opportunity to review copies of FSC's 1993 Annual Report to Shareholders, 1993
Annual Report on Form 10-K, 1993 Proxy Statement, and Quarterly Reports on Form
10-Q for the quarters ended March 31, 1994 and June 30, 1994. FSC has
previously made available to the Shareholder at reasonable times the opportunity
to ask questions and receive answers concerning the terms and conditions of the
Merger and the business and prospects of FSC.
6.1.5 KNOWLEDGE AND EXPERIENCE. The Shareholder, with his advisors,
has such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of investing in FSC Common Stock.
ARTICLE SEVEN - COVENANTS, REPRESENTATIONS
AND WARRANTIES OF FSC AND FSI
SECTION 7.1 COVENANTS, REPRESENTATIONS AND WARRANTIES OF FSC AND FSI. FSC
and FSI jointly and severally represent and warrant to and agree with Gaskill
and the Shareholder as of the date of this Agreement and as of the Closing Date
as follows:
7.1.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. Each of FSC and FSI
(a) is duly incorporated and validly existing and in good standing under the
laws of the State of Delaware (in the case of FSC), or the State of Utah (in the
case of FSI), (b) has all requisite power and authority (corporate and other) to
own its properties and conduct its businesses as now being conducted, (c) is
duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its businesses makes such qualification necessary, except
when failure to so qualify would not have a material adverse effect on FSC and
its consolidated subsidiaries, and (d) is not transacting business, or operating
any properties owned or leased by it in violation of any provision of federal or
state law or any rule or regulation promulgated thereunder, which violation
would have a material adverse effect on FSC and its consolidated subsidiaries.
7.1.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of FSC and FSI
has all necessary corporate power and authority to execute and deliver this
Agreement. This Agreement has been duly and validly approved by their
respective Boards of Directors (or the Executive Committee in the case of FSC)
and by FSI's sole shareholder, has been duly executed and delivered on their
behalf, and constitutes a valid and binding agreement of each, enforceable
against each in accordance with its terms.
7.1.3 FSC REPORTS. Since January 1, 1993, FSC and its consolidated
subsidiaries have filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that were required to
be filed with (a) the United States Securities and Exchange Commission (the
"SEC") including, but not limited to, Form 10-K, Form 10-Q, Form 8-K and proxy
statements, (b) the Federal Reserve Board, (c) the Office of
<PAGE>
the Comptroller of the Currency, and (d) the FDIC. All such reports and
statements filed with the SEC, the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC, and other applicable state securities or
insurance authorities are collectively referred to herein as the "FSC Reports."
As of their respective dates, to the best knowledge of the officers of FSC or
FSI, as appropriate, the FSC Reports complied in all material respects with all
the statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they were filed and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
7.1.4 FSC FINANCIAL STATEMENTS; TAX RETURNS. FSC's Consolidated
Balance Sheets as of December 31, 1992 and December 31, 1993, and its
Consolidated Statements of Income and Consolidated Statements of Cash Flow for
the years then ended, heretofore, or hereafter to be, delivered to Gaskill, were
prepared in accordance with generally accepted accounting principles
consistently applied and present fairly its consolidated financial condition,
results of operations and changes in financial position as of such dates and for
such periods. FSC and FSI have filed all federal, state and local tax returns
and forms, which are required by law to be filed or delivered as of the date
hereof and have paid all taxes which have become due. Where payment of such
taxes is not required to be made as of the date hereof, FSC or FSI (as the case
may be) has set up an adequate reserve or accrual for the payment of all taxes
required to be paid in respect of the periods covered by such returns.
7.1.5 OTHER LIABILITIES. Except as and to the extent stated in the
FSC Financial Statements provided by FSC to Gaskill, and except for those
liabilities incurred in the normal course of FSC's or any of its subsidiaries'
respective businesses, FSC and its consolidated subsidiaries do not have any
material liabilities or obligations, secured or unsecured (whether accrued,
absolute, contingent or otherwise).
7.1.6 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1993,
there has been no material adverse change, and no development involving a
reasonably foreseeable prospective material adverse change, in or affecting the
financial condition (present or prospective), businesses, properties or
operations of FSC and its consolidated subsidiaries.
7.1.7 ABSENCE OF DEFAULTS. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
conflict with or result in a breach of or constitute a default under any
provision of FSC's or FSI's respective Certificate or Articles of Incorporation
or Bylaws, or any agreement to which FSC or FSI is a party or by which either of
them is bound or to which any of their respective properties is subject or
result in the creation of any liens or encumbrances upon their respective
assets, and no consents or waivers thereunder are required to be obtained in
connection with the transactions contemplated hereby, except for the approval of
required regulatory authorities.
7.1.8 ACTIONS, PROCEEDINGS, AND INVESTIGATIONS. Except as set forth
in FSC's filings with the SEC, there are no actions, proceedings or
investigations pending, or to the knowledge of the executive officers of FSC and
FSI, threatened or contemplated, against or relating to FSC or any of its
consolidated subsidiaries, or any of their respective properties,
<PAGE>
which would materially and adversely affect the financial condition (present or
prospective), businesses, properties or operations of FSC and its consolidated
subsidiaries, or the ability of FSC and FSI to consummate the Merger
contemplated hereby.
7.1.9 REGULATORY APPROVALS. FSC and FSI shall (a) use their best
efforts in good faith to obtain all necessary regulatory approvals and to take
or cause to be taken all other action required under this Agreement on their
part to be taken as promptly as practicable so as to permit the consummation of
the transactions contemplated by this Agreement at the earliest possible date,
and cooperate fully with Gaskill to that end, and (b) furnish all necessary
information for inclusion in any applications relating to the consents,
approvals, and permissions of regulatory authorities referred to in Article
Three.
7.1.10 FSC COMMON STOCK. All of the outstanding Common Stock of FSC
is duly authorized and validly issued, fully paid and nonassessable. The FSC
Common Stock to be issued and delivered pursuant to the Merger, when issued as
contemplated hereby, will be duly authorized, validly issued, fully paid and
nonassessable.
7.1.11 NOTIFICATION OF ACTIONS. FSC and FSI covenant and agree to
immediately notify Gaskill in the event of the breach of any of the covenants
set forth in this Article Seven.
7.1.12 ABSENCE OF BROKERAGE COMMISSIONS, ETC. All negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by FSC and FSI directly with Gaskill and the Shareholder without the
participation or intervention of any other person, firm or corporation employed
or engaged by or on behalf of FSC or FSI in such a manner as to give rise to any
valid claim against FSC, FSI, the Shareholder or Gaskill for a brokerage
commission, finder's fee or like payment.
SECTION 7.2 ONE-TIME SECURITIES REGISTRATION RIGHT. FSC agrees with
Gaskill and the Shareholder as follows:
7.2.1 CERTAIN DEFINITIONS. All capitalized terms used herein shall
have the following respective meanings:
(a) COMMISSION means the Securities and Exchange Commission.
(b) EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
(c) HOLDER, for purposes of this Section 7.2, means Douglas C.
Gaskill, as the sole shareholder of Gaskill Common Stock immediately prior
to Closing, who will receive, and thereby become a holder of, FSC Common
Stock under the terms of this Agreement.
(d) REGISTRABLE SECURITIES means the shares of FSC Common Stock
to be received by the Holder under the terms of this Agreement. The
Registrable Securities shall cease to be Registrable Securities when
disposed of pursuant to an effective registration statement or transferred
to any person pursuant to Rule 144 (or any successor provision) under the
Securities Act or otherwise, or when they shall have ceased to be
outstanding.
<PAGE>
(e) REGISTRATION EXPENSES means all expenses incident to FSC's
performance of or compliance with its obligations under this Section 7.2 to
effect a registration including, without limitation, all registration,
filing, listing and NASDAQ fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees of FSC's counsel and
independent public accountants, including the expenses of any special
audits or "cold comfort" letters required by or incident to such
performance and compliance, and any fees and disbursements of underwriters
customarily paid by issuers and sellers of securities. Moreover this term
includes underwriting discounts, commissions and transfer taxes, if any,
associated with any registration of FSC Common Stock provided for in this
Section 7.2.
7.2.2 ONE-TIME SECURITIES REGISTRATION RIGHT.
(a) REQUEST FOR ONE-TIME REGISTRATION. In the event that FSC
receives from the Holder a written request that it effect any registration,
qualification or compliance with respect to all or a part of the
Registrable Securities, FSC will use its best efforts to effect such
registration, qualification or compliance (including, without limitation,
the execution of an undertaking to file post-effective amendments,
appropriate qualifications under the applicable blue sky or other state
securities laws and appropriate compliance with exemptive regulations
issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the
sale and distribution of all or a portion of the Registrable Securities as
are specified in such request; PROVIDED that FSC shall not be obligated to
take any action to effect such registration, qualification or compliance
pursuant to this Section 7.2 at any time within 180 days following the
Closing. FSC may include in such requested registration other securities of
FSC for sale, for FSC's account or for the account of any other person;
provided, however, that FSC shall bear such additional expense, if any, as
may be incurred in connection with the inclusion by FSC of other securities
in such requested registration. Notwithstanding the foregoing, FSC shall
have the right to delay any registration of Registrable Securities
requested pursuant to this Section 7.2 for up to 90 days if, in the
reasonable judgment of FSC's Board of Directors, (i) such registration
would substantially interfere with any material transaction being
considered at the time of receipt of the request from the Holder or (ii)
FSC is in possession of material information that has not been disclosed to
the public and FSC reasonably deems it to be advisable not to disclose such
information at such time in a registration statement; PROVIDED that FSC
shall furnish to the Holder a certificate signed by the President of FSC
stating the grounds for the delay; AND PROVIDED that FSC may not defer its
obligations in this manner more than once in any six-month period.
(b) UNDERWRITING. If the Holder intends to distribute the
Registrable Securities by means of an underwriting, he shall so advise FSC
as a part of his request made pursuant to Section 7.2.2(a). In such event,
if so requested in writing by FSC, the Holder shall negotiate with an
underwriter reasonably acceptable to FSC with regard to the underwriting of
such requested registration. FSC shall enter into an underwriting agreement
in customary form with the representative of the underwriter or
underwriters selected for such underwriting. Notwithstanding any other
provision of this Section
<PAGE>
7.2.2, if the underwriter advises the Holder in writing that marketing
factors require a limitation of the number of shares to be underwritten,
the number of shares of Registrable Securities that may be included in the
registration and underwriting may be so reduced by FSC. If the Holder
disapproves of the terms of the underwriting, he may elect to withdraw
therefrom by written notice to FSC and the underwriter. Any Registrable
Securities which may be withdrawn under the preceding sentence from such
underwriting shall, unless the Holder requests otherwise, be included in
such registration but shall not be transferred in a public distribution
prior to ninety days after the effective date of the registration statement
relating thereto.
7.2.3 EXPENSES. Holder shall pay all Registration Expenses incurred
in connection with any registration effected pursuant to this Agreement.
7.2.4 EFFECTIVE REGISTRATION STATEMENT. A registration shall not be
deemed to have been effected unless it has become effective with the Commission;
PROVIDED, that a registration which does not become effective after FSC has
filed a registration statement with respect thereto with the Commission solely
by reason of the Holder's failure to proceed shall be deemed to have been
effected by FSC in satisfaction of FSC's obligation to effect a requested
registration unless the Holder's withdrawal or election not to proceed is based
upon material adverse information relating to FSC that is different from the
information that is known by or available (upon request from FSC or otherwise)
to the Holder at the time of the request for registration under Section 7.2.2(a)
hereof. Notwithstanding the foregoing, a registration statement will not be
deemed to have been effected if after it has become effective with the
Commission, such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental agency or
any court proceeding for any reason other than a misrepresentation or omission
by the Holder.
7.2.5 REGISTRATION PROCEDURES.
(a) REGISTRATION PROCEDURES. If and whenever FSC is requested
to effect the registration of any Registrable Securities under the
Securities Act as provided in Section 7.2.2, FSC, as expeditiously as
possible and subject to the terms and conditions of Sections 7.2.2, will:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and use its best
efforts to cause such registration statement to become effective,
provided that before filing such registration statement or any
supplement or amendment thereto, FSC will furnish to the Holder
complete drafts of all such documents proposed to be filed (including
exhibits), and the Holder shall have the opportunity to object to any
information pertaining to the Holder and FSC will make the corrections
reasonably requested by the Holder prior to filing any such
registration statement or amendment;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and to comply with
<PAGE>
the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until the
earlier of such time as all of such securities have been disposed of
in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement or the
expiration of 120 days after such registration statement becomes
effective; PROVIDED, however, that (A) such 120-day period shall be
extended for a period of time equal to the period the Holder refrains
from selling any securities included in such registration at the
request of an underwriter of FSC Common Stock; and (B) in the case of
any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold,
PROVIDED that Rule 145, or any successor rule under the Securities
Act, permits an offering on a continuous or delayed basis, and
PROVIDED FURTHER that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment that (1) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (2)
reflects facts or events representing a material or fundamental change
in the information set forth in the registration statement, the
incorporation by reference of information required to be included in
(1) and (2) above to be contained in periodic reports filed pursuant
to Section 13 or 15(d) of the Exchange Act in the registration
statement;
(iii) promptly notify the Holder and the underwriter or
underwriters, if any:
(A) when such registration statement or any prospectus
used in connection therewith, or any amendment or supplement
thereto, has been filed and, with respect to such registration
statement or any posteffective amendment thereto, when the same
has become effective;
(B) of any written comments from the Commission with
respect to any filing referred to in clause (i) and of any
written request by the Commission for amendments or supplements
to such registration statement or prospectus;
(C) of the notification to FSC by the Commission of
its initiation of any proceeding with respect to the issuance by
the Commission of, or of the issuance by the Commission of, any
stop order suspending the effectiveness of such registration
statement; and
(D) of the receipt by FSC of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the applicable securities or blue sky
laws of any jurisdiction;
(iv) furnish to the Holder such number of conformed copies
of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act,
<PAGE>
in conformity with the requirements of the Securities Act, and such
other documents, as the Holder may request;
(v) use its best efforts to register or qualify all
Registrable Securities covered by such registration statement under
blue sky laws of such jurisdictions within the United States as the
Holder shall reasonably request, to keep such registration statement
qualification in effect for so long as such registration remains in
effect, and take any other action which may be reasonably necessary or
advisable to enable the Holder to consummate the disposition in such
jurisdictions of the securities owned by the Holder; PROVIDED that FSC
shall not for any such purpose be required to (A) qualify generally to
do business as a foreign corporation in any jurisdiction wherein it
would not be obligated to be so qualified but for the requirements of
this Section 7.2.6(a)(v), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction;
(vi) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other federal or state governmental agencies
or authorities as may be reasonably necessary to enable the Holder to
consummate the disposition of such Registrable Securities in the
United States;
(vii) furnish to the Holder signed counterparts, addressed
to the Holder (and the underwriters, if any), of
(A) an opinion of counsel for FSC, dated the effective
date of such registration statement or the date of any amendment
or supplement thereto, including the filing of documents
incorporated therein by reference (or, if such registration
includes an underwritten public offering, dated the date of any
closing under the underwriting agreement), and
(B) a "comfort" letter, dated the effective date of
such registration statement or the date of any amendment or
supplement thereto, including the filing of documents
incorporated therein by reference and, if such registration
includes an underwritten public offering, dated the date of any
closing, signed by the independent public accountants who have
certified FSC's financial statements included in such
registration statement, in each case in customary form and
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in
underwritten public offerings of securities together with an
officers' certificate confirming that FSC has complied with its
obligations hereunder;
(viii) notify the Holder at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which any prospectus included in
such registration statement, as then in effect,
<PAGE>
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and at the request of the Holder, as
promptly as practicable, prepare and furnish to the Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and
(ix) otherwise use all reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least 12 months, but
not more than 18 months, beginning with the first full calendar month
after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder.
(b) INFORMATION ABOUT THE HOLDER. FSC may require the Holder,
at his expense, to furnish FSC with such information and undertakings as it
may reasonably request regarding the Holder and the distribution of the
Registrable Securities as FSC may from time to time reasonably request in
writing.
7.2.6 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission that may permit the
sale of Registrable Securities to the public without registration, FSC agrees to
use its best efforts to:
(a) PUBLIC INFORMATION. Make and keep public information
regarding FSC available as those terms are understood and defined in Rule
144 under the Securities Act, at all times;
(b) SEC REPORTS. File with the Commission in a timely manner
all reports and other documents required of FSC under the Securities Act
and the Exchange Act; and
(c) FSC REPORTS. So long as the Holder owns any Registerable
Securities, furnish to the Holder forthwith upon written request a written
statement by FSC as to its compliance with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly report of FSC, and such other reports and
documents so filed as the Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing the Holder to sell any
such securities without registration.
<PAGE>
ARTICLE EIGHT - TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual consent of the Boards of Directors of FSI and FSC (or
Executive Committee in the case of FSC), and the Board of Directors of
Gaskill; or
(b) by the Boards of Directors of FSI and FSC (or Executive Committee
in the case of FSC) or the Board of Directors of Gaskill at any time after
the expiration of twelve (12) months from the date hereof, if the Merger
shall not theretofore have been consummated by the failure to satisfy the
conditions to Closing not within the control of the electing party; or
(c) by Gaskill, upon written notice to FSC and FSI at any time if any
material representation or warranty of FSC or FSI contained in this
Agreement was materially incorrect when made or becomes materially
incorrect on or prior to the Closing Date, or if FSC or FSI fails to comply
with any of their respective covenants contained in this Agreement, and the
same is not cured within thirty (30) days after notice of such inaccuracy
or noncompliance; or
(d) by FSC and FSI upon written notice to Gaskill at any time if any
material representation or warranty of Gaskill contained in this Agreement
was materially incorrect when made or becomes materially incorrect on or
prior to the Closing Date, or if Gaskill or the Shareholder fails to comply
with any of their respective covenants contained in this Agreement, and the
same is not cured within thirty (30) days after notice of such inaccuracy
or noncompliance.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination and
abandonment of this Agreement pursuant to the provisions of Section 8.1 above,
this Agreement shall become void and have no force or effect, except that
provisions of this Agreement relating to confidentiality or payment of expenses
and this Section shall survive the termination. Such termination shall not
relieve any party of liability for any default prior to such termination.
ARTICLE NINE - INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION BY THE SHAREHOLDER. The Shareholder agrees
that, notwithstanding the Closing or the Effective Time, and regardless of any
disclosure, except disclosures made in this Agreement or the Disclosure
Schedule, to or investigation at any time made by or on behalf of FSC or FSI in
respect thereof, the Shareholder will indemnify and save and hold FSC and FSI
harmless from and against any cost, damage, liability, loss, expense or
deficiency suffered or incurred by either of them, including without limitation
court and investigation costs and reasonable attorneys' fees, arising out of or
resulting from (a) any inaccuracy in any representation or the breach of any
covenant or warranty made by Gaskill or the Shareholder in this Agreement, or
(b) any claim by Timothy Foley in connection with any condition existing or
event occurring prior to the date hereof or any claim by Lyle
<PAGE>
Gaskill that he has or had, as of Closing, an ownership interest in Gaskill or
that arises out of or relates in any way to the Stock Purchase Agreement (but
excluding the promissory note references therein). The Shareholder's
indemnification obligations shall survive the Closing. Such indemnification
provisions are intended to and shall be the sole remedy available to FSC and FSI
for misrepresentation, breach of warranty, breach of covenant or, with the
exception of fraud, any other claim FSC or FSI may have against the Shareholder
under this Agreement or arising out of the transactions contemplated hereby.
SECTION 9.2 INDEMNIFICATION BY FSC AND FSI. FSC and FSI agree that,
notwithstanding the Closing or the Effective Time, and regardless of any
disclosure, except disclosures made in this Agreement, to or investigation at
any time made by or on behalf of Gaskill or the Shareholder in respect thereof,
FSC and FSI will jointly and severally indemnify and save and hold the
Shareholder harmless from and against any cost, damage, liability, loss, expense
or deficiency suffered or incurred by him, including without limitation court
and investigation costs and reasonable attorneys' fees, arising out of or
resulting from any inaccuracy in any representation or the breach of any
warranty made by FSC or FSI in this Agreement and shall also indemnify the
Shareholder to the extent of any personal guarantees or other undertakings made
by Shareholder on behalf of Gaskill in connection with Gaskill obligations.
FSC's and FSI's indemnification obligations shall survive the Closing. Such
indemnification provisions are intended to and shall be the sole remedy
available to the Shareholder for misrepresentation, breach of warranty, breach
of covenant or, with the exception of fraud, any other claim the Shareholder may
have against FSC or FSI under this Agreement or arising out of the transactions
contemplated hereby.
SECTION 9.3 LIMITS ON LIABILITY. The Shareholder shall not be required to
indemnify FSC or FSI under Section 9.1(a), above, for an aggregate amount in
excess of $260,000.00; provided, however, that the Shareholder shall have no
indemnification obligation unless and to the extent that FSC or FSI's damages
exceed $5,000.00. FSC and FSI shall not be required to indemnify the
Shareholder under Section 9.2, above, for an aggregate amount in excess of
$260,000.00; provided, however, that FSC and FSI shall have no indemnification
obligation unless and to the extent that the Shareholder's damages exceed
$5,000.00. Claims for indemnification made under this Article Nine shall be
made within two (2) years from and after the Effective Time.
SECTION 9.4 NOTICE. If any lawsuit or enforcement action is filed against
any party entitled to the benefit of indemnity hereunder, or if such party
receives notice of any matter for which indemnification is to be given
hereunder, written notice thereof shall be given to the indemnifying party as
promptly as practicable (and in any event within ten (10) days after the service
of a citation, summons or notice); provided, that the failure of any indemnified
party to give timely notice shall not affect rights to indemnification hereunder
except to the extent that the indemnifying party demonstrates actual damage
caused by such failure. After such notice, if the indemnifying party shall
acknowledge in writing to the indemnified party that the indemnifying party
shall be obligated under the terms of its indemnity hereunder in connection with
such lawsuit, action or notice, then the indemnifying party shall be entitled,
if it so elects, to take control of the defense and investigation of such
lawsuit or action not seeking injunctive relief, and to employ and engage
attorneys reasonably acceptable to the indemnified party to handle and defend
the same, at the indemnifying party's cost, risk and
<PAGE>
expense; and such indemnified party shall cooperate in all reasonable respects
with the indemnifying party and such attorneys in the investigation, trial and
defense of such lawsuit or action and any appeal arising therefrom; provided,
further, that the indemnified party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom.
ARTICLE TEN - ADDITIONAL COVENANTS
SECTION 10.1 COSTS. Each of the parties to this Agreement shall pay its
own charges and costs incurred or to be incurred in connection with the
execution and performance of this Agreement. In the event of a willful breach
of a material agreement or covenant contained herein by Gaskill, FSC or FSI,
which breach either directly or indirectly results or would result in a failure
to consummate the Merger, and which breach cannot be cured or is not cured
within thirty (30) days after written notice of such breach is given to the
party committing such breach, the party causing such breach shall be liable to
the other parties for damages; provided, however, that any party may elect to
forego the receipt of such payment, and pursue its right to the specific
performance or enforcement of the terms and provisions of this Agreement.
SECTION 10.2 INSTRUMENTS OF TRANSFER, ETC. Each of the parties hereto
shall cooperate with the others in every way in carrying out the transactions
contemplated herein, in delivering instruments to perfect the conveyances,
assignments and transfers contemplated herein, and in delivering all documents
and instruments reasonably deemed necessary or useful by counsel for any party
hereto.
SECTION 10.3 NOTICES.
10.3.1 MANNER OF GIVING NOTICE. All notices, requests, consents and
demands shall be given to or made upon the parties at their respective addresses
set forth below, or at such other address as a party may designate in writing
delivered to the other parties. Unless otherwise agreed in this Agreement, all
notices, requests, consents and demands shall be given or made by personal
delivery, by confirmed air courier, by telegram, by facsimile transmission
("FAX"), or by certified first class mail, return receipt requested, postage
prepaid, to the party or parties addressed as aforesaid. If sent by confirmed
air courier, such notice shall be deemed to be given upon the earlier to occur
of the date upon which it is actually received by the addressee or the business
day upon which delivery is made at such address as confirmed by the air courier
(or if the date of such confirmed delivery is not a business day, the next
succeeding business day). If mailed, such notice shall be deemed to be given
upon the earlier to occur of the date upon which it is actually received by the
addressee or the second business day following the date upon which it is
deposited in a first-class postage-prepaid envelope in the United States mail
addressed to such address. If given by fax, such notice shall be deemed to be
given upon the date it is actually received by the addressee, but only if
receipt is confirmed by a return fax signed by the addressee.
<PAGE>
IF TO FSC AND FSI, TO:
First Security Insurance Inc.
405 South Main Street
Salt Lake City, Utah 84111
Attention: Daniel S. Schull
Fax: (801) 531-1452
WITH A COPY TO:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
Attn: Scott C. Ulbrich
Fax: (801) 359-6928
AND WITH A COPY TO:
Brad D. Hardy, Esq.
Ray, Quinney & Nebeker
79 South Main Street, Suite 400
P. O. Box 45385
Salt Lake City, Utah 84145-0385
Fax Number: (801) 532-7543
IF TO GASKILL:
Gaskill Insurance Agency, Inc.
c/o Douglas C. Gaskill
3125 East Kennedy
Salt Lake City, Utah 84108
WITH A COPY TO:
William D. Holyoak, Esq.
Parsons Behle & Latimer
201 South Main Street, Suite 1800
P. O. Box 45898
Salt Lake City, Utah 84145-0898
Fax: (801) 536-6111
10.3.2 REQUIRED NOTICE. Each party hereto shall notify promptly the
other in writing of the occurrence of any event which will or may result in the
failure to satisfy the conditions specified in Article Three hereof. Between
the date of this Agreement and the Effective Time, each party hereto will advise
the other of the satisfaction of such conditions as they occur.
<PAGE>
SECTION 10.4 AMENDMENTS. Prior to the Effective Time, any provision of
this Agreement, except for Section 2.4 of this Agreement, which establishes the
conversion ratio, may be amended or modified at any time, either before or after
its approval by the shareholders of either party to this Agreement, by an
agreement in writing between the parties hereto approved by their respective
Boards of Directors (or Executive Committee in the case of FSC) and executed in
the same manner as this Agreement.
SECTION 10.5 GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed by the substantive laws of, the State of Utah,
without reference to principles governing choice or conflicts of laws.
SECTION 10.6 ASSIGNMENT. The benefit of this Agreement may not be
assigned or in any other manner transferred and the obligations may not be
delegated. Subject to the foregoing limitation upon assignment and delegation,
this Agreement shall be binding upon and inure to the benefit of the parties and
their respective legal representatives, successors, agents, heirs and assigns.
SECTION 10.7 COUNTERPARTS. Any number of counterparts of this Agreement
may be signed and delivered and each shall be considered an original and
together they shall constitute one agreement.
SECTION 10.8 EXCLUSIVE MERGER AGREEMENT. Gaskill, its Board of Directors,
and the Shareholder executing this Agreement below, covenant and agree that they
will not, either directly or indirectly, solicit or attempt to procure offers
relating to the merger or acquisition of Gaskill with or by any entity not a
party to this Agreement, or negotiate or enter into any agreements relating to
the merger or acquisition of Gaskill with or by any such third party.
SECTION 10.9 PUBLIC STATEMENTS. No party to this Agreement shall issue
any press release or other public statement concerning the transactions
contemplated by this Agreement without first providing the other parties hereto
with a written copy of the text of such release or statement and obtaining the
consent of the other parties respecting such release or statement, which consent
will not be unreasonably withheld. The consent provided for in this Section
10.9 shall not be required if the delay necessary to obtain such consent would
preclude the timely issuance of a press release or public statement as required
by law. The provisions of this Section 10.9 shall not be construed as
prohibiting the filing of copies of this Agreement or descriptions of this
Agreement with regulatory agencies as to which regulatory approvals are
contemplated by this Agreement.
SECTION 10.10 CONFIDENTIALITY. Each party shall use all information that
it obtains from the others pursuant to this Agreement solely for the
effectuation of the transactions contemplated by this Agreement or for other
purposes consistent with the intent of this Agreement and shall not use any of
such information for any other purpose, including, without limitation, the
competitive detriment of the other parties. Each party shall maintain as
strictly confidential all information it learns from the others and shall upon
expiration or termination of this Agreement without the Merger having been
consummated, return promptly to the other parties all documentation provided by
them or made available by third parties. Each party may disclose such
information to its respective affiliates, counsel,
<PAGE>
accountants, tax advisors and consultants. This provision shall not prohibit
the use or disclosure of confidential information pursuant to court order or
which has otherwise become publicly available through no fault of the recipient
party.
SECTION 10.11 ENTIRE AGREEMENT. This Agreement and the exhibits and
schedules attached hereto constitute the entire agreement between the parties
hereto with respect to the subject matter contained herein, and there are no
covenants, terms or conditions, express or implied, other than as set forth or
referred to herein. This Agreement supersedes all prior agreements between the
parties hereto relating to all or part of the subject matter herein. No party
has made any representations, oral or written, modifying or contradicting the
terms of this Agreement. The parties may not amend, modify or cancel this
Agreement except as provided herein or by a written agreement signed by all the
parties to this Agreement.
<PAGE>
EXHIBIT 5
OPINION OF RAY QUINNEY & NEBEKER
June 28, 1995
Scott C. Ulbrich,
Executive Vice President and Chief Financial Officer
First Security Corporation
2nd Floor
79 South Main Street
Salt Lake City, Utah 84111
Douglas C. Gaskill
7700 East Gainey Ranch Road
Scottsdale, Arizona 85258
Re: REGISTRATION OF 98,500 SHARES OF FIRST SECURITY CORPORATION
COMMON STOCK FOR DOUGLAS C. GASKILL.
Dear Messrs. Ulbrich and Gaskill:
This Firm has acted as counsel to First Security Corporation, a Delaware
corporation ("the Company), in connection with its registration of 98,500 shares
of its common stock, par value $1.25 ("the Shares") at the request of Douglas C.
Gaskill, a former shareholder of the Gaskill Insurance Agency. In this
connection we have prepared the Company's Registration Statement on Form S-3 as
filed with the Securities and Exchange Commission on June 28, 1995.
In connection with this representation, we have examined the originals, or
copies identified to our satisfaction, of such minutes, agreements, corporate
records and filings and other documents necessary to our opinion contained in
this letter. We have also relied as to certain matters of fact upon
representations made to us by officers and agents of the Company. Based upon
and in reliance on the foregoing, it is our opinion that:
<PAGE>
Scott C. Ulbrich
Douglas C. Gaskill
June 28, 1995
Page 2
1. The Company has been duly incorporated and is validly existing and in
good standing as a corporation under the laws of the State of Delaware; and
has full corporate power and authority to own its properties and conduct
its business as described in the Prospectus/Proxy Statement referred to
above.
2. The Shares are duly and validly issued and are fully paid and
nonassessable.
3. The shareholders of the Company have no pre-emptive rights to acquire
additional shares of First Security Corporation Common Stock in respect of
the Shares.
We hereby consent to the use of our name in the Prospectus and
Registration Statement and therein being disclosed as counsel to the Company in
this matter.
Very truly yours,
RAY, QUINNEY & NEBEKER
/s/ A. Robert Thorup
-------------------------
A. Robert Thorup
<PAGE>
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
First Security Corporation on Form S-3 of our report dated February 17, 1995,
appearing in the Annual report on Form 10-K of First Security Corporation for
the year ended December 31, 1994, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Salt Lake City, Utah
June 21, 1995
