<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY , 1997
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
FIRST SECURITY CORPORATION FIRST SECURITY CAPITAL I
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its
declaration of trust)
DELAWARE DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
87-6118148 84-6302434
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
6711 6719
(Primary Standard Industrial Classification Code (Primary Standard Industrial Classification Code
Number) Number)
</TABLE>
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)
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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)
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Copies to:
A. ROBERT THORUP, ESQ.
RAY, QUINNEY & NEBEKER
7TH FLOOR, 79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(PHONE) (801) 532-1500
(FAX) (801) 532-7543
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date 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>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY(1) PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
8.41% Subordinated Capital Income
Securities of First Security Capital
I................................... $150,000,000 100% $150,000,000 $45,495.00
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8.41% Junior Subordinated Debentures
of First Security Corporation, due
2026(2)............................. -- -- -- N/A
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First Security Corporation Guarantee
with respect to Subordinated Capital
Income Securities(3)................ -- -- -- N/A
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Total(4)..................... $150,000,000 100% $150,000,000 $45,495.00
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures (the "Junior
Subordinated Debentures") were originally purchased by First Security
Capital I with the proceeds of the sale of the Subordinated Capital Income
Securities (the "Capital Securities"). No separate consideration will be
received for the Junior Subordinated Debentures distributed upon any
liquidation of First Security Capital I.
(3) No separate consideration will be received for the First Security
Corporation Guarantee.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Debentures of First Security Corporation, the rights of holders of Junior
Subordinated Debentures of First Security Corporation under the Indenture,
the rights of holders of Capital Securities of First Security Capital I
under the Declaration of Trust, the rights of holders of the Capital
Securities under the Guarantee and certain backup undertakings as described
herein.
(5) Such amount represents the initial public offering price of the First
Security Capital I Capital Securities to be exchanged hereunder and the
principal amount of Junior Subordinated Debentures that may be distributed
upon any liquidation of First Security Capital I.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY , 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
IN EXCHANGE FOR
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OF
FIRST SECURITY CAPITAL I
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
LOGO
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 199 , UNLESS EXTENDED.
---------------------
First Security Capital I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust") and First Security Corporation, a
Delaware corporation, (the "Company"), hereby offer, upon the terms and subject
to the conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to $150,000,000 aggregate Liquidation Amount of its 8.41% Subordinated Capital
Securities (the "New Capital Securities") which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like Liquidation Amount of its outstanding 8.41% Subordinated
Capital Securities (the "Old Capital Securities"), of which $150,000,000
aggregate Liquidation Amount is outstanding. Pursuant to the Exchange Offer, the
Company is also exchanging its guarantee of the payment of Distributions and
payments on liquidation or redemption of the Old Capital Securities (the "Old
Guarantee") for a like guarantee of the New Capital Securities (the "New
Guarantee") and all of its 8.41% Junior Subordinated Debentures (the "Old Junior
Subordinated Debentures"), of which $154,640,000 aggregate principal amount is
outstanding, for like aggregate principal of its 8.41% Junior Subordinated
Debentures (the "New Junior Subordinated Debentures"), which New Guarantee and
New Junior Subordinated Debentures also have been registered under the
Securities Act. The Old Capital Securities, the Old Guarantee and the Old Junior
Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Guarantee and the New Junior
Subordinated Debentures are collectively referred to herein as the "New
Securities."
(CONTINUED ON FOLLOWING PAGE)
---------------------
SEE "RISK FACTORS" COMMENCING ON PAGE FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS WHO TENDER OLD CAPITAL SECURITIES IN THE
EXCHANGE OFFER.
---------------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
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(COVER PAGE CONTINUED)
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Old Securities, (ii) the
New Capital Securities will not provide for any increase in the Distribution
rate thereon and (iii) the New Junior Subordinated Debentures will not provide
for any increase in the interest rate thereon.
The New Capital Securities are being offered for exchange in order to
satisfy certain obligations of the Company and the Trust under the Registration
Rights Agreement dated as of December 23, 1996 (the "Registration Rights
Agreement") among the Company, the Trust and the Initial Purchasers (as defined
herein). The New Junior Subordinated Debentures and the New Guarantee are being
offered for exchange under the Registration Rights Agreement. In the event that
the Exchange Offer is consummated, any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer and the New Capital
Securities issued in the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or exercised
certain rights under the Declaration of Trust.
The New Capital Securities and the Old Capital Securities (together, the
"Capital Securities"), represent undivided beneficial interests in the assets of
the Trust. The Company is the owner of all of the beneficial interests
represented by common securities of the Trust (the "Common Securities" and,
collectively with the Capital Securities, the "Trust Securities"). The Bank of
New York (Delaware) is the Property Trustee of the Trust. The Trust exists for
the sole purpose of issuing the Trust Securities, investing the proceeds thereof
in the Junior Subordinated Debentures and to engage in only activities necessary
or incidental thereto. The Junior Subordinated Debentures will mature on
December 15, 2026 (the "Stated Maturity"). The Capital Securities will have a
preference under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of the New Securities--Description of Capital
Securities -- Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Indenture between the Company
and The Bank of New York as trustee, (ii) the "Declaration of Trust" means the
Amended and Restated Declaration of Trust relating to the Trust among the
Company, as Depositor, The Bank of New York as Property Trustee (the "Property
Trustee"), The Bank of New York (Delaware) as Delaware Trustee (the "Delaware
Trustee"), and the Regular Trustees named therein (collectively, with the
Property Trustee and Delaware Trustee, the "Issuer Trustees"), and (iii) the
"Guarantee Agreement" means the Guarantee Agreement relating to the Guarantee
between the Company and The Bank of New York, as trustee (the "Guarantee
Trustee"). In addition, as the context may require, unless expressly stated
otherwise, (i) "Capital Securities" includes the Old Capital Securities and the
New Capital Securities, (ii) "Junior Subordinated Debentures" includes the Old
Junior Subordinated Debentures and the New Junior Subordinated Debentures and
(iii) "Guarantee" includes the Old Guarantee and the New Guarantee.
Holders of the New Capital Securities will be entitled to receive
cumulative cash distributions accruing from the date of original issuance and
payable semi-annually in arrears on the 15th day of December and June of each
year, commencing June 15, 1997, at the annual rate of 8.41% of the liquidation
amount of $1,000 per New Capital Security ("Distribution"). The distribution
rate and the distribution payment dates and other payment dates for the New
Capital Securities will correspond to the interest rate and interest payment
dates and other payment dates on the New Junior Subordinated Debentures, which
will be the sole assets of the Trust. The Company will guarantee the payment of
Distributions and payments on liquidation of the Trust or redemption of the New
Capital Securities, but only in each case to the extent of funds held by the
Trust, as described herein (the "New Guarantee"). See "Description of
Guarantee." If the Company does not make interest payments on the Junior
Subordinated Debentures held by the Trust, the Trust will have insufficient
funds to pay Distributions on the New Capital Securities. The Company's
obligations under the New Guarantee, taken together with its obligations under
the New Junior Subordinated Debentures and the Indenture (as defined herein),
including its obligation to pay all costs, expenses and liabilities of the Trust
(other than with respect to the New Capital Securities), constitute a full and
unconditional guarantee of all of
2
<PAGE> 4
(COVER PAGE CONTINUED)
the Trust's obligations under the New Capital Securities. The obligations of the
Company under the New Guarantee and the New Junior Subordinated Debentures are
subordinate and junior in right of payment to all Indebtedness (as defined in
"Description of New Junior Subordinated Debentures -- Subordination") of the
Company and will be structurally subordinated to all liabilities and obligations
of the Company's subsidiaries. As of September 30, 1996, the Company had
approximately $339 million aggregate principal amount of Indebtedness
outstanding, and the Company's subsidiaries had approximately $12.3 billion of
indebtedness and other liabilities. The terms of the New Junior Subordinated
Debentures place no limitation on the amount of indebtedness that may be
incurred by the Company or on the amount of liabilities and obligations of the
Company's subsidiaries. See "Description of New Junior Subordinated
Debentures -- Subordination."
The Company has the right to defer payment of interest on the New Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each deferral
period (each, an "Extension Period"), provided that an Extension Period may
extend beyond the Stated Maturity (as defined herein) of the New Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date (as defined
herein), the Company may elect to begin a new Extension Period subject to the
requirements set forth herein. Accordingly, there could be multiple Extension
Periods of varying lengths throughout the term of the New Junior Subordinated
Debentures. If interest payments on the New Junior Subordinated Debentures are
so deferred, distributions on the New Capital Securities will also be deferred
and the Company may not, and may not permit any subsidiary of the Company to (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, the Company's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities that rank pari passu with or junior to
the New Junior Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior to the New
Junior Subordinated Debentures (other than (a) dividends or distributions in
common stock of the Company, (b) payments under the New Guarantee, (c) any
declaration of a dividend in connection with the implementation of a
shareholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, and
(d) purchase of common stock related to the issuance of common stock or rights
under any of the Company's benefit plans). During an Extension Period, interest
on the New Junior Subordinated Debentures will continue to become (and the
amount of Distributions to which holders of the New Capital Securities are
entitled will accumulate) at the rate of 8.41% per annum, compounded semi-
annually to the extent permitted by applicable law and holders of the New
Capital Securities will be required to accrue interest income for United States
federal income tax purposes prior to receipt of cash related to such interest
income. See "Description of New Junior Subordinated Debentures -- Option to
Extend Interest Payment Period" and "Certain United States Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The New Junior Subordinated Debentures are not redeemable prior to December
15, 2006 unless a Special Event (as defined herein) has occurred. The Junior
Subordinated Debentures are redeemable prior to maturity at the option of the
Company, subject to the receipt of any necessary prior approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve") (i) on or after
December 15, 2006, in whole or in part, at a redemption price equal to 104.2050%
of the principal amount thereof on December 15, 2004, declining ratably on each
December 15 thereafter to 100% on or after December 15, 2016, plus the accrued
and unpaid interest thereon, or (ii) at any time, in whole (but not in part),
upon the occurrence and continuation of a Special Event, at a redemption price
equal to the greater of (a) 100% of the principal amount thereof or (b) as
determined by a Quotation Agent (as hereinafter defined), the sum of the present
values of the principal amount and premium payable with respect to an optional
redemption or such New Junior Subordinated Debentures on December 15, 2006,
together with scheduled payments of interest from the prepayment date to
December 15, 2006, discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein) plus, in either case, accrued interest thereon
to the date of prepayment, in each case subject to the
3
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(COVER PAGE CONTINUED)
further conditions described under "Descriptions of New Junior Subordinated
Debentures -- Redemption." The Capital Securities are subject to mandatory
redemption, in whole or in part, upon repayment of the Junior Subordinated
Debentures at maturity or their earlier redemption, in an amount equal to the
amount of related Junior Subordinated Debentures maturing or being redeemed and
at a redemption price equal to the redemption price of such New Junior
Subordinated Debentures, in each case plus accumulated and unpaid Distributions
thereon to the date of redemption.
Upon the occurrence and continuation of a Special Event, the Company will
have the right, subject to the receipt of any necessary prior approval of the
Federal Reserve, to dissolve the Trust and cause the New Junior Subordinated
Debentures to be distributed to the holders of the Capital Securities and the
Common Securities in liquidation of the Trust. See "Description of New Capital
Securities -- Redemption -- Special Event Redemption or Distribution of New
Junior Subordinated Debentures."
In the event of the liquidation of the Trust, after satisfaction of the
claims of creditors of the Trust, if any, as provided by applicable law, the
holders of the New Capital Securities will be entitled to receive a liquidation
amount of $1,000 per Capital Security plus accumulated and unpaid Distributions
thereon to the date of payment, which may be in the form of a distribution of
such amount in New Junior Subordinated Debentures as described above. If such
liquidation amount can be paid only in part because the Trust has insufficient
assets available to pay in full the aggregate liquidation amount, then the
amounts payable directly by the Trust on the New Capital Securities shall be
paid on a pro rata basis. The holder(s) of the Common Securities will be
entitled to receive distributions upon any such liquidation pro rata with the
holders of the New Capital Securities, except that if an Indenture Event of
Default (as defined herein) has occurred and is continuing, the New Capital
Securities will have a priority over the Common Securities. See "Description of
New Capital Securities -- Liquidation Distribution Upon Dissolution."
The Company and the Trust are making the Exchange Offer of the New Capital
Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission (the "Commission")
as set forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Company nor the Trust has sought its own
interpretive letter and there can be no assurance that the staff of the Division
of Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance, and subject to the two immediately following sentences, the
Company and the Trust believe that New Capital Securities issued pursuant to
this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Company or the
Trust or who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Trust to resell pursuant to Rule 144A under the
Securities Act ("Rule 144A") or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the above-
mentioned interpretive letters, (b) will not be permitted or entitled to tender
such Old Capital Securities in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements. In addition,
as described below, if any broker-dealer holds Old Capital Securities acquired
for its own account as a result of market-making or other trading activities and
exchanges such Old Capital Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such New Capital Securities.
4
<PAGE> 6
(COVER PAGE CONTINUED)
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Company and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Company and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) on behalf of whom
such holder holds the Capital Securities to be exchanged in the Exchange Offer.
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Company and
the Trust believe that broker-dealers who acquired Old Capital Securities for
their own accounts, as a result of market-making activities or other trading
activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Capital Securities Registration Rights
Agreement, the Company and the Trust have agreed that this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 90 days after the Expiration Date or, if earlier, when all such
New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Company or the Trust may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
See "The Exchange Offer -- Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreements, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Company or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
5
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(COVER PAGE CONTINUED)
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market.
Although the Initial Purchasers have informed the Company and the Trust that
they each currently intend to make a market in the New Capital Securities, they
are not obligated to do so, and any such market making may be discontinued at
any time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Capital Securities. Neither
the Company nor the Trust currently intends to apply for listing of the New
Capital Securities on any securities exchange or for quotation through the
National Association of Securities Dealers Automated Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Declaration of
Trust (except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Company nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old Capital Securities
held by them. To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old
Capital Securities could be adversely affected. See "Risk
Factors -- Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Company and the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Company or the Trust and to the terms and provisions of the
Registration Rights Agreement. The Company has agreed to pay all expenses of the
Exchange Offer. See "The Exchange Offer -- Fees and Expenses." Each New Capital
Security will pay cumulative Distributions from the most recent Distribution
Date on the Old Capital Securities surrendered in exchange for such New Capital
Securities or, if no Distributions have been paid on such Old Capital
Securities, from December 23, 1996. Holders of the Old Capital Securities whose
Old Capital Securities are accepted for exchange will not receive accumulated
Distributions on such Old Capital Securities for any period from and after the
last Distribution Date on such Old Capital Securities prior to the original
issue date of the New Capital Securities or, if no such Distributions have been
paid, will not receive any accumulated Distributions on such Old Capital
Securities, and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after such
Distribution Date or, if no such interest has been paid or duly provided for,
from and after December 23, 1996. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old Capital Securities
as of February , 1997.
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds From
Sale of Old Capital Securities" and "Plan of Distribution."
6
<PAGE> 8
(COVER PAGE CONTINUED)
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY OR THE TRUST SINCE THE DATE HEREOF.
---------------------
7
<PAGE> 9
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission pursuant to the informational
requirements of the Exchange Act may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Chicago Regional Office, Suite 1400,
Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661;
and New York Regional Office, 7 World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission also maintains a
Web site (http://www.sec.gov) that contains reports, proxy statements and other
information regarding the Company.
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Company does not believe such financial
statements would be material to holders of the Capital Securities because (i)
all of the voting securities of the Trust will be owned, directly or indirectly,
by the Company, a reporting company under the Exchange Act, (ii) the Trust has
no independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in its assets and investing the
proceeds thereof in Junior Subordinated Debentures issued by the Company, and
(iii) the obligations of the Trust under the Capital Securities are guaranteed
by the Company to the extent described herein. See "Relationship Among the
Capital Securities, the Junior Subordinated Debentures and the Guarantee."
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company and the Trust with the
Commission under the Securities Act. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the New
Securities. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1996 and the Company's Current Report on
Form 8-K dated January 31, 1996, previously filed by the Company with the
Commission, are incorporated by reference in this Prospectus and shall be deemed
to be a part hereof.
Each document or report filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is 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 such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented
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<PAGE> 10
or otherwise modified from time to time. Statements contained in this Prospectus
as to the contents of any contract or other document referred to herein do not
purport to be complete, and where reference is made to the particular provisions
of such contract or other document, such provisions are qualified in all
respects by reference to all of the provisions of such contract or other
document. The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: First Security
Corporation, 2nd Floor, 79 South Main Street, Salt Lake City, Utah 84111,
telephone: (801) 246-6000, Attention: Scott C. Ulbrich, Chief Financial Officer.
9
<PAGE> 11
SUMMARY
The following summary is qualified in its entirety by, and is subject to,
the more detailed information and financial statements contained elsewhere and
incorporated by reference in this Prospectus. Holders of Old Capital Securities
are urged to read this Prospectus in its entirety.
FIRST SECURITY CAPITAL I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Declaration of Trust executed by the Company, The Bank of New York,
as Property Trustee and as Delaware Trustee, and the Regular Trustees named
therein, and (ii) the filing of a certificate of trust with the Delaware
Secretary of State in December, 1996. The Trust's business and affairs are
conducted by the Trustees: The Bank of New York, as Property Trustee, The Bank
of New York (Delaware) as Delaware Trustee, and three individual Regular
Trustees who are employees or officers of or affiliated with the Company. The
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities and effecting the Exchange Offer for the New Capital Securities, (ii)
using the proceeds from the sale of the Trust Securities to acquire the Old
Junior Subordinated Debentures issued by the Company, (iii) exchanging the Old
Junior Subordinated Debentures for the New Subordinated Debentures in the
Exchange Offer and (iv) engaging in only those other activities necessary or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the New Junior Subordinated Debentures will be the sole assets of
the Trust, and payments under the New Junior Subordinated Debentures will be the
sole revenues of the Trust. All of the Common Securities of the Trust will be
owned by the Company.
FIRST SECURITY CORPORATION
The Company is a Delaware incorporated multi-bank holding company
headquartered in Salt Lake City, Utah. At December 31, 1996, the Company and its
subsidiaries had total consolidated assets and shareholders' equity of $14.7
billion and $1.1 billion, respectively.
The principal banking subsidiaries of the Company, until June 21, 1996,
were First Security Bank of Utah, N.A., First Security Bank of Idaho, N.A., and
First Security Bank of New Mexico, N.A., all of which are commercial banking
institutions providing a broad range of banking, fiduciary, financial and other
services. Effective as of June 21, 1996, First Security Bank of Utah, N.A.
changed its name to First Security Bank, N.A., and immediately thereafter First
Security Bank of Idaho, N.A. was merged with and into First Security Bank, N.A.,
with First Security Bank, N.A. being the surviving national banking association.
All of the offices of First Security Bank of Idaho, N.A. are now operated as
branches of First Security Bank, N.A. This merger was effected in accordance
with the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994,
the Utah Financial Institutions Act and the Idaho Interstate Branching Act, all
of which provide for interstate bank mergers and branching.
The Company also operates banks in Wyoming, Oregon and Nevada. Nonbank
subsidiaries owned by the Company include a leasing company, a mortgage company,
a securities broker-dealer, and investment adviser, and insurance agency, a
credit life insurance company and a management and services company.
The Company maintains its principal executive offices at 79 South Main
Street, Salt Lake City, Utah 84111, telephone (801) 246-6000.
THE EXCHANGE OFFER
The Exchange Offer......... Up to $150,000,000 aggregate Liquidation Amount of
New Capital Securities are being offered in
exchange for a like aggregate Liquidation Amount of
Old Capital Securities. The Company will issue,
promptly after the Expiration Date, $1,000
Liquidation Amount of New Capital Securities in
exchange for each $1,000 Liquidation Amount of
outstanding Old Capital Securities tendered and
accepted in connection with the Exchange Offer. The
Company and the Trust are making the Exchange
10
<PAGE> 12
Offer in order to satisfy obligations under the
Registration Rights Agreement relating to the Old
Capital Securities. For a description of the
procedures for tendering Old Capital Securities,
see "The Exchange Offer -- Procedures for Tendering
Old Capital Securities."
Expiration Date............ 5:00 p.m., New York City time, on ,
1997 (such time on such date being hereinafter
called the "Expiration Date") unless the Exchange
Offer is extended by the Company and the Trust (in
which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange
Offer is extended). See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain
conditions, which may be waived by the Company and
the Trust in their sole discretion. The Exchange
Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being
tendered. See "The Exchange Offer -- Conditions to
the Exchange Offer." The Company and the Trust
reserve the right in their sole and absolute
discretion, subject to applicable law, at any time
and from time to time, (i) to delay the acceptance
of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to extend
the Expiration Date of the Exchange Offer and
retain all Old Capital Securities tendered pursuant
to the Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to
withdraw their tendered Old Capital Securities, or
(iv) to waive any condition or otherwise amend the
terms of the Exchange Offer in any respect. See
"The Exchange Offer -- Expiration Date; Extensions;
Amendments."
Withdrawal Rights.......... Tenders of Old Capital Securities may be withdrawn
at any time on or prior to the Expiration Date by
delivering a written notice of such withdrawal to
the Exchange Agent in conformity with certain
procedures set forth below under "The Exchange
Offer -- Withdrawal Rights."
Procedures for Tendering
Old Capital Securities..... Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittal in
accordance with the instructions contained therein
and forward the same by mail, facsimile or hand
delivery, together with any other required
documents, to the Exchange Agent, together with the
Old Capital Securities to be tendered or in
compliance with the specified procedures for
guaranteed delivery of Old Capital Securities.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer. Holders of Old
Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Old Capital
Securities pursuant to the Exchange Offer. See "The
Exchange Offer -- Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should not be
sent to the Company or to the Trust. Such documents
should only be sent to the Exchange Agent.
Questions regarding how to tender and requests for
information should be directed to the Exchange
Agent. See "The Exchange Offer -- Exchange Agent."
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<PAGE> 13
Resales of
New Capital Securities... The Company and the Trust are making the Exchange
Offer in reliance on the position of the staff of
the Division of Corporation Finance of the
Commission as set forth in certain interpretive
letters addressed to third parties in other
transactions. However, neither the Company nor the
Trust has sought its own interpretive letter and
there can be no assurance that the staff of the
Division of Corporation Finance of the Commission
would make a similar determination with respect to
the Exchange Offer as it has in such interpretive
letters to third parties. Based on these
interpretations by the staff of the Division of
Corporation Finance, and subject to the two
immediately following sentences, the Company and
the Trust believe that New Capital Securities
issued pursuant to this Exchange Offer in exchange
for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a
broker-dealer) without further compliance with the
registration and prospectus delivery requirements
of the Securities Act, provided that such New
Capital Securities are acquired in the ordinary
course of such holder's business and that such
holder is not participating, and has no arrangement
or understanding with any person to participate, in
a distribution (within the meaning of the
Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities who
is an "affiliate" of the Company or the Trust or
who intends to participate in the Exchange Offer
for the purpose of distributing the New Capital
Securities, or any broker-dealer who purchased the
Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will not be
able to rely on the interpretations of the staff of
the Division of Corporation Finance of the
Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or
entitled to tender such Old Capital Securities in
the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any sale
or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption
from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital
Securities acquired for its own account as a result
of market-making or other trading activities and
exchanges such Old Capital Securities for New
Capital Securities, then such broker-dealer must
deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales
of such New Capital Securities.
Each holder of Old Capital Securities who wishes to
exchange Old Capital Securities for New Capital
Securities in the Exchange Offer will be required
to represent that (i) it is not an "affiliate" of
the Company or the Trust, (ii) any New Capital
Securities to be received by it are being acquired
in the ordinary course of its business, (iii) it
has no arrangement or understanding with any person
to participate in a distribution (within the
meaning of the Securities Act) of such New Capital
Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and
does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such
New Capital Securities.
Each broker-dealer that receives New Capital
Securities for its own account pursuant to the
Exchange Offer must acknowledge that it
12
<PAGE> 14
acquired the Old Capital Securities for its own
account as the result of market-making activities
or other trading activities and must agree that it
will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale
of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. Based on
the position taken by the staff of the Division of
Corporation Finance of the Commission in the
interpretive letters referred to above, the Company
and the Trust believe that broker-dealers who
acquired Old Capital Securities for their own
accounts as a result of market-making activities or
other trading activities ("Participating
Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New
Capital Securities received upon exchange of such
Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from
the original sale of the Old Capital Securities)
with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus
prepared for an exchange offer so long as it
contains a description of the plan of distribution
with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may
be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in
connection with resales of New Capital Securities
received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by
such Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain provisions
set forth in the Registration Rights Agreement and
to the limitations described below under "The
Exchange Offer -- Resale of New Capital
Securities," the Company and the Trust have agreed
that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with
resales of such New Capital Securities for a period
ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is
declared effective. See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate"
of the Company or the Trust may not rely on such
interpretive letters and must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of
New Capital Securities.
Exchange Agent............. The exchange agent with respect to the Exchange
Offer is First Security Bank, N.A. (the "Exchange
Agent"). The addresses, and telephone and facsimile
numbers of the Exchange Agent are set forth in "The
Exchange Offer -- Exchange Agent" and in the Letter
of Transmittal.
Use of Proceeds............ Neither the Company nor the Trust will receive any
cash proceeds from the issuance of the New Capital
Securities offered hereby. See "Use of Proceeds
From Sale of Old Capital Securities."
Certain Federal Income Tax
Consequences; ERISA
Considerations........... Holders of Old Capital Securities should review the
information set forth under "Certain Federal Income
Tax Consequences" and "ERISA Considerations" prior
to tendering Old Capital Securities in the Exchange
Offer.
13
<PAGE> 15
THE NEW CAPITAL SECURITIES
Securities Offered......... Up to $150,000,000 aggregate Liquidation Amount of
the Trust's 8.41% Subordinated Capital Securities
which have been registered under the Securities Act
(Liquidation Amount of $1,000 per Capital
Security). The terms of the New Capital Securities
are identical in all material respects to the terms
of the Old Capital Securities, except that the New
Capital Securities have been registered under the
Securities Act and therefore are not subject to
certain restrictions on transfer applicable to the
Old Capital Securities and will not provide for any
increase in the Distribution rate thereon. See "The
Exchange Offer -- Purpose of the Exchange Offer,"
"Description of the New Capital Securities" and
"Description of the Old Securities." The Holders of
the New Capital Securities will be entitled to a
preference in certain circumstances with respect to
Distributions and amounts payable on redemption,
liquidation or otherwise over the Common
Securities.
Distributions.............. Holders of the New Capital Securities will be
entitled to receive cumulative cash distributions
at an annual rate of 8.41% of the liquidation
amount of $1,000 per New Capital Security, accruing
from the date of original issuance and payable
semi-annually in arrears on the 15th day of
December and June of each year commencing on June
15, 1997. The distribution rate and the
distribution and other payment dates for the New
Capital Securities will correspond to the interest
rate and interest and other payment dates on the
Junior Subordinated Debentures. See "Description of
New Capital Securities."
The New Junior Subordinated
Debentures............... The Trust invested the proceeds from the issuance
of the Capital Securities and Common Securities in
an equivalent amount of Old 8.41% Junior
Subordinated Debentures of the Company. The Trust
will exchange its Old Junior Subordinated
Debentures for the New Junior Subordinated
Debentures in connection with the Exchange Offer.
The New Junior Subordinated Debentures will mature
on December 15, 2026. The New Junior Subordinated
Debentures will rank subordinate and junior in
right of payment to all Indebtedness of the
Company. In addition, the Company's obligations
under the New Junior Subordinated Debentures will
be structurally subordinated to all existing and
future liabilities and obligations of its
subsidiaries. See "Risk Factors -- Ranking of
Subordinate Obligations Under the Guarantee and the
New Junior Subordinated Debentures", "Risk
Factors -- Status of Company as Holding Company"
and "Description of New Junior Subordinated
Debentures -- Subordination."
New Guarantee.............. Payment of distributions out of moneys held by the
Trust, and payments on liquidation of the Trust or
the redemption of New Capital Securities, are
guaranteed by the Company to the extent the Trust
has funds available therefor. If the Company does
not make principal or interest payments on the New
Junior Subordinated Debentures, the Trust will not
have sufficient funds to make Distributions on the
New Capital Securities, in which event the New
Guarantee shall not apply to such Distributions
until the Trust has sufficient funds available
therefor. The Company's obligations under the New
Guarantee, taken together with its obligations
under the New Junior Subordinated Debentures and
the Indenture, including its obligation to pay all
costs, expenses and liabili-
14
<PAGE> 16
ties of the Trust (other than with respect to the
New Capital Securities), constitute a full and
unconditional guarantee of all of the Trust's
obligations under the New Capital Securities. See
"Description of New Guarantee" and "Relationship
Among the New Capital Securities, the New Junior
Subordinated Debentures and the New Guarantee." The
obligations of the Company under the New Guarantee
are subordinate and junior in right of payment to
all Indebtedness of the Company. See "Risk
Factors -- Ranking of Subordinated Obligations
Under the New Guarantee and the New Junior
Subordinated Debentures" and "Description of New
Guarantee."
Right to Defer Interest.... The Company has the right to defer payment of
interest on the New Junior Subordinated Debentures
by extending the interest payment period on the New
Junior Subordinated Debentures, from time to time,
for up to 10 consecutive semi-annual periods. There
could be multiple Extension Periods of varying
lengths throughout the term of the New Junior
Subordinated Debentures. If interest payments on
the New Junior Subordinated Debentures are so
deferred, distributions on the New Capital
Securities will also be deferred for an equivalent
period and the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or
pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment
with respect to, the Company's capital stock or
(ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem
any debt securities that rank pari passu with or
junior to the New Junior Subordinated Debentures or
make any guarantee payments with respect to any
guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee
ranks pari passu with or junior to the New Junior
Subordinated Debentures (other than (a) dividends
or distributions in common stock of the Company,
(b) payments under the New Guarantee, (c) any
declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or
the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such
rights pursuant thereto, and (d) purchases of
common stock related to the issuance of common
stock or rights under any of the Company's benefit
plans). During an Extension Period, interest on the
New Junior Subordinated Debentures will continue to
accrue (and the amount of Distributions to which
holders of the New Capital Securities are entitled
will accumulate) at the rate of 8.41% per annum,
compounded semi-annually to the extent permitted by
applicable law. During an Extension Period, holders
of New Capital Securities will be required to
include the interest on their pro rata share of the
Junior Subordinated Debentures in their gross
income as original issue discount ("OID") even
though the cash payments attributable thereto have
not been made. See "Description of New Junior
Subordinated Debentures -- Option to Extend
Interest Payments Period" and "Certain United
States Federal Income Tax Consequences -- Interest
Income and Original Issue Discount."
Redemption................. The New Junior Subordinated Debentures are
redeemable by the Company in whole or in part on or
after December 15, 2006, or at any time, in whole
but not in part, upon the occurrence of a Special
Event, in either case subject to any necessary
prior approval of the Federal Reserve. If the New
Junior Subordinated Debentures are redeemed, the
Trust must redeem Trust Securities having an
aggregate liquidation
15
<PAGE> 17
amount equal to the aggregate principal amount of
the New Junior Subordinated Debentures so redeemed.
The Trust Securities will be redeemed upon maturity
of the New Junior Subordinated Debentures. See
"Description of New Capital
Securities -- Redemption -- Mandatory Redemption"
and "-- Special Event Redemption or Distribution of
New Junior Subordinated Debentures."
Liquidation of the Trust... Upon the occurrence and continuation of a Special
Event, the Regular Trustees, subject to any
necessary prior approval of the Federal Reserve,
may dissolve the Trust and cause the New Junior
Subordinated Debentures to be distributed to the
holders of the New Capital Securities and the
Common Securities in liquidation of the Trust. See
"Description of New Capital
Securities -- Redemption -- Special Event
Redemption or Distribution of New Junior
Subordinated Debentures."
In the event of the liquidation of the Trust, after
satisfaction of the claims of creditors of the
Trust, if any, as provided by applicable law, the
holders of the New Capital Securities will be
entitled to receive a liquidation amount of $1,000
per Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which
may be in the form of a distribution of such amount
in New Junior Subordinated Debentures as described
above. If such Liquidation Distribution (as defined
herein) can be paid only in part because the Trust
has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the New
Capital Securities shall be paid on a pro rata
basis. The holder(s) of the Common Securities will
be entitled to receive distributions upon any such
liquidation pro rata with the holders of the
Capital Securities, except that if an Indenture
Event of Default has occurred and is continuing,
the New Capital Securities shall have a priority
over the Common Securities. See "Description of New
Capital Securities -- Liquidation Distribution Upon
Dissolution."
Ratings.................... It is expected that the New Capital Securities will
be rated a3 by Moody's Investors Service, Inc.,
BBB- by Standard & Poor's Ratings Services, and A-
by Fitch Investors Service, L.P. A security rating
is not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning rating
organization.
Absence of Market for the
New Capital Securities..... The New Capital Securities will be a new issue of
securities for which there currently is no market.
Although Lehman Brothers Inc. and J. P. Morgan
Securities, Inc., the initial purchasers of the Old
Capital Securities (the "Initial Purchasers"), have
informed the Company and the Trust that they each
currently intend to make a market in the New
Capital Securities, they are not obligated to do
so, and any such market making may be discontinued
at any time without notice. Accordingly, there can
be no assurance as to the development or liquidity
of any market for the New Capital Securities. The
Trust and the Company do not intend to apply for
listing of the New Capital Securities on any
securities exchange or for quotation through the
National Association of Securities Dealers
Automated Quotation System.
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<PAGE> 18
RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters. Unless as otherwise stated or the context
otherwise requires in the Risk Factors set forth below, the New Capital
Securities and the Old Capital Securities will be referred to as the "Capital
Securities" and the New Junior Subordinate Debentures and the Old Junior
Subordinate Debentures will be referred to as the "Junior Subordinated
Debentures." To the extent any of the information contained or incorporated by
reference in this Prospectus constitutes a "forward-looking statement" as
defined in Section 21E(i)(l) of the Exchange Act, the risk factors set forth
below are cautionary statements identifying important factors that could cause
actual results to differ materially from those in the forward-looking statement.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee issued by the Company
for the benefit of the holders of Capital Securities and under the Junior
Subordinated Debentures are unsecured and rank subordinate and junior in right
of payment to all Indebtedness of the Company. At September 30, 1996, the
Indebtedness of the Company aggregated approximately $339 million. Neither the
Indenture, the Guarantee nor the Declaration (as defined herein) places any
limitation on the amount of secured or unsecured Indebtedness that may be
incurred by the Company. See "Description of New Guarantee -- Status of the
Guarantee" and "Description of New Junior Subordinated
Debentures -- Subordination."
STATUS OF COMPANY AS HOLDING COMPANY
As a holding company, the ability of the Company to make payments of
interest and principal on the Junior Subordinated Debentures will be dependent
primarily upon the receipt of dividends and other distributions from the
Company's subsidiaries. The Company's principal subsidiaries are First Security
Bank, N.A. and First Security Bank of New Mexico, N.A. (the "Banks"). There are
various regulatory restrictions on the ability of the Company's banking
subsidiaries to pay dividends or make other payments to the Company. At December
31, 1996, the Company's banking subsidiaries could pay an aggregate of $272.2
million in dividends to the Company without prior regulatory approval. In
addition, the right of the Company to participate in any distribution of assets
of any subsidiary, including the Bank, upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution), will be subject to the
prior claims of creditors of that subsidiary, except to the extent that any
claims of the Company as a creditor of such subsidiary may be recognized as
such. Accordingly, the Capital Securities will effectively be subordinated to
all existing and future liabilities and obligations of the Company's
subsidiaries, and holders of the Capital Securities should look only to the
assets of the Company for payments on the Capital Securities. As of December 31,
1996, the Company's subsidiaries had indebtedness and other liabilities of
approximately $12.9 billion.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Trust Enforcement Event (as defined herein) occurs and is continuing,
then the holders of Capital Securities would rely on the enforcement by the
Property Trustee (as defined herein) of its rights as a holder of the Junior
Subordinated Debentures against the Company. The holders of a majority in
liquidation amount of the Capital Securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Property Trustee or to direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder of the
Junior Subordinated Debentures. If the Property Trustee fails to enforce its
rights with respect to the Junior Subordinated Debentures held by the Trust, any
record holder of Capital Securities may institute legal proceedings directly
against the Company to enforce the Property Trustee's rights under such Junior
Subordinated Debentures without first instituting any legal proceedings against
such Property Trustee or any other person or entity.
17
<PAGE> 19
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
However, in the event the Company failed to pay interest on or principal of the
Junior Subordinated Debentures on the payment date on which such payment is due
and payable, then a holder of Capital Securities may directly institute a
proceeding against the Company under the Indenture for enforcement of payment to
such holder of the interest on or principal of such Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Capital Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Company will be subrogated to the rights of such holder
of Capital Securities under the Declaration to the extent of any payment made by
the Company to such holder of Capital Securities in such Direct Action. Except
as set forth herein, holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of Junior Subordinated
Debentures or assert directly any other rights in respect of the Junior
Subordinated Debentures. See "Description of New Capital
Securities -- Enforcement of Certain Rights by Holders of Capital Securities",
"Description of New Guarantee" and "Description of New Junior Subordinated
Debentures -- Indenture Events of Default." The Declaration provides that each
holder of New Capital Securities by acceptance thereof agrees to the provisions
of the New Guarantee and the Indenture.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
The Company has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods, provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will be deferred during any
such Extension Period but would continue to accumulate at the rate of 8.41% per
annum, compounded semi-annually during any such Extension Period. During any
such Extension Period, the Company may not, and may not permit any subsidiary of
the Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior to the Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior to the Junior Subordinated Debentures
(other than (a) dividends or distributions in common stock of the Company, (b)
payments under the Guarantee, (c) any declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, and (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's benefit plans).
Prior to the termination of any such Extension Period, the Company may further
extend the Extension Period, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the above requirements. See
"Description of New Capital Securities -- Distributions" and "Description of New
Junior Subordinated Debentures -- Option to Extend Interest Payment Period."
Should the Company defer payment of interest on the Junior Subordinated
Debentures, a holder of Capital Securities will be required to accrue income (in
the form of OID) for United States federal income tax purposes in respect of its
pro rata share of the Junior Subordinated Debentures held by the Trust. As a
result, a holder of Capital Securities will include such interest income in
gross income for United States federal income tax purposes in advance of the
receipt of cash attributable to such interest income, and will not receive the
cash related to such income from the Trust if the holder disposes of the Capital
Securities prior to the record date for the payment of Distributions with
respect to such Extension Period. See "Certain United States Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sales of
Capital Securities."
18
<PAGE> 20
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Capital Securities is likely to be
adversely affected. A holder that disposes of its Capital Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Capital Securities. In addition, as a
result of the Company's right to defer interest payments, the market price of
the Capital Securities (which represent preferred undivided beneficial interests
in the Junior Subordinated Debentures) may be more volatile than the market
prices of other similar securities where the issuer does not have such right to
defer interest payments.
SPECIAL EVENT REDEMPTION; PROPOSED TAX LEGISLATION
Upon the occurrence and continuation of a Special Event, the Company has
the right, subject to any necessary prior approval of the Federal Reserve, to
redeem the Junior Subordinated Debentures in whole (but not in part) within 90
days following the occurrence of such Special Event and thereby cause a
mandatory redemption of the Capital Securities and Common Securities. A "Special
Event" means a Tax Event, a Regulatory Capital Event or an Investment Company
Event (each as defined herein).
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
introduced in the 104th Congress which would have, among other things, generally
denied interest deductions on a debt instrument that had a maximum weighted
average maturity of more than 40 years. The Bill also would generally deny
interest deductions for interest on an instrument, issued by a corporation, that
has a maximum term of more than 20 years and that is not shown as indebtedness
on the separate balance sheet of the issuer or, where the instrument is issued
to a related party (other than a corporation), where the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the issuer's consolidated balance sheet. For purposes of determining the
weighted average maturity or the term of an instrument, any right to extend
would be treated as exercised. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If either provision were to apply to the Junior Subordinated
Debentures, the Company would not be able to deduct interest on the Junior
Subordinated Debentures. However, on March 29, 1996, the Chairmen of the Senate
Finance and House Ways and Means Committees issued a joint statement (the "Joint
Statement") to the effect that it was their intention that the effective date of
the Bill, if enacted, would be no earlier than the date of appropriate
Congressional action. In addition, subsequent to the publication of the Joint
Statement, Senator Daniel Patrick Moynihan and Representatives Sam M. Gibbons
and Charles B. Rangel wrote letters to Treasury Department officials concurring
with the view expressed in the Joint Statement (the "Democrat Letters"). The
104th Congress adjourned without enacting the Bill. Moreover, if the principles
contained in the Joint Statement and the Democrat Letters were followed, any
similar legislation that is subsequently proposed or enacted would not apply to
the Old Junior Subordinated Debentures. There can be no assurance however, that
current or future legislative or administrative proposals or final legislation
will not adversely affect the ability of the Company to deduct interest on the
Junior Subordinated Debentures or otherwise affect the tax treatment described
herein. Such a change, therefore, could give rise to a Tax Event, which would
permit the Company to cause a redemption of the Capital Securities or to
dissolve the Trust and distribute the Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust upon receiving an
opinion of counsel as described more fully under "Description of New Capital
Securities -- Redemption -- Special Event Redemption or Distribution of Junior
Subordinated Debentures."
LIQUIDATION DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Upon the occurrence and continuation of a Special Event the Regular
Trustees, subject to any necessary prior approval of the Federal Reserve, may
dissolve the Trust and cause the Junior Subordinated Debentures to be
distributed to the holders of the Capital Securities and the Common Securities
in liquidation of the Trust. In addition, upon liquidation of the Trust and
certain other events, the Junior Subordinated Debentures may be distributed to
such holders. Under current United States federal income tax law and
interpretations thereof and assuming, as expected, the Trust is treated as a
grantor trust for United States federal income tax purposes, a distribution by
the Trust of the Junior Subordinated Debentures pursuant to a liquidation of the
19
<PAGE> 21
Trust will not be a taxable event to the Trust or to holders of the Capital
Securities, and will result in a holder of the Capital Securities receiving
directly such holder's pro rata share of the Junior Subordinated Debentures
(previously held indirectly through the Trust). If, however, the liquidation of
the Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Junior Subordinated
Debentures as a result of the occurrence of a Tax Event or otherwise, the
distribution of Junior Subordinated Debentures to holders of the Capital
Securities by the Trust would be a taxable event to the Trust and each holder,
and holders of the Capital Securities would recognize gain or loss as if they
had exchanged their Capital Securities for the Junior Subordinated Debentures
they received upon the liquidation of the Trust. See "Certain United States
Federal Income Tax Consequences -- Distribution of Junior Subordinated
Debentures or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for Capital Securities or
for Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a liquidation of the Trust occurs. Accordingly, the
Capital Securities that an investor may purchase, whether pursuant to the offer
made hereby or in the secondary market, or the Junior Subordinated Debentures
that a holder of Capital Securities may receive on liquidation of the Trust, may
trade at a discount to the price that the investor paid to purchase the Capital
Securities offered hereby. Because holders of Capital Securities may receive
Junior Subordinated Debentures on termination of the Trust, prospective
purchasers of Capital Securities are also making an investment decision with
regard to the Junior Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures contained herein. See
"Description of New Capital Securities -- Redemption -- Special Event Redemption
or Distribution of Junior Subordinated Debentures" and "Description of New
Junior Subordinated Debentures -- General."
LIMITED VOTING RIGHTS
Holders of Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and certain other
matters described herein. Holders of Capital Securities will not be entitled to
vote to appoint, remove or replace any of the Trustees (as defined below), which
voting rights are vested exclusively in the holder of the Common Securities. The
Trustees and the Company may amend the Declaration without the consent of
holders of Capital Securities to ensure that the Trust will be classified as a
grantor trust for United States federal income tax purposes even if such action
adversely affects the interests of such holders. See "Description of Capital
Securities -- Voting Rights; Amendment of the Declaration."
BANK REGULATORY RESTRICTIONS ON OPERATIONS OF THE TRUST
Because the Trust is a subsidiary of the Company, federal banking
authorities will have the right to examine the Trust and its activities. Under
certain circumstances, including any determination that the Company's
relationship to the Trust results in an unsafe and unsound banking practice,
such banking authorities will have the authority to issue orders which could
restrict the ability of the Trust to make distributions on or to redeem the
Capital Securities.
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures that may be distributed in exchange for Capital
Securities if a termination of the Trust occurs. Accordingly, the Capital
Securities that an investor may purchase whether pursuant to the offer made
hereby or in the secondary market, or the Junior Subordinated Debentures that a
holder of Capital Securities may receive in liquidation of the Trust, may trade
at a discount from the price that the investor paid to purchase the Capital
Securities offered hereby. Because holders of Capital Securities may receive
Junior Subordinated Debentures in liquidation of the Trust and because
Distributions are otherwise limited to payments on the Junior Subordinated
Debentures, prospective purchasers of Capital Securities are also making an
investment decision with regard to the Junior Subordinated Debentures and should
carefully review all the information regarding the Junior Subordinated
Debentures contained herein. See "Description of the Junior Subordinated
Debentures."
20
<PAGE> 22
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Company and the Trust do not intend to register under
the Securities Act any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
through Automatic Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain outstanding after the
Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Declaration of Trust. See
"Description of the New Capital Securities."
The Company has agreed that, if the Exchange Offer is not consummated
within 30 days of the effective date hereof, cash penalty amounts may be payable
by the Company to the holders of the Old Capital Securities. See "Description of
The Old Securities" and "The Exchange Offer."
ABSENCE OF A PUBLIC MARKET
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the holders
(who are not affiliates of the Company or the Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. The Company and the
Trust have been advised by the Initial Purchasers that the Initial Purchasers
presently intend to make a market in the New Capital Securities. However, the
Initial Purchasers are not obligated to do so and any market-making activity
with respect to the New Capital Securities may be discontinued at any time
without notice. In addition, such market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer. Accordingly, no assurance can be given that an active
public or other market will develop for the New Capital Securities or the Old
Capital Securities or as to the liquidity of or the trading market for the New
Capital Securities or the Old Capital Securities. If an active public market
does not develop, the market price and liquidity of the New Capital Securities
may be adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the New Capital Securities may trade at a discount.
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<PAGE> 23
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of the Company or the Trust may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of Rule
144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents. Therefore,
holders of the Old Capital Securities desiring to tender such Old Capital
Securities in exchange for New Capital Securities should allow sufficient time
to ensure timely delivery. The Trust is under no duty to give notification of
defects or irregularities with respect to the tenders of Old Capital Securities
for exchange.
USE OF PROCEEDS
Neither the Company nor the Trust will receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. The New Capital
Securities will be exchanged for Old Capital Securities in like Liquidation
Amounts which will be retired and cancelled.
The Company expects to use the proceeds from the sale of such Junior
Subordinated Debentures for general corporate purposes, which may include the
repayment of indebtedness, investments in or extensions of credit to its
subsidiaries and the financing of possible acquisitions. The Company engages on
a regular basis in discussions regarding the potential acquisition of branches,
deposits and other financial institutions but it currently has no agreements,
arrangements or understandings with respect to any possibule material
acquisitions. Pending such use, the net proceeds may be temporarily invested in
short-term obligations. The precise amounts and timing of the application of
proceeds will depend upon the funding requirements of the Company and its
subsidiaries and the availability of other funds.
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The Company's consolidated ratios of earnings to fixed charges and
consolidated ratios of earnings to combined fixed charges and preferred stock
dividend requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- --------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits...... 2.76x 2.48x 2.19x 3.02x 4.62x 4.55x 2.28x
Including Interest on Deposits...... 1.57x 1.52x 1.41x 1.70x 1.72x 1.54x 1.23x
Earnings to Combined Fixed Charges and
Preferred Stock Dividend
Requirements:
Excluding Interest on Deposits...... 2.75x 2.48x 2.19x 3.02x 4.62x 4.54x 2.28x
Including Interest on Deposits...... 1.57x 1.52x 1.41x 1.70x 1.70x 1.54x 1.23x
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except
22
<PAGE> 24
interest on deposits), capitalized interest, and the interest factor included in
rents. Fixed charges, including interest on deposits, represent all interest
expense, capitalized interest, and the interest factor included in rents.
Combined fixed charges and preferred stock dividend requirements, excluding
interest on deposits, represent interest expense (except interest paid on
deposits), capitalized interest, an amount equal to the pre-tax earnings
required to meet applicable preferred stock dividend requirements, and the
interest factor included in rents. Combined fixed charges and preferred stock
dividend requirements, including interest on deposits, represent all interest
expense, capitalized interest, an amount equal to the pre-tax earnings required
to meet applicable preferred stock dividend requirements, and the interest
factor included in rents.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The New Capital Securities
will be presented in the consolidated balance sheet of the Company as a debt
item, and appropriate disclosures about the New Capital Securities, the New
Guarantee and the New Junior Subordinated Debentures will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, the Company will record Distributions payable on the New Capital
Securities as an expense in its consolidated statements of income.
REGULATORY TREATMENT
The Company is required by the Federal Reserve to maintain certain levels
of capital for bank regulatory purposes. The Company expects that the New
Capital Securities will be treated as Tier 1 capital of the Company for such
purposes.
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<PAGE> 25
CAPITALIZATION
The following table sets forth the unaudited historical consolidated
capitalization of the Company and its subsidiaries as of September 30, 1996, and
as adjusted to give effect to the consummation of (i) the sale of the Old
Capital Securities and (ii) the sale of $150,000,000 aggregate principal amount
of the Company's 6.875% Senior Notes due 2006 on November 19, 1996.
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT
Parent Company:
Floating Rate Notes due 1999...................................... $ 6,984 $ 6,984
Medium Term Notes due 1998-2003................................... 32,750 32,750
7.875% Senior Notes due 1999...................................... 98,962 98,962
6.875% Senior Notes due 2006...................................... -- 150,000
7.5% Subordinated Notes due 2002.................................. 75,000 75,000
7.0% Subordinated Notes Due 2005.................................. 125,000 125,000
Subsidiaries:
Bank Notes & FHLB Borrowings (1,2)................................ 482,243 482,243
Non-Bank.......................................................... 993 993
---------- ----------
Total long-term debt...................................... 821,932 971,932
---------- ----------
Guaranteed Preferred Beneficial Interests in Company's Junior
Subordinated Debentures(3)........................................ -- 150,000
STOCKHOLDERS' EQUITY
Series A, $3.15 Cumulative Convertible Preferred Stock:
(10,459 shares outstanding)....................................... 549 549
Common Stock (par value $1.25, authorized 300,000,000 shares, issued
and outstanding 76,171,674 shares)(4)............................. 95,213 95,213
Paid-in surplus................................................ 126,069 126,069
Retained earnings.............................................. 889,551 889,551
Net unrealized loss on securities available for sale........... (8,051) (8,051)
Subtotal.......................................................... 1,102,782 1,102,782
Less: common treasury stock at cost (573,820 shares).............. (10,000) (10,000)
Total common stockholders' equity................................. 1,092,782 1,092,782
---------- ----------
Total stockholders' equity................................ 1,093,331 1,093,331
---------- ----------
Total long-term debt and stockholders' equity............. $2,015,263 $2,315,263
========== ==========
Capital ratios:
Tier 1 Capital.................................................... 10.10% 11.61%
Total Capital..................................................... 13.36% 14.88%
Tier 1 Leverage Ratio............................................. 7.34% 8.26%
</TABLE>
- ---------------
(1) These obligations are direct obligations of subsidiaries of the Company, and
as such, constitute claims against such subsidiaries ranking prior to the
Company's equity therein.
(2) Federal Home Loan Bank borrowings mature in 1996-2000.
(3) As described herein, the sole assets of the Trust will be approximately
$150,000,000 principal amount of New Junior Subordinated Debentures issued
by the Company to the Trust. The New Junior Subordinated Debentures will
bear interest at the rate of 8.41% per annum and will mature on January 15,
2026. The Company owns all of the Common Securities of the Trust.
(4) Shares issued and outstanding and as adjusted exclude 3,890,610 shares
reserved for issuance upon exercise of outstanding employee stock options,
190,615 shares reserved for issuance upon exercise of conversion rights of
preferred stock, 1,152,000 shares reserved for issuance under the dividend
reinvestment and stock purchase plan, 2,869,447 shares reserved for issuance
under the Company's Comprehensive Management Incentive Plan, 1,257,000
shares reserved for issuance under the 1994 Employee Stock Purchase Plan,
and 669,000 shares reserved for issuance under the Company's Non Employee
Director Stock Option Plan.
24
<PAGE> 26
THE TRUST
The Trust is a statutory business trust formed under the Delaware Business
Trust Act, as amended (the "Trust Act"), pursuant to a declaration of trust (as
so amended and restated, the "Declaration") and the filing of a certificate of
trust as filed with the Secretary of State of the State of Delaware. The Company
will acquire Common Securities in an aggregate liquidation amount equal to at
least 3% of the total capital of the Trust. The Trust will use all the proceeds
derived from the issuance of the Capital Securities and the Common Securities to
purchase the Junior Subordinated Debentures and, accordingly, the assets of the
Trust will consist solely of the Junior Subordinated Debentures. The Trust
exists for the exclusive purpose of (i) issuing the Trust Securities
representing undivided beneficial ownership interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the Junior
Subordinated Debentures, and (iii) engaging in only those other activities
necessary or incidental thereto.
Pursuant to the Declaration, there will initially be five trustees (the
"Trustees") for the Trust. Three of the Trustees (the "Regular Trustees") will
be individuals who are employees or officers of or who are affiliated with the
Company. The fourth trustee will be a financial institution that is unaffiliated
with the Company (the "Property Trustee"). The fifth trustee will be an entity
that maintains its principal place of business in the State of Delaware and
otherwise meets the requirements of applicable law (the "Delaware Trustee").
Initially, The Bank of New York will act as Property Trustee, and its affiliate,
The Bank of New York (Delaware), will act as Delaware Trustee until, in each
case, removed or replaced by the holder of the Common Securities. The Bank of
New York will also act as trustee under the Guarantee (the "Guarantee Trustee").
The Property Trustee will hold title to the New Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities, and the
Property Trustee will have the power to exercise all rights, powers and
privileges with respect to the New Junior Subordinated Debentures under the
Indenture (as defined herein) as the holder of the Junior Subordinated
Debentures. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments made in respect of the New Junior Subordinated Debentures for the
benefit of the holders of the Trust Securities. The Guarantee Trustee will hold
the New Guarantee for the benefit of the holders of the Capital Securities. The
Company, as the holder of all the Common Securities, will have the right to
appoint, remove or replace any of the Trustees and to increase or decrease the
number of Trustees, provided that the number of Trustees shall be at least
three; provided further that at least one Trustee shall be a Delaware Trustee,
at least one Trustee shall be the Property Trustee and at least one Trustee
shall be a Regular Trustee.
The Company paid and will continue to pay all fees and expenses related to
the organization and operations of the Trust (including any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States or any other domestic taxing authority upon
the Trust) and the offering of the Old Capital Securities and be responsible for
all debts and obligations of the Trust (other than with respect to the Capital
Securities).
For so long as the Capital Securities remain outstanding, the Company will
covenant (i) to maintain directly or indirectly 100% ownership of the Common
Securities, (ii) to cause the Trust to remain a statutory business trust and not
to voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the Declaration, (iii) to use its commercially reasonable efforts
to ensure that the Trust will not be an "investment company" for purposes of the
Investment Company Act of 1940, as amended, and (iv) to take no action that
would be reasonably likely to cause the Trust to be classified as an association
or a publicly traded partnership taxable as a corporation for United States
federal income tax purposes.
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration and the Trust Indenture Act. See "Description of New Capital
Securities." The Declaration and the New Guarantee also incorporate by reference
the terms of the Trust Indenture Act.
The location of the principal executive office of the Trust is c/o First
Security Corporation, Attn. Chief Financial Officer, 79 South Main Street, Salt
Lake City, Utah 84111 and its telephone number is (801) 246-6000.
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THE COMPANY
The Company is a regional bank holding company headquartered in Salt Lake
City, Utah. It is comprised of five banks and other financial companies with
approximately 300 offices, located primarily in the 6 states of Idaho, Nevada,
New Mexico, Oregon, Utah and Wyoming. Through its subsidiaries, the Company
provides commercial and agricultural finance, consumer banking, trust, capital
markets, treasury management, investment management, data processing, leasing
and securities brokerage services. At December 31, 1996, the Company and its
consolidated subsidiaries had consolidated assets of $14.7 billion, consolidated
deposits of $9.4 billion and shareholders' equity of $1.1 billion.
The subsidiary banks of the Company engage in general commercial banking
business, principally in domestic markets, and provide banking and ancillary
services to individuals, businesses, institutional organizations, governmental
entities and other financial institutions. The largest subsidiary bank, First
Security Bank, N.A. ("FSB"), had assets of $11.7 billion at December 31, 1996.
The Company is a legal entity separate and distinct from its banking and
non-banking affiliates. The principal sources of the Company's income are
dividends, interest and fees from FSB and the other banking and non-banking
affiliates. The bank subsidiaries of the Company, including FSB (the "Banks"),
are subject to certain restrictions imposed by federal law on any extensions of
credit to, and certain other transactions with, the Company and certain other
affiliates, and on investments in stock or other securities thereof. Such
restrictions prevent the Company and such other affiliates from borrowing from
the Banks unless the loans are secured by various types of collateral. Further,
such secured loans, other transactions and investments by any of the Banks are
generally limited in amount as to the Company and as to each of such other
affiliates to 10% of such Bank's capital and surplus and as to the Company and
all of such other affiliates to an aggregate of 20% of such Bank's capital and
surplus. In addition, payment of dividends to the Company by the subsidiary
banks is subject to ongoing review by banking regulators and is subject to
various statutory limitations and in certain circumstances requires approval by
banking regulatory authorities.
The Company was organized in 1928, and is the oldest multi-bank holding
company in the United States. Its principal executive offices are located at 79
South Main Street, Salt Lake City, Utah 84111 (telephone (801) 246-6000). For
further information concerning the Company, see the Company documents
incorporated by reference herein as described under "Incorporation of Certain
Documents by Reference."
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THE EXCHANGE OFFER
PURPOSE AND EFFECT
In connection with the sale of the Old Capital Securities, the Company and
the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which the Company and the Trust agreed, among other
things, to file and to use their reasonable efforts to cause to become effective
with the Commission a registration statement with respect to the exchange of the
Old Capital Securities for capital securities with terms identical in all
material respects to the terms of the Old Capital Securities. A copy of the
Registration Rights Agreement has been filed as an Exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offer is being made
to satisfy the contractual obligations of the Company and the Trust under the
Registration Rights Agreement. The form and terms of the New Capital Securities
are the same as the form and terms of the Old Capital Securities except that the
New Capital Securities have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Capital Securities and will not provide for any increase in the
Distribution rate thereon. In that regard, the Old Capital Securities provide,
among other things, that, if the Exchange Offer is not consummated by July 21,
1997, then the Company will pay Liquidated Damages to each holder of Old Capital
Securities, with respect to the first 90-day period immediately following the
occurrence of such Registration Default, in an amount equal to $.25 per week per
$1,000 liquidation amount of Old Capital Securities held by such holder. The
amount of the liquidated damages will increase by an additional $.05 per week
per $1,000 liquidation amount of Old Capital Securities with respect to each
subsequent 90-day period until all registration defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 liquidation
amount of Old Capital Securities. All accrued liquidated damages will be paid by
the Company on each Distribution payment date to DTC by wire transfer of
immediately available funds or by federal funds check and to holders of
certificated securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all registration defaults, the accrual of
liquidated damages will cease. See "Risk Factors -- Consequences of a Failure to
Exchange Old Capital Securities" and "Description of the Old Securities."
The Exchange Offer is not being made to, nor will the Company or the Trust
accept tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company who
desires to deliver such Old Capital Securities by book-entry transfer at The
Depository Trust Company.
Pursuant to the Exchange Offer, the Company will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and
all of the Old Junior Subordinated Debentures, of which $154,640,000 aggregate
principal amount is outstanding, for like aggregate principal of the New Junior
Subordinated Debentures. The New Guarantee and New Junior Subordinated
Debentures have been registered under the Securities Act.
TERMS OF THE EXCHANGE
The Company and the Trust hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $150,000,000 aggregate Liquidation Amount of New
Capital Securities for a like aggregate Liquidation Amount of Old Capital
Securities properly tendered on or prior to the Expiration Date (as defined
below) and not properly withdrawn in accordance with the procedures described
below. The Trust will issue, promptly after the Expiration Date, an aggregate
Liquidation Amount of up to $150,000,000 of New Capital Securities in exchange
for a like principal amount of outstanding Old Capital Securities tendered and
accepted in connection with the Exchange Offer. Holders may tender their Old
Capital Securities in any integral multiple of $1,000. The
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Exchange Offer is not conditioned upon any minimum Liquidation Amount of Old
Capital Securities being tendered. As of the date of this Prospectus
$150,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Declaration of Trust, but will not be entitled to any further registration
rights under the Registration Rights Agreement, except under limited
circumstances. See "Risk Factors -- Consequences of a Failure to Exchange Old
Capital Securities" and "Description of the Old Securities." If any tendered Old
Capital Securities are not accepted for exchange because of an invalid tender,
the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted Old Capital Securities will be returned,
without expense, to the tendering holder thereof promptly after the Expiration
Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE TRUSTEES OF THE TRUST
MAKE ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO WHETHER TO
TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD CAPITAL
SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Company and the
Trust (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended). The Company and the Trust
expressly reserve the right in their sole and absolute discretion, subject to
applicable law, at any time and from time to time, (i) to delay the acceptance
of the Old Capital Securities for exchange, (ii) to terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) if the Company and the Trust determine, in their sole and absolute
discretion, that any of the events or conditions referred to under
"-- Conditions to the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and retain
all Old Capital Securities tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Capital Securities to withdraw their
tendered Old Capital Securities as described under "-- Withdrawal Rights," and
(iv) to waive any condition or otherwise amend the terms of the Exchange Offer
in any respect. If the Exchange Offer is amended in a manner determined by the
Company and the Trust to constitute a material change, or if the Company and the
Trust waive a material condition of the Exchange Offer, the Company or the Trust
will promptly disclose such amendment by means of a prospectus supplement that
will be distributed to the registered holders of the Old Capital Securities, and
the Company and the Trust will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the
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Company or the Trust may choose to make any public announcement and subject to
applicable law, neither the Company nor the Trust shall have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company and the Trust will exchange, and will issue to the Exchange Agent, New
Capital Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date. In all cases, delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (i) Old Capital Securities or a book-entry confirmation
of a book-entry transfer of Old Capital Securities into the Exchange Agent's
account at The Depositary Trust Company ("DTC"), (ii) the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company and
the Trust will be deemed to have accepted for exchange, and thereby exchanged,
Old Capital Securities validly tendered and not withdrawn as, if and when the
Company or the Trust gives oral or written notice to the Exchange Agent of the
Company's and the Trust's acceptance of such Old Capital Securities for exchange
pursuant to the Exchange Offer. The Exchange Agent will act as agent for the
Company and the Trust for the purpose of receiving tenders of Old Capital
Securities, Letters of Transmittal and related documents, and as agent for
tendering holders for the purpose of receiving Old Capital Securities, Letters
of Transmittal and related documents and transmitting New Capital Securities to
validly tendering holders. Such exchange will be made promptly after the
Expiration Date. If for any reason whatsoever, acceptance for exchange or the
exchange of any Old Capital Securities tendered pursuant to the Exchange Offer
is delayed (whether before or after the Company's and the Trust's acceptance for
exchange of Old Capital Securities) or the Company or the Trust extends the
Exchange Offer or is unable to accept for exchange or exchange Old Capital
Securities tendered pursuant to the Exchange Offer, then, without prejudice to
the Company or the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalf of the Company and the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital Securities and such
Old Capital Securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "-- Withdrawal
Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities
will warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital Securities,
that the Trust will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and the Old Capital Securities tendered for exchange
are not subject to any adverse claims or proxies. The holder also will warrant
and agree that it will, upon request, execute and deliver any additional
documents deemed by the Company, the Trust or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment, and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
VALID TENDER. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under
"-- Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation
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must be received by the Exchange Agent, in each case on or prior to the
Expiration Date, or (iii) the guaranteed delivery procedures set forth below
must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees and any other required documents, must in any case be delivered to
and received by the Exchange Agent at its address set forth under "-- Exchange
Agent" on or prior to the Expiration Date, or the guaranteed delivery procedure
set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal
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(or facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are received by the
Exchange Agent within five New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery of
New Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry confirmations
with respect to Old Capital Securities and other required documents are received
by the Exchange Agent.
The acceptance by the Company and the Trust for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement between the tendering holder, the Company and the
Trust upon the terms and subject to the conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Trust, in its sole
discretion, whose determination shall be final and binding on all parties. The
Company and the Trust reserve the absolute right, in their sole and absolute
discretion, to reject any and all tenders determined by them not to be in proper
form or the acceptance of which, or exchange for, may, in the view of counsel to
the Company and the Trust, be unlawful. The Company and the Trust also reserve
the absolute right, subject to applicable law, to waive any of the conditions of
the Exchange Offer as set forth under "-- Conditions to the Exchange Offer" or
any condition or irregularity in any tender of Old Capital Securities of any
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders.
The Company and the Trust's interpretation of the terms and conditions of
the Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. Neither the Company, the Trust, any affiliates
or assigns of the Company, the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in
tenders or incur any liability for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company or
the Trust, proper evidence satisfactory to the Company or the Trust, in its sole
discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Company and the Trust are making the Exchange Offer for the Old Capital
Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Company nor the Trust sought its own interpretive letter and there can be no
assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the
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Division of Corporation Finance, and subject to the two immediately following
sentences, the Company and the Trust believe that New Capital Securities issued
pursuant to this Exchange Offer in exchange for Old Capital Securities may be
offered for resale, resold and otherwise transferred by a holder thereof (other
than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Capital Securities are acquired in the ordinary course of
such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities who is an "affiliate" of the
Company or the Trust or who intends to participate in the Exchange Offer for the
purpose of distributing New Capital Securities, or any broker-dealer who
purchased Old Capital Securities from the Trust to resell pursuant to Rule 144A
or any other available exemption under the Securities Act, (a) will not be able
to rely on the interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned interpretive letters,
(b) will not be permitted or entitled to tender such Old Capital Securities in
the Exchange Offer and (c) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or other
transfer of such Old Capital Securities unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Capital Securities acquired for its own account as a
result of market-making or other trading activities and exchanges such Old
Capital Securities for New Capital Securities, then such broker-dealer must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company or the Trust, (ii)
any New Capital Securities to be received by it are being acquired in the
ordinary course of its business, (iii) it has no arrangement or understanding
with any person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and does not intend to engage in,
a distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, the Company and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to the Company and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of Rule
13d-3 under the Exchange Act) on behalf of whom such holder holds the Capital
Securities to be exchanged in the Exchange Offer. Each broker-dealer that
receives New Capital Securities for its own account pursuant to the Exchange
Offer must acknowledge that it acquired the Old Capital Securities for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Company and the Trust believe
that broker-dealers who acquired Old Capital Securities for their own accounts
as a result of market-making activities or other trading activities
("Participating Broker-Dealers") may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon exchange
of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Capital Securities Registration Rights
Agreement, the Company and the Trust have agreed that this Prospectus, as it may
be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 180 days after the Expiration Date
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or, if earlier, when all such New Capital Securities have been disposed of by
such Participating Broker-Dealer. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the Company or the Trust may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreements, such Participating
Broker-Dealer will suspend the sale of New Capital Securities (or the New
Guarantee or the New Junior Subordinated Debentures, as applicable) pursuant to
this Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer or
the Company or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering Old
Capital Securities," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described
above under "-- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. Neither the Company, the Trust, any affiliates or assigns of the
Company, the Trust, the Exchange Agent nor any other person shall be under any
duty to give any notification of any irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification. Any Old
Capital Securities which have been tendered but which are withdrawn will be
returned to the holder thereof promptly after withdrawal.
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DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with respect
to such Old Capital Securities prior to the original issue date of the New
Capital Securities or, if no such Distributions have been made, will not receive
any accumulated Distributions on such Old Capital Securities, and will be deemed
to have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after such Distribution Date or, if no such
Distributions have been made, from and after December 23, 1996. However, because
Distributions on the New Capital Securities will accumulate from December 23,
1996, the amount of the Distributions received by holders whose Old Capital
Securities are accepted for exchange will not be affected by the exchange.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an "affiliate" of
the Company or the Trust within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such New Capital
Securities are acquired in the ordinary course of such holders' business
and such holders have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities;
(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Company's and the Trust's judgment,
would reasonably be expected to impair the ability of the Company or the
Trust to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's and the Trust's judgment, would reasonably
be expected to impair the ability of the Company or the Trust to proceed
with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Delaware, Utah, Idaho or New Mexico State authorities which, in
the Company's and the Trust's judgment, would reasonably be expected to
impair the ability of the Company or the Trust to proceed with the Exchange
Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Company's and
the Trust's judgment, would reasonably be expected to impair the ability of
the Company or the Trust to proceed with the Exchange Offer; or
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Company or the Trust, threatened for that purpose; or
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or the Trust or any of
their subsidiaries have occurred which, in the sole judgment of the company
and the Trust, might materially impair the ability of the Company or the
Trust to proceed with the Exchange Offer.
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If the Company and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Company and the Trust may, subject to applicable
law, terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the Company
and the Trust will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities, and the Company and the Trust will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
First Security Bank, N.A. has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
First Security Bank, N.A.
Corporate Trust
3rd Floor
79 South Main Street
Salt Lake City, Utah 84111
Attention:
Telephone: (801) 246-
Facsimile: (801) 246-
Delivery to other than the above address or facsimile number will not constitute
a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Capital Securities, and in handling or tendering
for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Company nor the Trust will make any payment to brokers, dealers
or others soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Declaration of Trust, the Regular Trustees, on
behalf of the Trust, have issued the Old Capital Securities and the Common
Securities, and will issue the New Capital Securities. The New Capital
Securities will represent preferred undivided beneficial interests in the assets
of the Trust and the holders thereof will be entitled to a preference with
respect to Distributions and amounts payable on redemption of the Trust
Securities or liquidation of the Trust over the Common Securities. The
Declaration of Trust has been qualified under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act") and the Delaware Business Trust Act.
This summary of certain provisions of the New Capital Securities, the
Common Securities and the Declaration of Trust does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Declaration of Trust, including the definitions therein of
certain terms. The term "Capital Securities" used in this section refers to the
New Capital Securities, which have substantially identical terms to the Old
Capital Securities. See "Description of Old Securities". The term "Guarantee"
refers to the New Guaranty, which has identical terms to the Old Guaranty. See
"The New Guaranty".
GENERAL
The Capital Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities except as described under
"-- Subordination of Common Securities." Legal title to the New Junior
Subordinated Debentures will be held by the Property Trustee in trust for the
benefit of the holders of the Capital Securities and Common Securities. The
Guarantee executed by the Company for the benefit of the holders of the Capital
Securities (the "Guarantee") will be a guarantee on a subordinated basis but
will not guarantee payment of Distributions or amounts payable on redemption of
the Capital Securities or on liquidation of the Trust when the Trust does not
have funds on hand available to make such payments. The Company's obligations
under the Guarantee, taken together with its obligations under the New Junior
Subordinated Debentures and the Indenture, including its obligation to pay all
costs, expenses and liabilities of the Trust (other than with respect to the
Capital Securities), constitute a full and unconditional guarantee of all of the
Trust's obligations under the Capital Securities. See "-- Description of New
Guarantee."
Holders of the Capital Securities have no preemptive or similar rights.
DISTRIBUTIONS
Distributions on each Capital Security will be payable at the annual rate
of 8.41% of the liquidation amount of $1,000, payable semi-annually in arrears
on the 15th day of December and June of each year. Distributions will accumulate
from the date of original issuance and commence on June 15, 1997. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Capital Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
Distributions. The revenue of the Trust available for distribution to holders of
its Capital Securities will be limited to payments under the New Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Capital Securities and the Common Securities. See
"Description of New Junior Subordinated Debentures." If the Company does not
make interest payments on the New Junior Subordinated Debentures, the Property
Trustee will not have funds available to pay Distributions on the Capital
Securities.
The Company will have the right under the Indenture to defer the payment of
interest on the New Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the New Junior Subordinated Debentures. Accordingly, there
could be multiple Extension Periods of varying lengths throughout the term of
the New Junior Subordinated Debentures. As a consequence of any such extension,
semi-annual Distributions on the Capital Securities will be deferred by the
Trust during any such Extension Period. Distributions to which holders of the
Capital Securities are entitled
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will accumulate and compound semi-annually to the extent permitted by applicable
law at the rate per annum of 8.41% thereof from the relevant payment date for
such Distributions. The term "Distributions" as used herein shall include any
such compounded amounts unless the context otherwise requires. During any such
Extension Period, the Company may not, and may not permit any subsidiary of the
Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior to the New Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the New Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Company, (b) payments under the Guarantee, (c) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans). Prior to the termination of any such Extension Period,
the Company may further extend the Extension Period, provided that no Extension
Period may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the New Junior Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all amounts then due on any Interest
Payment Date, the Company may elect to begin a new Extension Period subject to
the foregoing requirements. See "Description of New Junior Subordinated
Debentures -- Option to Extend Interest Payment Period." The Company has no
current intention of exercising its right to defer payments of interest by
extending the interest payment period of the New Junior Subordinated Debentures.
In the event that any date on which Distributions are payable on the
Capital Securities is not a Business Day, then payment of the Distributions
payable on such date will be made on the next succeeding day that is a Business
Day (and without any additional Distributions or other payment in respect of any
such delay), with the same force and effect as if made on the date such payment
was originally payable (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office of
the Property Trustee or the Indenture Trustee (as defined herein) is closed for
business.
Distributions on the Capital Securities (other than distributions on a
Redemption Date) will be payable to the holders thereof as they appear on the
register of the Trust on the relevant record dates, which shall be the first day
of the month of the relevant Distribution Date. Distributions payable on any
Capital Securities that are not punctually paid on any Distribution Date will
cease to be payable to the person in whose name such Capital Securities are
registered on the relevant record date, and such defaulted Distribution will
instead be payable to the person in whose name such Capital Securities are
registered on the special record date or other specified date determined in
accordance with the Declaration.
REDEMPTION
Mandatory Redemption. Unless a Special Event has occurred, the Capital
Securities will not be redeemable prior to December 15, 2006. Upon the repayment
or redemption, in whole or in part, of the Junior Subordinated Debentures,
whether at Stated Maturity or upon earlier redemption as provided in the
Indenture, the proceeds from such repayment or redemption shall be applied by
the Property Trustee to redeem Capital Securities and Common Securities upon not
less than 30 nor more than 60 days' notice prior to the date fixed for repayment
or redemption. If less than all of the Junior Subordinated Debentures are to be
repaid or redeemed on a Redemption Date, then the proceeds from such repayment
or redemption shall be allocated to the redemption pro rata of the Capital
Securities and the Common Securities.
Special Event Redemption or Distribution of New Junior Subordinated
Debentures. If a Special Event shall occur and be continuing, the Company will
have the right, subject to the receipt of any necessary prior approval of the
Federal Reserve, to either (i) redeem within 90 days following the occurrence of
such Special
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Event the New Junior Subordinated Debentures on the date of redemption (the
"Redemption Date") in whole (but not in part) and thereby cause a mandatory
redemption of the Capital Securities in whole (but not in part) at a redemption
price with respect to the Capital Securities equal to the redemption price in
respect of the New Junior Subordinated Debentures or (ii) to dissolve the Trust
and, after satisfaction of the claims of creditors of the Trust as provided by
applicable law, cause the New Junior Subordinated Debentures to be distributed
to the holders of the Capital Securities in liquidation of the Trust. Under
current United States federal income tax law and interpretations thereof and
assuming, as expected, the Trust is treated as a grantor trust, a distribution
of the New Junior Subordinated Debentures should not be a taxable event to
holders of the Capital Securities. Should there be a change in law, a change in
legal interpretation, certain Tax Events or other circumstances, however, the
distribution could be a taxable event to holders of the Capital Securities. See
"Certain United States Federal Income Tax Consequences -- Distribution of New
Junior Subordinated Debentures or Cash upon Liquidation of the Trust."
If the Company does not elect either option described above, the Capital
Securities will remain outstanding until the repayment of the New Junior
Subordinated Debentures, whether at maturity or redemption, and in the event a
Tax Event has occurred and is continuing, the Company will be obligated to pay
any additional taxes, duties, assessments and other governmental charges (other
than withholding taxes) to which the Trust has become subject as a result of a
Tax Event.
A "Special Event" means a Tax Event, a Regulatory Capital Event or an
Investment Company Event. A "Tax Event" means the receipt by the Company of an
opinion of counsel, rendered by a law firm having a recognized national tax
practice, to the effect that, as a result of any amendment to, change in or
announced proposed change in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is adopted or which proposed change, pronouncement or decision is
announced on or after the date of original issuance of the Capital Securities,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the New Junior
Subordinated Debentures, (ii) interest payable by the Company on such New Junior
Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by the Company, in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is, or will be within 90 days of
the date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges. A "Regulatory Capital Event" means
that the Company shall have received an opinion of independent bank regulatory
counsel experienced in such matters to the effect that, as a result of (a) any
amendment to or change (including any announced prospective change) in the laws
(or any regulations thereunder) of the United States or any rules, guidelines or
policies of the Federal Reserve or (b) any official administrative pronouncement
or judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after the date of original issuance of the Capital Securities, the Capital
Securities do not constitute, or within 90 days of the date thereof, will not
constitute Tier I capital (or its then equivalent); provided, however, that the
distribution of the Junior Subordinated Debentures in connection with the
liquidation of the Trust by the Company shall not in and of itself constitute a
Regulatory Capital Event unless such liquidation shall have occurred in
connection with a Tax Event or an Investment Company Event. "Investment Company
Event" means the receipt by the Trust of an opinion of counsel, rendered by a
law firm having a recognized national securities practice, to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
the Trust is or will be considered an "investment company" that is required to
be registered under the Investment Company Act of 1940, as amended, which Change
in 1940 Act Law becomes effective on or after the date of original issuance of
the Capital Securities.
REDEMPTION PROCEDURES
Capital Securities redeemed on each Redemption Date shall be redeemed at
the redemption price in respect of the New Junior Subordinated Debentures (the
"Redemption Price") with the applicable proceeds
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from the contemporaneous redemption or payment at Stated Maturity of the New
Junior Subordinated Debentures. Redemptions of the Capital Securities shall be
made and the Redemption Price shall be payable on each Redemption Date only to
the extent that the Trust has sufficient funds available for the payment of such
Redemption Price. See also "-- Subordination of Common Securities."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Capital Securities to be
redeemed at its registered address. If the Trust gives a notice of redemption in
respect of the Capital Securities, then, by 12:00 noon, New York City time, on
the Redemption Date, to the extent funds are available, the Property Trustee
will deposit irrevocably with DTC or its nominee funds sufficient to pay the
applicable Redemption Price for all securities held in DTC and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Capital Securities. See "-- Book-Entry Issuance." If any Capital
Securities are held in certificated form, the Trust, to the extent funds are
available, will irrevocably deposit with the paying agent for such Capital
Securities funds sufficient to pay the applicable Redemption Price and will give
the paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing the
Capital Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Capital Security called for redemption
shall be payable to the holders of such Capital Security on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit,
all rights of the holders of such Capital Securities so called for redemption
will cease, except the right of the holders of such Capital Securities to
receive the Redemption Price, but without interest on such Redemption Price, and
such Capital Securities will cease to be outstanding. In the event that any date
fixed for redemption of Capital Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. In the event that payment of the Redemption
Price in respect of Capital Securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by the Company pursuant
to the Guarantee as described under "Description of New Guarantee",
Distributions on such Capital Securities will continue to accrue at the then
applicable rate, from the Redemption Date originally established by the Trust
for the Capital Securities to the date such Redemption Price is actually paid,
in which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all semi-annual distribution periods terminating on or
prior to the date of redemption. If less than all of the Capital Securities and
Common Securities issued by the Trust are to be redeemed on a Redemption Date,
then the aggregate amount of such Capital Securities and Common Securities to be
redeemed shall be allocated pro rata among the Capital Securities and the Common
Securities. If the Capital Securities are in book-entry form, they will be
redeemed as described below under "Book-Entry Issuance." If not, the particular
Capital Securities to be redeemed shall be selected on a pro rata basis not more
than 60 days prior to the Redemption Date by the Property Trustee from the
outstanding Capital Securities not previously called for redemption, by such
method as the Property Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $1,000 or an
integral multiple of $1,000 in excess thereof) of the liquidation amount of
Capital Securities of a denomination larger than $1,000. The Property Trustee
shall promptly notify the Trust registrar in writing of the Capital Securities
selected for redemption and, in the case of any Capital Security selected for
partial redemption, the liquidation amount thereof to be redeemed. For all
purposes of the Declaration, unless the context otherwise requires, all
provisions relating to the redemption of Capital
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Securities shall relate, in the case of any Capital Security redeemed or to be
redeemed only in part, to the portion of the aggregate liquidation amount of
Capital Securities which has been or is to be redeemed.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the liquidation amount of such Capital Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date an Indenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all of the outstanding Capital Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Declaration, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve on the first to occur of: (i) certain
events of bankruptcy, dissolution or liquidation of the Company; (ii) the
distribution of the New Junior Subordinated Debentures to the holders of the
Capital Securities and Common Securities; (iii) the repayment of all of the
Capital Securities in connection with the maturity or redemption of all of the
New Junior Subordinated Debentures; and (iv) the entry by a court of competent
jurisdiction of an order for the dissolution of the Trust.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Trust shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Capital Securities and Common Securities their pro rata interest
in the New Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
holders will be entitled to receive out of the assets of the Trust available for
distribution to holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to, in the case of holders
of Capital Securities, the aggregate of the liquidation amount plus accrued and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Capital Securities shall be paid on a pro rata basis. The holder(s)
of the Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that if
an Indenture Event of Default has occurred and is continuing, the Capital
Securities shall have a priority over the Common Securities.
After the liquidation date is fixed for any distribution of New Junior
Subordinated Debentures to holders of the Capital Securities (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) DTC or its nominee,
as a record holder of Capital Securities, will receive a registered global
certificate or certificates representing the New Junior Subordinated Debentures
to be delivered upon such distribution and (iii) any certificates representing
Capital Securities held in certificated form will be deemed to represent New
Junior Subordinated Debentures having a principal amount equal to the
liquidation amount of such Capital Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on such
Capital Securities until such certificates are presented for cancellation
whereupon the Company will issue to such holder, and the Indenture Trustee will
authenticate, a certificate representing such New Junior Subordinated
Debentures.
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TRUST ENFORCEMENT EVENTS
An Indenture Event of Default constitutes a Trust Enforcement Event under
the Declaration with respect to the Trust Securities, provided that pursuant to
the Declaration, the holder of the Common Securities will be deemed to have
waived any Trust Enforcement Event with respect to the Common Securities until
all Trust Enforcement Events with respect to the Capital Securities have been
cured, waived or otherwise eliminated. Until such Trust Enforcement Event with
respect to the Capital Securities has been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf of
the holders of the Capital Securities and only the holders of the Capital
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration, and therefore the Indenture.
Upon the occurrence of a Trust Enforcement Event, the Indenture Trustee (as
defined herein) or the Property Trustee as the holder of the New Junior
Subordinated Debentures will have the right under the Indenture to declare the
principal of and interest on the Junior Subordinated Debentures to be
immediately due and payable. Each of the Company and the Trust is required to
file annually with the Property Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Declaration.
If the Property Trustee fails to enforce its rights with respect to the
Junior Subordinated Debentures held by the Trust, any record holder of Capital
Securities may institute legal proceedings directly against the Company to
enforce the Property Trustee's rights under such New Junior Subordinated
Debentures without first instituting any legal proceedings against such Property
Trustee or any other person or entity. In addition, if a Trust Enforcement Event
has occurred and is continuing and such event is attributable to the failure of
the Company to pay interest, principal or other required payments on the New
Junior Subordinated Debentures issued to the Trust on the date such interest,
principal or other payment is otherwise payable, then a record holder of Capital
Securities may, on or after the respective due dates specified in the New Junior
Subordinated Debentures, institute a proceeding directly against the Company
under the Indenture for enforcement of payment on New Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Capital Securities held by such holder. In connection with such Direct
Action, the Company will be subrogated to the rights of such record holder of
Capital Securities to the extent of any payment made by the Company to such
record holder of Capital Securities.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under "Description of New
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Declaration, the holders of the Capital Securities will have no voting rights.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
executing any trust or power conferred on the Property Trustee with respect to
such Junior Subordinated Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the New Junior Subordinated Debentures
shall be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or such New Junior Subordinated Debentures, where
such consent shall be required, without, in each case, obtaining the prior
approval of the holders of a majority in aggregate liquidation amount of all
outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of New Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior consent of each holder of Capital Securities.
The Trustees shall not revoke any action previously authorized or approved by a
vote of the holders of the Capital Securities except pursuant to a subsequent
vote of the holders of the Capital Securities. The Property Trustee shall notify
each holder of record of the Capital Securities of any notice of default which
it receives with respect to the New Junior Subordinated Debentures. In addition
to obtaining the foregoing approvals of the holders of the Capital Securities,
prior to taking any of the foregoing actions, the Trustees shall receive an
opinion of counsel experienced in such matters to the effect that the Trust will
not be classified as other than a grantor trust for United States federal income
tax purposes on account of such action.
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The Declaration may be amended from time to time by the Company and a
majority of the Regular Trustees (and in certain circumstances the Property
Trustee and the Delaware Trustee), without the consent of the holders of the
Capital Securities, (i) to cure any ambiguity, correct or supplement any
provisions in the Declaration that may be inconsistent with any other provision,
or to make any other provisions with respect to matters or questions arising
under the Declaration that shall not be inconsistent with the other provisions
of the Declaration or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified as a grantor trust for United States federal income tax purposes
at all times that any Capital Securities and Common Securities are outstanding
or to ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that such action
shall not adversely affect in any material respect the interests of any holder
of Capital Securities or Common Securities, and any amendments of the
Declaration shall become effective when notice thereof is given to the holders
of Capital Securities and Common Securities. The Declaration may be amended by
the Company and a majority of the Regular Trustees with (i) the consent of
holders representing not less than a majority (based upon liquidation amounts)
of the outstanding Capital Securities and Common Securities and (ii) receipt by
the Regular Trustees of an opinion of counsel to the effect that such amendment
or the exercise of any power granted to the Regular Trustees in accordance with
such amendment will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from status as an
"investment company" under the Investment Company Act, provided, further that
without the consent of each holder of Capital Securities and Common Securities
affected thereby, the Declaration may not be amended to (i) change the amount or
timing of any Distribution on the Capital Securities and Common Securities or
otherwise adversely affect the amount of any Distribution required to be made in
respect of the Capital Securities and Common Securities as of a specified date
or (ii) restrict the right of a holder of Capital Securities or Common
Securities to institute suit for the enforcement of any such payment on or after
such date.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of Capital Securities in the manner set forth in the
Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel its Capital Securities in accordance with the
Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Trustees or any affiliate of the
Company or any Trustees, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Capital Securities) and all
costs and expenses of the Trust (including costs and expenses relating to the
organization of the Trust, the fees and expenses of the Trustees and the costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes and all costs and expenses with respect thereto (other than United States
withholding taxes) to which the Trust might become subject. The foregoing
obligations of the Company under the Indenture are for the benefit of, and shall
be enforceable by, any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether or not such Creditor has
received notice thereof. Any such Creditor may enforce such obligations of the
Company directly against the Company, and the Company has irrevocably waived any
right or remedy to require that any such Creditor take any action against the
Trust or any other person before proceeding against the Company. The Company has
also agreed in the Indenture to execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
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REGISTRAR AND TRANSFER AGENT
First Security Bank, N.A. will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required (i) to register or cause to be
registered the transfer or exchange of the Capital Securities during a period
beginning at the opening of business 15 days before the day of the mailing of
the relevant notice of redemption and ending at the close of business on the day
of mailing of such notice of redemption or (ii) to register or cause to be
registered the transfer or exchange of any Capital Securities so selected for
redemption, except in the case of any Capital Securities being redeemed in part,
any portion thereof not to be redeemed.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such Trust Enforcement
Event, must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Declaration at the request of any holder of Capital
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no Trust Enforcement Event
has occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
Declaration or is unsure of the application of any provision of the Declaration,
and the matter is not one on which holders of Capital Securities are entitled
under the Declaration to vote, then the Property Trustee may, but shall be under
no duty to, take such action as is directed by the Company and, if not so
directed, shall take such action as it deems advisable and in the best interests
of the holders of the Capital Securities and the Common Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
PAYMENT AND PAYING AGENCY
Payments in respect of the Global Capital Securities (as defined herein)
shall be made to DTC, which shall credit the relevant accounts at DTC on the
applicable Distribution Dates or, if the Capital Securities are held in
certificated form, such payments shall be made by check mailed to the address of
the holder entitled thereto as such address shall appear on the register
maintained by the registrar. The paying agent (the "Paying Agent") shall
initially be the Property Trustee and any co-paying agent chosen by the Property
Trustee and acceptable to the Regular Trustees and the Company. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Company. In the event that the Property Trustee shall
no longer be the Paying Agent, the Regular Trustees shall appoint a successor
(which shall be a bank or trust company acceptable to the Regular Trustees and
the Company) to act as Paying Agent.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Trust may, at the request of the Company, with the consent
of the Regular Trustees and without the consent of the holders of the Capital
Securities, the Delaware Trustee or the Property Trustee, merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided that (i) such successor entity (if not the
Trust) either (a) expressly assumes all of the obligations of the Trust with
respect to the Trust Securities or (b) substitutes for the Capital Securities
other securities having substantially the same terms as the Capital Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Capital Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) if the Trust is not
the successor entity, the Company expressly appoints a
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trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the New Junior Subordinated Debentures, (iii)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Capital Securities (including any Successor Securities)
to be downgraded by any nationally recognized statistical rating organization,
(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect, (v) such successor entity has a purpose identical to that of
the Trust, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer, or lease, the Company has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, (1) neither the Trust nor such
successor entity will be required to register as an investment company under the
Investment Company Act and (2) the Trust or the successor entity will continue
to be classified as a grantor trust for United States federal income tax
purposes, (vii) the Company or any permitted successor or assignee owns all of
the Common Securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee, and (viii) such successor entity (if not the Trust)
expressly assumes all of the obligations of the Trust with respect to the
Trustees. Notwithstanding the foregoing, the Trust shall not, except with the
consent of holders of 100% in aggregate liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes and each holder of Trust Securities not to be
treated as owning an undivided interest in the New Junior Subordinated
Debentures.
MERGER OR CONSOLIDATION OF TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or
any Regular Trustee that is not a natural person may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Trustee, shall be the successor of such Trustee under the Declaration,
provided such corporation shall be otherwise qualified and eligible.
MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act or classified as other than a grantor trust for United States federal income
tax purposes and so that the New Junior Subordinated Debentures will be treated
as indebtedness of the Company for United States federal income tax purposes. In
this connection, the Company and the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or the
Declaration, that the Company and the Regular Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Capital Securities.
The Trust may not borrow money, issue debt, mortgage nor pledge any of its
assets.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The New Junior Subordinated Debentures are to be issued under a Junior
Subordinated Indenture (the "Indenture") between the Company and The Bank of New
York, as trustee (the "Indenture Trustee"). This
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summary of certain terms and provisions of the New Junior Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture. Where used in
this section, the term "Capital Securities" refers to the New Capital Securities
unless the context otherwise required.
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof and the consideration paid by the Company for the
Common Securities in the Old Junior Subordinated Debentures issued by the
Company. The New Junior Subordinated Debentures will be in the principal amount
equal to the aggregate liquidation amount of the New Capital Securities plus the
Company's concurrent investment in the Common Securities. The Junior
Subordinated Debentures will bear interest at the annual rate of 8.41% of the
principal amount thereof, payable semi-annually in arrears on the 15th day of
December and June of each year (each, an "Interest Payment Date"), commencing
June 15, 1997, to the person in whose name each Junior Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the first
day of the month of the relevant Interest Payment Date. It is anticipated that,
until the liquidation, if any, of the Trust, each Junior Subordinated Debenture
will be held in the name of the Property Trustee in trust for the benefit of the
holders of the Capital Securities and the Common Securities. The amount of
interest payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on the Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of 8.41% thereof, compounded
semi-annually. The term "interest" as used herein shall include semi-annual
interest payments and interest on semi-annual interest payments not paid on the
applicable Interest Payment Date, as applicable.
The New Junior Subordinated Debentures will mature on December 15, 2026
(the "Stated Maturity").
The New Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Indebtedness (as defined
below) of the Company. The Indenture does not limit the incurrence or issuance
of other secured or unsecured debt of the Company, whether under the Indenture
or any existing or other indenture that the Company may enter into in the future
or otherwise. See "-- Subordination."
The general provisions of the Indenture do not afford holders of the New
Junior Subordinated Debentures protection in the event of a highly leveraged or
other transaction involving the Company that may adversely affect holders of the
New Junior Subordinated Debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
at any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the New Junior
Subordinated Debentures. At the end of such Extension Period, the Company must
pay all interest then accrued and unpaid (together with interest thereon at the
annual rate of 8.41%, compounded semi-annually, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures (or holders of Capital Securities
while the Capital Securities are outstanding) will be required to accrue
interest income (as OID) for United States federal income tax purposes. See
"Certain United States Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Junior Subordinated Debentures or make any guarantee
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payments with respect to any guarantee by the Company of the debt securities of
any subsidiary of the Company if such guarantee ranks pari passu with or junior
in interest to the New Junior Subordinated Debentures (other than (a) dividends
or distributions in common stock of the Company, (b) payments under the New
Guarantee, (c) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, and (d) purchases of common stock related to the issuance of
common stock or rights under any of the Company's benefit plans). Prior to the
termination of any such Extension Period, the Company may further extend the
Extension Period, provided that no Extension Period may exceed 10 consecutive
semi-annual periods or extend beyond the Stated Maturity of the New Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the above requirements. No
interest shall be due and payable during an Extension Period, except at the end
thereof. The Company must give the Property Trustee, the Regular Trustees and
the Indenture Trustee notice of its election of such Extension Period not less
than one Business Day prior to such record date. The Property Trustee shall give
notice of the Company's election to begin a new Extension Period to the holders
of the Capital Securities.
REDEMPTION
The New Junior Subordinated Debentures are not redeemable prior to December
15, 2006 unless a Special Event has occurred. The New Junior Subordinated
Debentures are redeemable prior to maturity at the option of the Company,
subject to the receipt of any necessary prior approval of the Federal Reserve,
on or after December 15, 2006, in whole or in part at any time at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest, if any, to the date of redemption, if redeemed
during the twelve-month period beginning on December 15 of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------- ----------
<S> <C>
2006............................................. 104.2050%
2007............................................. 103.7845%
2008............................................. 103.3640%
2009............................................. 102.9435%
2010............................................. 102.5230%
2011............................................. 102.1025%
2012............................................. 101.6820%
2013............................................. 101.2615%
2014............................................. 100.8410%
2015............................................. 100.4205%
</TABLE>
On or after December 15, 2016, the redemption price will be 100%, plus
accrued and unpaid interest, if any, to the date of redemption.
The New Junior Subordinated Debentures are also redeemable at any time in
whole (but not in part), within 90 days of the occurrence of a Special Event, at
a redemption price (the "Special Event Prepayment Price") equal to the greater
of (i) 100% of the principal amount of such New Junior Subordinated Debentures
or (ii) as determined by a Quotation Agent (as defined below), the sum of the
present values of the principal amount and premium payable with respect to an
optional redemption on such New Junior Subordinated Debentures on December 15,
2006, together with scheduled payments of interest from the prepayment date to
December 15, 2006 (the "Remaining Life") discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of 30-day months) at the
Adjusted Treasury Rate, plus, in each case, accrued interest thereon to the date
of prepayment.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
Treasury Rate plus (i) 1.46% if such prepayment date occurs on or before
December 15, 1997 or (ii) 0.50% if such prepayment date occurs after December
15, 1997.
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"Treasury Rate" means (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities," for the maturity corresponding to the
Remaining Life (if no maturity is within three months before or after the
Remaining Life, yields for the two published maturities most closely
corresponding to the Remaining Life shall be determined and the Treasury Rate
shall be interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or does
not contain such yields, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such prepayment date. The
Treasury Rate shall be calculated on the third business day preceding the
prepayment date.
"Comparable Treasury Issue" means with respect to any prepayment date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States treasury security has a maturity which is within a
period from three months before to three months after December 15, 2006, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Quotation Agent" means (i) Lehman Brothers Inc. and its successors;
provided, however, that if the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer; and (ii) any
other Primary Treasury Dealer selected by the Indenture Trustee after
consultation with the Company.
"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations for such prepayment date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Indenture
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Indenture Trustee by such Reference Treasury Dealer at 5:00 p.m.
New York City time, on the third business day preceding such prepayment date.
If the New Junior Subordinated Debentures are redeemed, the Trust must
redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of New Junior Subordinated Debentures so redeemed.
See "Description of Capital Securities -- Mandatory Redemption."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of New Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Company defaults
in payment of the redemption price, on and after the redemption date interest
ceases to accrue on such New Junior Subordinated Debentures or portions thereof
called for redemption.
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant in the Indenture that if and so long as the Trust
is the holder of all New Junior Subordinated Debentures, the Company, as
borrower, will pay to the Trust all fees and expenses related to the Trust and
the offering of the Capital Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trust (including any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any domestic taxing authority
upon the Trust but excluding obligations under the Capital Securities).
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The Company will also covenant that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
New Junior Subordinated Debentures or make any guarantee payments with respect
to any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the New
Junior Subordinated Debentures (other than (a) dividends or distributions in
common stock of the Company, (b) payments under the Guarantee (c) any
declaration of a dividend in connection with the implementation of a
shareholders' rights plans, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, and
(d) purchases of common stock related to the issuance of common stock or rights
under any of the Company's benefit plans) if at such time (x) there shall have
occurred any event of which the Company has actual knowledge that (I) with the
giving of notice or the lapse of time, or both, would constitute an Indenture
Event of Default with respect to New Junior Subordinated Debentures and (II) in
respect of which the Company shall not have taken reasonable steps to cure, (y)
the Company shall be in default with respect to its payment of any obligations
under the Guarantee or (z) the Company shall have given notice of its election
of an Extension Period as provided in the Indenture and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any New Junior
Subordinated Debentures issued thereunder will be subordinated and junior in
right of payment to all Indebtedness to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Company upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Indebtedness will first be
entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Indebtedness before the holders of New Junior
Subordinated Debentures or the Property Trustee on behalf of the holders of
Capital Securities will be entitled to receive or retain any payment in respect
of the principal of and premium, if any, or interest, if any, on the New Junior
Subordinated Debentures; provided, however, that holders of Indebtedness shall
not be entitled to receive payment of any such amounts to the extent that such
holders would be required by the subordination provisions of such Indebtedness
to pay such amounts over to the obligees on trade accounts payable or other
liabilities arising in the ordinary course of the Company's business.
In the event of the acceleration of the maturity of any New Junior
Subordinated Debentures, the holders of all Indebtedness outstanding at the time
of such acceleration will first be entitled to receive payment in full of all
amounts then due thereon (including any amounts due upon acceleration) before
the holders of New Junior Subordinated Debentures will be entitled to receive or
retain any payment in respect of the principal of and premium, if any, or
interest, if any, on the New Junior Subordinated Debentures; provided, however,
that holders of Indebtedness shall not be entitled to receive payment of any
such amounts to the extent that such holders would be required by the
subordination provisions of such Indebtedness to pay such amounts over to the
obligees on trade accounts payable or other liabilities arising in the ordinary
course of the Company's business.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the New Junior Subordinated Debentures may be made if there
shall have occurred and be continuing a default in any payment with respect to
Indebtedness, or an event of default with respect to any Indebtedness resulting
in the acceleration of the maturity thereof, or if any judicial proceeding shall
be pending with respect to any such default.
"Indebtedness" means with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent, (i)
every obligation of such person for money borrowed; (ii) every obligation of
such person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimburse-
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ment obligation of such person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such person; (iv)
every obligation of such person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) every capital lease
obligation of such person; (vi) every obligation of such person for claims (as
defined in Section 101(4) of the United States Bankruptcy Code of 1978, as
amended) in respect of derivative products such as interest and foreign exchange
rate contracts, commodity contracts and similar arrangements; and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another person
and all dividends of another person the payment of which, in either case, such
person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise; provided that "Indebtedness" shall not include (i) any
obligations which, by their terms, are expressly stated to rank pari passu in
right of payment with, or to not be superior in right of payment to, the New
Junior Subordinated Debentures, (ii) any Indebtedness of the Company which when
incurred and without respect to any election under Section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company,
(iii) any Indebtedness of the Company to any of its subsidiaries, (iv)
Indebtedness to any employee of the Company, or (v) any indebtedness in respect
of debt securities issued to any trust, or a trustee of such trust, partnership
or other entity affiliated with the Company that is a financing entity of the
Company in connection with the issuance of such financing entity of securities
that are similar to the Capital Securities.
The Indenture places no limitation on the amount of additional Indebtedness
that may be incurred by the Company or any indebtedness or other liabilities
that may be incurred by the Company's subsidiaries. As of September 30, 1996,
Indebtedness of the Company aggregated approximately $339 million, and the
Company's subsidiaries had indebtedness and other liabilities of approximately
$12.3 billion to which the New Junior Subordinated Debentures would be
effectively subordinated.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes an "Indenture Event of Default" with respect to the
New Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the New Junior
Subordinated Debentures when due (subject to the deferral of any due date
in the case of an Extension Period); or
(ii) failure to pay any principal on the New Junior Subordinated
Debentures when due whether at maturity, upon redemption by declaration or
otherwise; or
(iii) failure to observe or perform in any material respect any other
covenant contained in the Indenture for 90 days after written notice to the
Company from the Indenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of outstanding New Junior
Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of New
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of New Junior Subordinated Debentures may declare
the principal due and payable immediately upon an Indenture Event of Default,
and, should the Indenture Trustee or such holders of such New Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate liquidation amount of the Capital Securities shall have such
right. The holders of a majority in aggregate outstanding principal amount of
New Junior Subordinated Debentures may annul such declaration and waive the
default if the default (other than the non-payment of the principal of New
Junior Subordinated Debentures which has become due solely by such acceleration)
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Indenture Trustee, and should the holders of such New Junior Subordinated
Debentures fail to annul such
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declaration and waive such default, the holders of a majority in aggregate
liquidation amount of the Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
New Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the New Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Indenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding New Junior Subordinated Debentures, and should the
holders of such New Junior Subordinated Debentures fail to waive such default,
the holders of a majority in aggregate liquidation amount of the Capital
Securities shall have such right. The Company is required to file annually with
the Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Indenture.
In case an Indenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such New Junior Subordinated Debentures and any other amounts
payable under the Indenture to be forthwith due and payable and to enforce its
other rights as a creditor with respect to such New Junior Subordinated
Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If an Indenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the New Junior Subordinated Debentures on the date such interest or principal
is otherwise payable, a holder of Capital Securities may institute a Direct
Action for payment. The Company may not amend the Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the Capital Securities. Notwithstanding any payment made
to such holder of Capital Securities by the Company in connection with a Direct
Action, the Company shall remain obligated to pay the principal of or interest
on the New Junior Subordinated Debentures held by the Trust or the Property
Trustee and the Company shall be subrogated to the rights of the holder of such
Capital Securities with respect to payments on the Capital Securities to the
extent of any payments made by the Company to such holder in any Direct Action.
The holders of Capital Securities will not be able to exercise directly any
other remedy available to the holders of the New Junior Subordinated Debentures.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless (i) in case the Company
consolidates with or merges into another Person or conveys, transfers or leases
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes the
Company's obligations on the New Junior Subordinated Debentures issued under the
Indenture; (ii) immediately after giving effect thereto, no Indenture Event of
Default, and no event which, after notice or lapse of time or both, would become
an Indenture Event of Default, shall have happened and be continuing; (iii) if
at the time any Capital Securities are outstanding, such transaction is
permitted under the Declaration and the New Guarantee and does not give rise to
any breach or violation of the Declaration or Guarantee; (iv) any such lease
shall provide that it will remain in effect so long as any New Junior
Subordinated Debentures are outstanding; and (v) certain other conditions as
prescribed in the Indenture are met.
MODIFICATION OF INDENTURE
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the New Junior Subordinated Debentures, amend, waive
or supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interest of the holders of New
Junior Subordinated Debentures) and
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qualifying, or maintaining the qualification of, the Indenture under the Trust
Indenture Act. The Indenture contains provisions permitting the Company and the
Indenture Trustee, with the consent of the holders of not less than a majority
in principal amount of outstanding New Junior Subordinated Debentures affected,
to modify the Indenture in a manner affecting the rights of the holders of such
Junior Subordinated Debentures; provided that no such modification may, without
the consent of the holder of each outstanding New Junior Subordinated Debentures
so affected, (i) change the stated maturity of New Junior Subordinated
Debentures, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon (except such extension as is
contemplated hereby) or (ii) reduce the percentage of principal amount of Junior
Subordinated Debentures the holders of which are required to consent to any such
modification of the Indenture, provided that, so long as any Capital Securities
remain outstanding, no such modification may be made that adversely affects the
holders of such Capital Securities in any material respect, and no termination
of the Indenture may occur, and no waiver of any Indenture Event of Default or
compliance with any covenant under the Indenture may be effective, without the
prior consent of the holders of at least a majority of the aggregate liquidation
amount of the outstanding Capital Securities unless and until the principal of
the New Junior Subordinated Debentures and all accrued and unpaid interest
thereon have been paid in full and certain other conditions are satisfied.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at the Company's option: (a) will
be discharged from any and all obligations in respect of the New Junior
Subordinated Debentures (except for certain obligations to register the transfer
or exchange of New Junior Subordinated Debentures, replace stolen, lost or
mutilated New Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) or (b) need not comply with certain restrictive
covenants of the Indenture (including that described in the second paragraph
under "Certain Covenants of the Company"), in each case if the Company deposits,
in trust with the Indenture Trustee, money or U.S. Government Obligations which
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money, in an amount sufficient to pay all the principal
of, and interest and premium, if any, on the New Junior Subordinated Debentures
on the dates such payments are due in accordance with the terms of such New
Junior Subordinated Debentures. To exercise any such option, the Company is
required to deliver to the Indenture Trustee an opinion of counsel to the effect
that the deposit and related defeasance would not cause the holders of the New
Junior Subordinated Debentures to recognize income, gain or loss for United
States federal income tax purposes and, in the case of a discharge pursuant to
clause (a), such opinion shall be accompanied by a private letter ruling to the
effect received by the Company from the United States Internal Revenue Service
or revenue ruling pertaining to a comparable form of transaction to such effect
published by the United States Internal Revenue Service.
DISTRIBUTIONS OF JUNIOR SUBORDINATED DEBENTURES; BOOK-ENTRY ISSUANCE
Under certain circumstances involving the termination of the Trust, New
Junior Subordinated Debentures may be distributed to the holders of the Capital
Securities in liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as provided by applicable law. If distributed to holders
of Capital Securities in liquidation, the New Junior Subordinated Debentures
will initially be issued in the form of global securities and certificated
securities. DTC, or any successor depositary, will act as depositary for such
global securities. It is anticipated that the depositary arrangements for such
global securities would be substantially identical to those in effect for the
Capital Securities. For a description of global securities and certificated
securities, see "Book-Entry Issuance."
There can be no assurance as to the market price of any New Junior
Subordinated Debentures that may be distributed to the holders of Capital
Securities.
PAYMENT AND PAYING AGENTS
The Company initially will act as Paying Agent with respect to the New
Junior Subordinated Debentures except that, if the New Junior Subordinated
Debentures are distributed to the holders of the Capital Securities in
liquidation of such holders' interests in the Trust, the Indenture Trustee will
act as the Paying
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Agent. The Company at any time may designate additional Paying Agents or rescind
the designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent at the place of payment.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of and
premium, if any, or interest on any New Junior Subordinated Debentures and
remaining unclaimed for two years after such principal and premium, if any, or
interest has become due and payable shall, at the request of the Company, be
repaid to the Company and the holder of such New Junior Subordinated Debentures
shall thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
GOVERNING LAW
The Indenture and the New Junior Subordinated Debentures will be governed
by and construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of New Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF NEW GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit of
the holders from time to time of such Capital Securities. As soon as practicable
after the Expiration Date, the Old Guarantee will be exchanged by the Company
for the New Guarantee. The Bank of New York will act as indenture trustee
("Guarantee Trustee") under the New Guarantee. This summary of certain
provisions of the New Guarantee does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of the
New Guarantee, including the definitions therein of certain terms. The Guarantee
Trustee will hold the New Guarantee for the benefit of the holders of the
Capital Securities.
GENERAL
The Company will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Capital Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the Capital Securities, to the extent not paid by or on behalf of the
Trust (the "Guarantee Payments"), will be subject to the New Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has sufficient funds available therefor
at the time, (ii) the redemption price with respect to any Capital Securities
called for redemption, to the extent that the Trust has sufficient funds
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Trust (unless the New Junior
Subordinated Debentures are distributed to holders of the Capital Securities),
the lesser of (a) the aggregate liquidation amount of the Capital Securities and
all accrued and unpaid Distributions thereon to the date of payment and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Capital Securities. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of the applicable Capital Securities or by causing the Trust to pay such
amounts to such holders.
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The New Guarantee will be an irrevocable guarantee on a subordinated basis
of the Trust's obligations under the Capital Securities, but will apply only to
the extent that the Trust has sufficient funds available to make such payments.
If the Company does not make interest payments on the New Junior
Subordinated Debentures held by the Trust, the Trust will not be able to pay
Distributions on the Capital Securities and will not have funds legally
available therefor. The New Guarantee will rank subordinate and junior in right
of payment to all general liabilities of the Company. See "-- Status of the New
Guarantee." The New Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, whether under the Indenture or any
existing or other indenture that the Company may enter into in the future or
otherwise.
The Company has, through the New Guarantee, the New Junior Subordinated
Debentures and the Indenture, taken together, fully and unconditionally
guaranteed all of the Trust's obligations under the Capital Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full and
unconditional guarantee of the Trust's obligations under the Capital Securities.
See "Relationship Among the New Capital Securities, the New Junior Subordinated
Debentures and the New Guarantee -- General."
STATUS OF THE GUARANTEE
The New Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all Indebtedness of
the Company. The New Guarantee does not place a limitation on the amount of
additional Indebtedness that may be incurred by the Company.
The New Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the New Guarantee without
first instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Capital Securities.
The New Guarantee will not be discharged except by payment of the Guarantee
Payments in full to the extent not paid by the Trust or upon distribution of the
Junior Subordinated Debentures to the holders of the Capital Securities in
exchange for all of the Capital Securities.
The obligations of the Company under the Guarantee will be substantially
subordinated to all liabilities and obligations of the Company's subsidiaries.
See "Risk Factors -- Status of Company as Holding Company."
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the New Guarantee may not be amended without the prior approval of
the holders of not less than a majority of the aggregate liquidation amount of
the outstanding Capital Securities. The manner of obtaining any such approval
will be as set forth under "Description of New Capital Securities -- Voting
Rights; Amendment of the Declaration." All guarantees and agreements contained
in the New Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the registered
holders of the Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the New Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of the New
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the New Guarantee.
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Any holder of the Capital Securities may institute a legal proceeding
directly against the Company to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the New Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in each New Guarantee and, after
default with respect to the New Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or her
own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the New Guarantee at
the request of any holder of any Capital Security unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
The New Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of all of the Capital Securities, upon full
payment of the amounts payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Capital
Securities in exchange for all of the Capital Securities. The New Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Capital Securities must restore payment of any sums paid
under the Capital Securities or the New Guarantee.
GOVERNING LAW
The New Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES,
THE NEW JUNIOR SUBORDINATED DEBENTURES AND THE NEW GUARANTEE
Payments of Distributions and other amounts due on the New Capital
Securities (to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of New Guarantee." If and to the extent that the
Company does not make payments under the New Junior Subordinated Debentures, the
Trust will not pay Distributions or other amounts due on the New Capital
Securities. The New Guarantee does not cover payment of Distributions when the
Trust does not have sufficient funds to pay such Distributions. In such event, a
holder of New Capital Securities may institute a legal proceeding directly
against the Company under the Indenture to enforce payment of such Distributions
to such holder after the respective due dates. Taken together, the Company's
obligations under the New Junior Subordinated Debentures, the Indenture and the
New Guarantee provide, in the aggregate, a full and unconditional guarantee of
payments of distributions and other amounts due on the New Capital Securities.
No single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full and
unconditional guarantee of the Trust's obligations under the New Capital
Securities. The obligations of the Company under the New Guarantee and the New
Junior Subordinated Debentures are subordinate and junior in right of payment to
all Indebtedness of the Company.
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SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
New Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the New Capital Securities, primarily
because (i) the aggregate principal amount of the New Junior Subordinated
Debentures will be equal to the sum of the aggregate stated liquidation amount
of the New Capital Securities and the Common Securities; (ii) the interest rate
and interest and other payment dates on the New Junior Subordinated Debentures
will match the Distribution rate and Distribution and other payment dates for
the related New Capital Securities; (iii) the Company will pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations
under the New Capital Securities; and (iv) the Declaration further provides that
the Trust will not engage in any activity that is not consistent with the
limited purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a related payment under the New Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF NEW CAPITAL SECURITIES
A holder of New Capital Securities may institute a legal proceeding
directly against the Company to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the New Guarantee Trustee,
the Trust or any other person or entity.
A default or event of default under any Indebtedness of the Company will
not constitute a default or Indenture Event of Default. In addition, in the
event of payment defaults under, or acceleration of, Indebtedness of the
Company, the subordination provisions of the Indenture provide that no payments
may be made in respect of the New Junior Subordinated Debentures until such
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on the New Junior
Subordinated Debentures would constitute an Indenture Event of Default under the
Indenture.
LIMITED PURPOSE OF TRUST
The New Capital Securities evidence a beneficial interest in the assets of
the Trust, and the Trust exists for the sole purpose of issuing the New Capital
Securities and the Common Securities and investing the proceeds thereof in New
Junior Subordinated Debentures. A principal difference between the rights of a
holder of New Capital Securities and a holder of New Junior Subordinated
Debentures is that a holder of New Junior Subordinated Debentures is entitled to
receive from the Company the principal amount of and interest accrued on Junior
Subordinated Debentures held, while a holder of New Capital Securities is
entitled to receive Distributions from the Trust (or from the Company under the
New Guarantee) if and to the extent the Trust has funds available for the
payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the New Junior Subordinated Debentures,
the holders of the New Capital Securities will be entitled to receive, out of
assets held by the Trust, the liquidation distribution in cash. See "Description
of New Capital Securities -- Liquidation Distribution Upon Dissolution." Upon
any voluntary or involuntary liquidation or bankruptcy of the Company, the
Property Trustee, as holder of the New Junior Subordinated Debentures, would be
a subordinated creditor of the Company, subordinated in right of payment to all
Indebtedness, but entitled to receive payment in full of principal and interest
before any stockholders of the Company receive payments or distributions. Since
the Company is the guarantor under the New Guarantee and has agreed to pay for
all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of the Capital Securities), the positions of a holder
of New Capital Securities and a holder of the New Junior Subordinated Debentures
relative to other creditors and to stockholders of the Company in the event of
liquidation or bankruptcy of the Company would be substantially the same.
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DESCRIPTION OF THE OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except under
limited circumstances); (ii) the New Capital Securities will not provide for any
increase in the Distribution rate thereon; and (iii) the New Junior Subordinated
Debentures will not provide for any increase in the interest rate thereon. The
Old Securities provide that, in the event that the Exchange Offer is not
consummated on or prior to July 21, 1997, or, in certain limited circumstances,
in the event a shelf registration statement (the "Shelf Registration Statement")
with respect to the resale of the Old Capital Securities is not declared
effective in a timely manner, then the Company will pay Liquidated Damages to
each holder of Capital Securities, with respect to the first 90-day period
immediately following the occurrence of such Registration Default, in an amount
equal to $.25 per week per $1,000 liquidation amount of Capital Securities held
by such holder. The amount of the liquidation damages will increase by an
additional $.05 per week per $1,000 liquidation amount of Old Capital Securities
with respect to each subsequent 90-day period until all registration defaults
have been cured, up to a maximum amount of liquidated damages of $.50 per week
per $1,000 liquidation amount of Old Capital Securities. All accrued liquidated
damages will be paid by the Company on each Distribution payment date to DTC by
wire transfer of immediately available funds or by federal funds check and to
holders of certificated securities by wire transfer to the accounts specified by
them or by mailing checks to their registered addresses if no such accounts have
been specified. Following the cure of all registration defaults the accrual of
liquidated damages will cease. Accordingly, holders of Old Capital Securities
should review the information set forth under "Risk Factors -- Certain
Consequences of a Failure to Exchange Old Capital Securities" and "Description
of the New Securities."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Ray, Quinney & Nebeker, special United States federal
income tax counsel to the Company and the Trust ("Tax Counsel"), the following
summary accurately describes the material United States federal income tax
consequences that may be relevant to the purchase, ownership and disposition of
the New Capital Securities. Unless otherwise stated, this summary deals only
with Capital Securities held as capital assets by United States Holders (defined
below) who purchase the Capital Securities upon original issuance at their
original offering price. As used herein, a "United States Holder" means (i) a
person that is a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is subject to United States federal income taxation regardless of its
source, or (iv) a trust the income of which is subject to United States federal
income tax regardless of its source; provided, however, that for taxable years
beginning after December 31, 1996 (or if a trustee so elects, for taxable years
ending after August 20, 1996), a "United States Holder" shall include any trust
if a court within the United States is able to exercise primary supervision over
the administration of such trust and one or more United States fiduciaries have
the authority to control all the substantial decisions of such trust. The tax
treatment of a holder may vary depending on his, her or its particular
situation. This summary does not address all the tax consequences that may be
relevant to a particular holder or to holders who may be subject to special tax
treatment, such as banks, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, or
tax-exempt investors. In addition, this summary does not include any description
of any alternative minimum tax consequences or the tax laws of any state, local
or foreign government that may be applicable to a holder of New Capital
Securities. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis. The authorities
on which this summary is based are subject to various interpretations and the
opinions of Tax Counsel are not binding on the Internal Revenue Service ("IRS")
or the courts, either of which could take a contrary position. Moreover, no
rulings have been or will be sought from the IRS with respect to the
transactions described herein. Accordingly, there can be no assurance that the
IRS will not challenge the opinions expressed herein
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or that a court would not sustain such a challenge. Nevertheless, Tax Counsel
has advised that it is of the view that, if challenged, the opinions expressed
herein would be sustained by a court with jurisdiction in a properly presented
case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NEW
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN,
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE CAPITAL
SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE "DESCRIPTION OF NEW
CAPITAL SECURITIES -- REDEMPTION -- SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF
NEW JUNIOR SUBORDINATED DEBENTURES."
CLASSIFICATION OF THE TRUST
In connection with the issuance of the New Capital Securities, Tax Counsel
is of the opinion that under current law and assuming full compliance with the
terms of the Declaration and other documents, and based upon certain facts and
assumptions contained in such opinion, the Trust will be classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes. Accordingly, for United States federal income tax
purposes, each holder of New Capital Securities will be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures and, thus,
will be required to include in its gross income its pro rata share of interest
income or original issue discount that is paid or accrued on the New Junior
Subordinated Debentures.
CLASSIFICATION OF THE NEW JUNIOR SUBORDINATED DEBENTURES
The Company, the Trust and the holders of the New Capital Securities (by
the acceptance of a beneficial interest in a Capital Security) will agree to
treat the New Junior Subordinated Debentures as indebtedness for all United
States federal income tax purposes. In connection with the issuance of the New
Junior Subordinated Debentures, Tax Counsel is of the opinion that, under
current law, and based on certain representations, facts and assumptions set
forth in such opinion, the New Junior Subordinated Debentures will be classified
as indebtedness for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the New Junior Subordinated
Debentures generally will be taxable to a holder as ordinary income at the time
it is paid or accrued in accordance with such holder's regular method of tax
accounting.
The Company believes that, under the applicable Treasury regulations, the
New Junior Subordinated Debentures will not be treated as issued with "original
issue discount" ("OID") within the meaning of section 1273(a) of the Code. If,
however, the Company exercises its right to defer payments of interest on the
New Junior Subordinated Debentures, the New Junior Subordinated Debentures will
become OID instruments at such time and all holders of the New Junior
Subordinated Debentures and, consequently, holders of the Capital Securities
will be required to accrue their pro rata share of OID (which will include both
the stated interest and de minimis OID on the New Junior Subordinated
Debentures) on a daily economic accrual basis during the Extension Period even
though the Company will not pay such interest until the end of the Extension
Period, and even though some holders may use the cash method of tax accounting.
Moreover, thereafter the New Junior Subordinated Debentures will be taxed as OID
instruments for as long as they remain outstanding. Thus, even after the end of
an Extension Period, all holders would be required to continue to include the
stated interest on the New Junior Subordinated Debentures in income on a daily
basis, regardless of their method of tax accounting and in advance of receipt of
the cash attributable to such interest
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income. Under the OID economic accrual rules, a holder would accrue an amount of
interest income each year that approximates the stated interest payments called
for under the terms of the New Junior Subordinated Debentures, and actual cash
payments of interest on the New Junior Subordinated Debentures would not be
reported separately as taxable income. Any amount of OID included in a holder's
gross income (whether or not during an Extension Period) with respect to a New
Capital Security will increase such holder's tax basis in such New Capital
Security, and the amount of Distributions received by a holder in respect of
such accrued OID will reduce the tax basis of such New Capital Security.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that the
stated interest on the New Junior Subordinated Debentures was OID regardless of
whether the Company exercises its option to defer payments of interest on such
debentures, all holders of New Capital Securities would be required to include
such stated interest in income on a daily economic accrual basis as described
above.
Corporate holders of New Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized by such
holders with respect to the New Capital Securities.
DISTRIBUTION OF NEW JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF
THE TRUST
As described under the caption "Description of New Junior Subordinated
Debentures -- Distribution of New Junior Subordinated Debentures" New Junior
Subordinated Debentures may be distributed to holders in exchange for the
Capital Securities and in liquidation of the Trust. Under current law, such a
distribution would be non-taxable, and will result in the holder receiving
directly its pro rata share of the New Junior Subordinated Debentures previously
held indirectly through the Trust, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such holder had in its
Capital Securities before such distribution. If, however, the liquidation of the
Trust were to occur because the Trust is subject to United States federal income
tax with respect to income accrued or received on the New Junior Subordinated
Debentures, the distribution of the New Junior Subordinated Debentures to
holders would be a taxable event to the Trust and to each holder and a holder
would recognize gain or loss as if the holder had exchanged its New Capital
Securities for the New Junior Subordinated Debentures it received upon
liquidation of the Trust. A holder would accrue interest in respect of the New
Junior Subordinated Debentures received from the Trust in the manner described
above under "-- Interest Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of New
Capital Securities -- Special Event Redemption or Distribution of New Junior
Subordinated Debentures"), the Junior Subordinated Debentures may be redeemed
for cash, with the proceeds of such redemption distributed to holders in
redemption of their New Capital Securities. Under current law, such a redemption
would constitute a taxable disposition of the redeemed New Capital Securities
for United States federal income tax purposes, and a holder would recognize gain
or loss as if it sold such redeemed New Capital Securities for cash. See
"-- Sales of New Capital Securities."
SALES OF NEW CAPITAL SECURITIES
A holder that sells New Capital Securities will recognize gain or loss
equal to the difference between the amount realized by such holder on the sale
of the New Capital Securities (except to the extent that such amount realized is
characterized as a payment in respect of accrued but unpaid interest on such
holder's allocable share of the New Junior Subordinated Debentures that the
holder had not included in gross income previously) and the holder's adjusted
tax basis in the New Capital Securities sold. Such gain or loss generally will
be a capital gain or loss and generally will be taxable as a long-term capital
gain or loss if the New Capital Securities have been held for more than one
year. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
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EXCHANGE OFFER
The exchange of the Old Junior Subordinated Debentures for the New Junior
Subordinated Debentures pursuant to the Exchange Offer should not be treated as
an "exchange" for United States federal income tax purposes because the New
Junior Subordinated Debentures should not be considered to differ materially in
kind or extent from the Junior Subordinated Debentures. Rather, the New Junior
Subordinated Debentures received by the Trust should be treated as a
continuation of the Junior Subordinated Debentures in the hands of the Trust. As
a result, there should be no United States federal income tax consequences to a
holder exchanging Capital Securities for New Capital Securities pursuant to the
Exchange Offer. Accordingly, the New Capital Securities should be treated as
having the same issue date and issue price as the Capital Securities for United
States federal income tax purposes.
PROPOSED TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
introduced in the 104th Congress which would have, among other things, generally
denied interest deductions for interest or OID on an instrument issued by a
corporation that has a maximum weighted average maturity of more than 40 years.
The Bill also would generally deny interest deductions for interest on an
instrument, issued by a corporation that has a maximum term of more than 20
years and that is not shown as indebtedness on the separate balance sheet of the
issuer or, where the instrument is issued to a related party (other than a
corporation) where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. For purposes of determining the weighted average maturity or the
term of an instrument, any right to extend would be treated as exercised. The
above-described provisions of the Bill were proposed to be effective generally
for instruments issued on or after December 7, 1995. If either provision were to
apply to the New Junior Subordinated Debentures, the Company would not be able
to deduct interest on the New Junior Subordinated Debentures. However, on March
29, 1996, the Chairmen of the Senate Finance and House Ways and Means Committees
issued a joint statement (the "Joint Statement") to the effect that it was their
intention that the effective date of the Bill, if enacted, would be no earlier
than the date of appropriate Congressional action. In addition, subsequent to
the publication of the Joint Statement, Senator Daniel Patrick Moynihan and
Representatives Sam M. Gibbons and Charles B. Rangel wrote letters to Treasury
Department officials concurring with the views expressed in the Joint Statement
(the "Democrat Letters"). The 104th Congress adjourned without enacting the
Bill. Moreover, if the principles contained in the Joint Statement and Democrat
Letters were followed, any similar legislation that is subsequently proposed or
enacted would not apply to the New Junior Subordinated Debentures. There can be
no assurance, however, that current or future legislative or administrative
proposals or final legislation will not adversely affect the ability of the
Company to deduct interest on the New Junior Subordinated Debentures or
otherwise affect the tax treatment described herein. Such a change, therefore,
could give rise to a Tax Event, which would permit the Company to cause the
redemption of the New Capital Securities or to terminate the Trust and
distribute the New Junior Subordinated Debentures to the holders of Trust
Securities in liquidation of the Trust upon receiving an opinion of counsel, as
described more fully under "Description of New Capital Securities -- Special
Event Redemption or Distribution of New Junior Subordinated Debentures."
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any person that
is not a United States Holder (as defined above). As discussed above, the New
Capital Securities will be treated as evidence of an indirect beneficial
ownership interest in the New Junior Subordinated Debentures. See
"-- Classification of the Trust." Thus, under present United States federal
income tax law, and subject to the discussion below concerning backup
withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any paying agent of
principal or interest (which for purposes of this discussion includes any
OID) on the New Junior Subordinated Debentures to a Non-United States
Holder, provided (i) that the beneficial owner of the Capital Securities
("Beneficial Owner") does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of the Company
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entitled to vote within the meaning of section 871(h)(3) of the Code and
the regulations thereunder, (ii) the Beneficial Owner is not a controlled
foreign corporation that is related to the Company through stock ownership,
(iii) the Beneficial Owner is not a bank whose receipt of interest on the
New Junior Subordinated Debentures is described in section 881(c)(3)(A) of
the Code and (iv) the Beneficial Owner satisfies the statement requirement
(described generally below) set forth in section 871(h) and section 881(c)
of the Code and the regulations thereunder; and
(b) no withholding of United States federal income tax will be
required with respect to any gain realized by a Non-United States Holder
upon the sale or other disposition of the New Capital Securities.
To satisfy the requirement referred to in (a)(iv) above, the Beneficial
Owner, or a financial institution holding the Capital Securities on behalf of
such owner, must provide, in accordance with specified procedures, to the Trust
or its paying agent, a statement to the effect that the Beneficial Owner is not
a United States Holder. Pursuant to current temporary Treasury regulations,
these requirements will be met if (1) the Beneficial Owner provides his name and
address, and certifies, under penalties of perjury, that it is not a United
States person (which certification may be made on an IRS Form W-8 (or successor
form)) or (2) a financial institution holding the New Capital Securities on
behalf of the Beneficial Owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes a paying agent with a copy
thereof.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium, if
any, and interest (including any OID) made to such Non-United States Holder will
be subject to a 30% withholding tax unless the Beneficial Owner provides the
Company or its paying agent, as the case may be, with a properly executed (1)
IRS Form 1001 (or successor form) claiming an exemption from, or a reduction of,
such withholding tax under the benefit of a tax treaty or (2) IRS Form 4224 (or
successor form) stating that interest paid on the Junior Subordinated Debentures
is not subject to withholding tax because it is effectively connected with the
Beneficial Owner's conduct of a trade or business in the United States. In
addition, Liquidated Damages may not be eligible for the "portfolio interest"
exception described in (a) above. Consequently, the Company intends to withhold
30% of the amount of any Liquidated Damages that are payable to a Non-United
States Holder unless such Non-United States Holder can establish (to the
satisfaction of the Company) another exemption from United States withholding
tax.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest on the New Junior Subordinated Debentures is
effectively connected with the conduct of such trade or business, the Non-United
States Holder, although exempt from the withholding tax discussed above, will be
subject to United States federal income tax on such interest income on a net
income basis in the same manner as if it were a United States Holder. In
addition, if such Non-United States Holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to adjustments. For this
purpose, such interest income would be included in such foreign corporation's
earnings and profits.
Any gain realized upon the sale or other disposition of the New Capital
Securities generally will not be subject to United States federal income tax
unless (i) such gain is effectively connected with a trade or business in the
United States of the Non-United States Holder, (ii) in the case of a Non-United
States Holder who is an individual, such individual is present in the United
States for 183 days or more in the taxable year of such sale, exchange or
retirement, and certain other conditions are met, and (iii) in the case of any
gain representing accrued interest on the Junior Subordinated Debentures, the
requirements described above are not satisfied.
As discussed above, legislation was introduced in the 104th Congress that
would have denied an interest deduction to the Company for the interest payable
on the Junior Subordinated Debentures. Such legislation also may have caused the
Junior Subordinated Debentures to have been classified as equity (rather than
indebtedness) of the Company for United States federal income tax purposes and,
thus, caused the income derived from the Junior Subordinated Debentures to be
characterized as dividend, rather than interest, income for such purposes.
Dividend income is not eligible for the "portfolio interest" exception described
in (a)
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above. Therefore, if such legislation had been enacted, income derived by a
Non-United States Holder on the Capital Securities may have been subject to the
30% United States federal withholding tax described above, unless a reduction or
elimination of such tax was available under an applicable tax treaty or such
dividend income was effectively connected with a trade or business carried on in
the United States by such Non-United States Holder. The 104th Congress adjourned
without enacting such legislation. However, it is possible that legislation
could be enacted in the future that could affect the characterization of income
paid on the Capital Securities (or the Junior Subordinated Debt Securities) or
otherwise adversely affect a Non-United States Holder. See "-- Proposed Tax Law
Changes".
Non-United States Holders should note that the tax treatment described in
the preceding paragraph also will apply if the Internal Revenue Service were to
assert successfully that, under current law, the Junior Subordinated Debentures
should be classified as equity (rather than indebtedness) of the Company for
United States federal income tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Income on the New Capital Securities held of record by United States
Holders (other than corporations and other exempt holders) will be reported
annually to such holders and to the IRS. The Regular Trustees currently intend
to deliver such reports to holders of record prior to January 31 following each
calendar year. It is anticipated that persons who hold New Capital Securities as
nominees for beneficial holders will report the required tax information to
beneficial holders on Form 1099.
"Backup withholding" at a rate of 31% will apply to payments of interest to
non-exempt United States Holders unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
No information reporting or backup withholding will be required with
respect to payments made by the Trust or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on the New Junior
Subordinated Debentures are paid or collected by a foreign office of a
custodian, nominee or other foreign agent on behalf of the Beneficial Owner, or
if a foreign office of a broker (as defined in applicable Treasury regulations)
pays the proceeds of the sale of the New Capital Securities to the owner
thereof. If, however, such nominee, custodian, agent or broker is, for United
States federal income tax purposes, a United States person, a controlled foreign
corporation or a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United States,
such payments will not be subject to backup withholding but will be subject to
information reporting, unless (1) such custodian, nominee, agent or broker has
documentary evidence in its records that the Beneficial Owner is not a United
States person and certain other conditions are met or (2) the Beneficial Owner
otherwise establishes an exemption.
Payment of the proceeds from disposition of New Capital Securities to or
through a United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a holder of the New Capital Securities under the
backup withholding rules will be allowed as a refund or a credit against such
holder's United States federal income tax liability, provided the required
information is furnished to the IRS.
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BOOK-ENTRY ISSUANCE
The New Capital Securities will be represented by one or more Capital
Securities registered in global form ("the Global Capital Securities").
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below. See "Exchange of Book-Entry
Capital Securities for Certificated Capital Securities."
Other Capital Securities will be issued only in registered, certificated
(i.e., non-global) form. Other Capital Securities may not be exchanged for
beneficial interests in any Global Capital Securities except in the limited
circumstances described below. See "Exchange of Certificated Capital Securities
for Book-Entry Capital Securities."
DEPOSITARY PROCEDURES
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of DTC are
recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to procedures
established by it, (i) upon deposit of the New Global Capital Securities, DTC
will credit the accounts of Participants owning portions of the principal amount
of the Old Global Capital Securities as instructed by the Trust based on
acceptance by the Exchange Offer and (ii) ownership of such interests in the New
Global Capital Securities will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Investors in the Restricted Global Capital Securities may hold their
interests therein directly through DTC if they are participants in such system,
or indirectly through organizations (including Euroclear and CEDEL) which are
participants in such system. Investors in the Regulation S Global Capital
Securities must initially hold their interests therein through Euroclear or
CEDEL, if they are participants in such systems, or indirectly through
organizations which are participants in such systems. After the expiration of
the Restricted Period (but not earlier), investors may also hold interests in
the Regulation S Global Capital Securities through organizations other than
Euroclear and CEDEL that are participants in the DTC system. Euroclear and CEDEL
will hold interests in the Regulation S Global Capital Securities on behalf of
their participants through customers' securities accounts in their respective
names on the books of their respective depositaries, which are Morgan Guaranty
Trust Company of New York, Brussels office, as operator of Euroclear, and
Citibank, N.A., as operator of CEDEL. The depositaries, in turn, will hold such
interests in the Regulation S Global Capital Securities in customers' securities
accounts in the depositaries' names on the books of DTC. All interest in a
Global Capital Security, including those held through Euroclear or CEDEL, may be
subject to the procedures and requirements of DTC. Those interests held through
Euroclear or CEDEL may also be subject to the procedures and requirements of
such system. The laws of some states require that certain persons take physical
delivery in certificated form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Capital Security to such
persons will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a Global Capital
Security to pledge such interests to
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persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests. For certain other restrictions on the
transferability of the Capital Securities, see "Exchange of Book-Entry Capital
Securities for Certificated Capital Securities," "Exchange of Certificated
Capital Securities for Book-Entry Capital Securities" and "Exchanges Between
Regulation S Capital Securities and Rule 144A Capital Securities" below.
Except as described below, owners of interests in the New Global Capital
Securities will not have New Capital Securities registered in their name, will
not received physical delivery of Capital Securities in certificated form and
will not be considered the registered owners or holders thereof for any purpose.
Payments in respect of the Global Capital Security registered in the name
DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder. The Property Trustee will treat the persons
in whose names the Capital Securities, including the Global Capital Securities,
are registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Property Trustee nor any agent thereof has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Capital Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Trust and the Company that its current practice, upon receipt of any
payment in respect of securities such as the Capital Securities, is to credit
the accounts of the relevant Participants with the payment on the payment date
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Capital Securities will be governed by standing
instructions and customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the responsibility of
DTC, the Property Trustee or the Trust. Neither the Trust nor the Property
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the New Capital Securities, and the Trust
and the Property Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear or CEDEL participants, interests
in the Global Capital Securities will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the New
Capital Securities described herein, cross-market transfers between the
Participants in DTC, on the one hand, and Euroclear or CEDEL participants, on
the other hand, will be effect through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of instructions to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Capital Securities in
DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and CEDEL
participants may not deliver instructions directly to the depositaries for
Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a Global Capital Security from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear of CEDEL participant, during the securities settlement
processing day
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(which must be a business day for Euroclear and CEDEL) immediately following the
settlement date of DTC. Cash received in Euroclear or CEDEL as a result of sales
of interest in a Global Capital Security by or through a Euroclear or CEDEL
participant to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or CEDEL
cash account only as of the business day for Euroclear or CEDEL following DTC's
settlement date.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited. However, if there is an Event of Default, DTC
reserves the right to exchange the Global Capital Securities for legended
Capital Securities in certificated form and to distribute such Capital
Securities to its Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Trust and the
Company believe to be reliable, but neither the Trust nor the Company takes
responsibility for the accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interest in the Regulation S Global Capital
Securities and in the Restricted Global Capital Securities among participants in
DTC, Euroclear and CEDEL, they are under no obligation to perform or to continue
to perform such procedures, and such procedures may be discontinued at any time.
Neither the Trust nor the Property Trustee will have any responsibility for the
performance by DTC, Euroclear or CEDEL or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL SECURITIES
A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company in its sole discretion elects to cause the issuance of the Capital
Securities in certificated form or (iii) there shall have occurred and be
continuing an Event of Default or any event which after notice or lapse of time
or both would be an Event of Default under the Declaration. In addition,
beneficial interests in a Global Capital Security may be exchanged for
certificated Capital Securities upon request but only upon at least 20 days'
prior written notice given to the Property Trustee by or on behalf of DTC in
accordance with customary procedures. In all cases, certificated Capital
Securities delivered in exchange for any Global Capital Security or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in accordance with
its customary procedures).
EXCHANGE OF CERTIFICATED CAPITAL SECURITIES FOR BOOK-ENTRY CAPITAL SECURITIES
Other Capital Securities which will be issued in certificated form may not
be exchanged for beneficial interests in any Global Capital Security unless such
exchange occurs in connection with a transfer of such Other Capital Securities
and the transferor first delivers to the Property Trustee a written certificate
to the effect that such transfer will comply with the appropriate transfer
restrictions applicable to such Capital Securities as set forth in Appendix A
hereto. In the case of any such exchange for an interest in the Regulation S
Global Capital Security, such transfer must occur pursuant to Regulation S or
Rule 144 (if available).
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Code ("Plans"), may purchase Capital Securities, subject to the investing
fiduciary's determination that the investment in Capital Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.
64
<PAGE> 66
The Department of Labor ("DOL") has issued a regulation (29 C.F.R. sec.
2510.3-101) (the "DOL Regulation") concerning the definition of what constitutes
the assets of a Plan. The DOL Regulation provides that as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a plan makes an "equity" investment will be
deemed for purposes of ERISA to be assets of the investing plan unless certain
exceptions apply.
There can be no assurance that any of the exceptions set forth in the DOL
regulation will apply to the Capital Securities and, as a result, an investing
Plan's assets could be considered to include an undivided interest in the Junior
Subordinated Debentures held by the Trust. In the event that assets of the Trust
are considered assets of an investing Plan, the Company, the Trustees and other
persons, in providing services with respect to the Junior Subordinated
Debentures, may be considered fiduciaries to such Plan and subject to the
fiduciary responsibility provisions of Title I of ERISA (including the
prohibited transaction provisions thereof). In addition, the prohibited
transaction provisions of Section 4975 of the Code could apply with respect to
transactions engaged in by any "disqualified person," as defined below,
involving such assets unless a statutory or administrative exemption applies.
Even if they are not fiduciaries, the Company and/or any of its affiliates
may be considered a "party in interest" (within the meaning of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to certain Plans. The acquisition and ownership of Capital Securities by
a Plan (or by an individual retirement arrangement or other plan described in
Section 4975(e)(1) of the Code) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Capital
Securities are acquired pursuant to and in accordance with an applicable
exemption. As a result, Plans with respect to which the Company or any of its
affiliates is a party in interest or a disqualified person should not acquire
Capital Securities unless such Capital Securities are acquired pursuant to and
in accordance with an applicable prohibited transaction exemption.
Notwithstanding the foregoing, it is possible that the New Capital
Securities may qualify as "publicly offered securities" under the DOL Regulation
if, in addition to the exchange pursuant to any effective registration
statement, they are also "widely held" and "freely transferable" at the time of
the Exchange Offer. Under the DOL Regulation, a class of securities is "widely
held" only if it is a class of securities owned by 100 or more investors
independent of the issuer and each other. Although it is possible that at the
time of the Exchange Offer the New Capital Securities will be "widely held", no
assurances can be given that that will be true. If the New Capital Securities
are "publicly offered securities" at the time of the Exchange Offer, the assets
of the Trust would not be assets of the Investing Plans as of such time. If the
New Capital Securities did not qualify as "publicly offered securities", the
foregoing discussion about plan assets in the preceding paragraphs would also be
applicable to the New Capital Securities.
Any Plans or other entities whose assets include Plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire Capital Securities or New
Capital Securities should consult with their own counsel.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 180 days after the Registration Statement of
which this Prospectus constitutes a part is declared effective. See "The
Exchange Offer -- Resales of New Capital Securities." Neither the Company nor
the Trust will receive any cash proceeds from the issuance of the New Capital
Securities offered hereby. New Capital Securities received by broker-dealers for
their own accounts in connection with the Exchange Offer may be sold from time
to time in one or more transactions in the over-the-counter market, in
65
<PAGE> 67
negotiated transactions, through the writing of options on the New Capital
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Capital Securities. Any broker-dealer that resells
New Capital Securities that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates in
a distribution of such New Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of New Capital Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
Neither the Company nor the Trustees shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related New Capital Securities and each such person may
conclusively rely on, and shall be protected in relying on, instructions from
the Depository for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the New Capital Securities to
be issued).
VALIDITY OF THE NEW SECURITIES
Certain matters of Delaware law relating to the validity of the New Capital
Securities will be passed upon for the Trust by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware Counsel to the Company and the Trust. The
validity of the New Junior Subordinated Debentures and the New Guarantee will be
passed upon for the Company and the Trust by Ray Quinney & Nebeker, Salt Lake
City, Utah. Certain United States Federal income taxation and other regulatory
matters also will be passed upon for the Company and the Trust by Ray, Quinney &
Nebeker.
Alonzo W. Watson, who is Assistant Secretary of the Company, is a member of
the firm of Ray, Quinney & Nebeker. A daughter of the Chairman and Chief
Executive Officer of the Company is also a member of Ray, Quinney & Nebeker. At
December 31, 1996, 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.
EXPERTS
The consolidated financial statements incorporated herein by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
have been audited by Deloitte & Touche, LLP, independent auditors, as stated in
their report, which is incorporated herein by reference.
66
<PAGE> 68
- ---------------------------------------------------------
- ---------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information........................ 8
Incorporation of Certain Information by
Reference.................................. 8
Summary...................................... 10
Risk Factors................................. 17
Use of Proceeds.............................. 22
Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.................. 23
Accounting Treatment......................... 23
Regulatory Treatment......................... 23
Capitalization............................... 24
The Trust.................................... 25
The Company.................................. 26
Exchange Offer............................... 27
Description of New Capital Securities........ 36
Description of New Junior Subordinated
Debentures................................. 44
Description of New Guarantee................. 51
Relationship Among the New Capital
Securities, the New Junior Subordinated
Debentures and the New Guarantee........... 54
Enforcement of Rights of Holders of Capital
Securities................................. 55
Limited Purpose of the Trust................. 55
Rights Upon Termination...................... 55
Description of the Old Securities............ 56
Certain Federal Income Tax Consequences...... 56
Book-Entry Issuance.......................... 62
Plan of Distribution......................... 65
Validity of the New Securities............... 66
Experts...................................... 66
</TABLE>
UNTIL , 1997 (180 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENT OF
SUBSCRIPTIONS.
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
FIRST SECURITY
CAPITAL I
OFFER FOR ALL OUTSTANDING
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
IN EXCHANGE FOR
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
REGISTERED UNDER THE SECURITIES ACT OF 1933
FULLY AND UNCONDITIONALLY
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
FIRSTSECURITY LOGO
---------------------------
PROSPECTUS
, 1997
---------------------------
LOGO
EXCHANGE AGENT
---------------------------------------------------------
---------------------------------------------------------
<PAGE> 69
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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 Bylaws of Registrant
provide for such indemnification. The Registrant also insures its officers and
directors to the full extent permitted by Section 145.
The preceding discussion of the Registrant's Certificate of Incorporation
and Bylaws, and of Section 145 of the Delaware General Corporation Law is not
intended to be exhaustive and is qualified in its entirety by the Certificate of
Incorporation, the Bylaws, and by Section 145 of the Delaware General
Corporation Law.
The Declaration of Trust and the Indenture provide for indemnification of
the Regular and other Trustees of the Trust by the Registrant against any and
all expenses and liabilities other than under circumstances of willful bad faith
conduct or gross negligence.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ ------------------------------------------------------------------------------------
<C> <C> <S>
*1.1 -- Purchase Agreement by and between First Security Capital I, First Security
Corporation, Lehman Brothers Inc. and J. P. Morgan Securities Inc. dated as of
December 23, 1996
*3.1 -- Amended and Restated Declaration of Trust of First Security Capital I (the
"Declaration of Trust"), dated as of December 23, 1996 by and between First Security
Corporation, David R. Wilson, Brad D. Hardy, Scott C. Ulbrich, The Bank of New York
and The Bank of New York (Delaware).
*3.2 -- Certificate of Incorporation, as amended, of First Security Corporation (Exhibit 2
to FSC's Registration Statement on Form S-7, Registration Number 2-61892, as filed
on June 16, 1978 and Exhibit 3(1) to FSC's Registration Statement on Form S-4,
Registration Number 33-30045, as filed on July 24, 1989, hereby incorporated herein
by reference).
*3.3 -- Bylaws of First Security Corporation (Exhibit 2 to FSC's Registration Statement on
Form S-7, Registration Number 2-61892, as filed on June 16, 1978, and Exhibit 3(2)
to FSC's Registration Statement on Form S-4, Registration Number 33-30045, as filed
on July 24, 1989, hereby incorporated herein by reference).
*4.1 -- Indenture (the "Indenture") dated as of December 23, 1996 by and between First
Security Corporation and The Bank of New York.
*4.2 -- Registration Rights Agreement dated as of December 23, 1996 by and among First
Security Capital I, First Security Corporation, Lehman Brothers Inc. and J. P.
Morgan Securities Inc.
*4.3 -- Form of Capital Security Certificate (included as part of Exhibit 3.1).
*4.4 -- Form of Security for 8.41% Junior Subordinated Debentures (included as part of
Exhibit 4.1).
*4.5 -- Guaranty Agreement dated December 23, 1996.
*5.1 -- Opinion of Richards Layton & Finger.
*5.2 -- Opinion of Ray Quinney & Nebeker.
</TABLE>
II-1
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ ------------------------------------------------------------------------------------
<C> <C> <S>
*8.1 -- Opinion of Ray Quinney & Nebeker as to tax matters concerning the Exchange Offer
(included in their opinion filed as Exhibit 5.2)
*10.1 -- First Security Corporation Comprehensive Management Incentive Plan (Exhibit A to
Prospectus in Registration Statement No. 33-21556 on Form S-8 filed April 29, 1988,
hereby incorporated by reference).
*10.2 -- First Security Corporation Supplemental Executive Retirement Plan. (Exhibit to FSC's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1989, hereby
incorporated by reference. [File No. 1-6906])
*10.3 -- Employment Agreement between First Security Corporation and Spencer F. Eccles dated
October 16, 1996.
*10.4 -- Employment Agreement between First Security Corporation and Morgan J. Evans dated
October 16, 1996.
*10.5 -- Employment Agreement between First Security Corporation and L. Scott Nelson dated
October 16, 1996.
*10.6 -- Employment Agreement between First Security Corporation and J. Patrick McMurray
dated October 16, 1996.
*10.7 -- Employment Agreement between First Security Corporation and Scott C. Ulbrich dated
October 16, 1996.
*10.8 -- Employment Agreement between First Security Corporation and Brad D. Hardy dated
October 16, 1996.
*10.9 -- Employment Agreement between First Security Corporation and Michael Caughlin dated
October 16, 1996.
*10.10 -- Employment Agreement between First Security Corporation and Mark Howell dated
October 16, 1996.
**12.1 -- Calculation of Ratio of Earnings to Fixed Charges
*13.1 -- FSC's Annual Report to Shareholders for the year ended December 31, 1995, hereby
incorporated by reference [File No. 1-6906].
*13.2 -- FSC's Quarterly Report on Form 10-Q for Quarter ended September 30, 1996, hereby
incorporated by reference [File No. 1-6906].
*22.1 -- First Security Corporation's Subsidiaries (included in the Company's Annual 10-K
Report for the year ended December 31, 1995 [File No. 1-6906], and incorporated by
reference).
*23.1 -- Consent of Deloitte & Touche LLP, Independent Public Accountants
*23.2 -- Consent of Richards Layton & Finger (included in their opinion filed as Exhibit 5.1
hereto)
*23.3 -- Consent of Ray Quinney & Nebeker (included in their opinion filed as Exhibit 5.2
hereto)
*24.1 -- Powers of Attorney (set forth on signature page)
*25.1 -- Form T-1 of The Bank of New York as to Declaration of Trust
*25.2 -- Form T-1 of the Bank of New York as to Guaranty Agreement
*25.3 -- Form T-1 of the Bank of New York as to Indenture
*99.1 -- Form of Letter of Transmittal
*99.2 -- Form of Guaranteed Delivery
*99.3 -- Form of Exchange Agent Agreement
</TABLE>
- ---------------
* Filed herewith
** To be filed by amendment. The Company will furnish upon request of the
Commission any omitted schedule.
II-2
<PAGE> 71
ITEM 22. 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 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this Registration Statement
when it becomes effective;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4,10(b),11 or 13 of this Form, within one business day of
II-3
<PAGE> 72
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of this Registration Statement
through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-4
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, First Security
Corporation and First Security Capital I, a statutory Delaware Business Trust,
have duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Salt Lake City, Utah, on the 11th day
of February, 1997.
<TABLE>
<S> <C>
FIRST SECURITY CORPORATION FIRST SECURITY CAPITAL I
By: /s/ MORGAN J. EVANS /s/ DAVID R. WILSON
- -------------------------------------------- --------------------------------------------
Morgan J. Evans David R. Wilson
President and Chief Operating Officer Regular Trustee
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
A. Robert Thorup, Esq., 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
FOR THE COMPANY:
/s/ SPENCER F. ECCLES Chairman and Chief Executive February 11, 1997
- --------------------------------------------- Officer, Director
Spencer F. Eccles
/s/ MORGAN J. EVANS President and Chief February 11, 1997
- --------------------------------------------- Operating Officer,
Morgan J. Evans Director
/s/ SCOTT C. ULBRICH Executive Vice President and February 11, 1997
- --------------------------------------------- Chief Financial Officer
Scott C. Ulbrich (Principal Financial and
Accounting Officer)
/s/ JAMES C. BEARDALL Director February 11, 1997
- ---------------------------------------------
James C. Beardall
/s/ RODNEY H. BRADY Director February 11, 1997
- ---------------------------------------------
Rodney H. Brady
/s/ Director
- ---------------------------------------------
James E. Bruce
</TABLE>
II-5
<PAGE> 74
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS D. DEE II Director February 11, 1997
- ---------------------------------------------
Thomas D. Dee II
/s/ Director
- ---------------------------------------------
Dr. David P. Gardner
/s/ ROBERT GARFF Director February 11, 1997
- ---------------------------------------------
Robert Garff
/s/ DAVID B. HAIGHT
- ---------------------------------------------
David B. Haight Director February 11, 1997
/s/ Director
- ---------------------------------------------
Jay Dee Harris
/s/ ROBERT T. HEINER Director February 11, 1997
- ---------------------------------------------
Robert T. Heiner
/s/ KAREN H. HUNTSMAN Director February 11, 1997
- ---------------------------------------------
Karen H. Huntsman
/s/ G. FRANK JOKLIK Director February 11, 1997
- ---------------------------------------------
G. Frank Joklik
/s/ B. Z. KASTLER Director February 11, 1997
- ---------------------------------------------
B. Z. Kastler
/s/ Director
- ---------------------------------------------
Joseph G. Maloof
/s/ SCOTT S. PARKER Director February 11, 1997
- ---------------------------------------------
Scott S. Parker
/s/ DR. ARTHUR K. SMITH Director February 11, 1997
- ---------------------------------------------
Dr. Arthur K. Smith
/s/ JAMES L. SORENSON Director February 11, 1997
- ---------------------------------------------
James L. Sorenson
/s/ HAROLD J. STEELE Director February 11, 1997
- ---------------------------------------------
Harold J. Steele
/s/ JAMES WILSON Director February 11, 1997
- ---------------------------------------------
James Wilson
FOR THE TRUST:
/s/ BRAD D. HARDY Regular Trustee February 11, 1997
- ---------------------------------------------
Brad D. Hardy
</TABLE>
II-6
<PAGE> 75
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ SCOTT C. ULBRICH Regular Trustee February 11, 1997
- ---------------------------------------------
Scott C. Ulbrich
/s/ DAVID R. WILSON Regular Trustee February 11, 1997
- ---------------------------------------------
David R. Wilson
The Bank of New York Property Trustee
By: /s/
- ---------------------------------------------
Authorized Officer
Bank of New York (Delaware) Delaware Trustee
By: /s/
- ---------------------------------------------
Authorized Officer
</TABLE>
II-7
<PAGE> 76
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ---------------------------------------------------------------------------- ------
<C> <C> <S> <C>
*1.1 -- Purchase Agreement by and between First Security Capital I, First Security
Corporation, Lehman Brothers Inc. and J. P. Morgan Securities Inc. dated as
of December 23, 1996........................................................
*3.1 -- Amended and Restated Declaration of Trust of First Security Capital I (the
"Declaration of Trust"), dated as of December 23, 1996 by and between First
Security Corporation, David R. Wilson, Brad D. Hardy, Scott C. Ulbrich, The
Bank of New York and The Bank of New York (Delaware)........................
*3.2 -- Certificate of Incorporation, as amended, of First Security Corporation
(Exhibit 2 to FSC's Registration Statement on Form S-7, Registration Number
2-61892, as filed on June 16, 1978 and Exhibit 3(1) to FSC's Registration
Statement on Form S-4, Registration Number 33-30045, as filed on July 24,
1989, hereby incorporated herein by reference)..............................
*3.3 -- Bylaws of First Security Corporation (Exhibit 2 to FSC's Registration
Statement on Form S-7, Registration Number 2-61892, as filed on June 16,
1978, and Exhibit 3(2) to FSC's Registration Statement on Form S-4,
Registration Number 33-30045, as filed on July 24, 1989, hereby incorporated
herein by reference)........................................................
*4.1 -- Indenture (the "Indenture") dated as of December 23, 1996 by and between
First Security Corporation and The Bank of New York.........................
*4.2 -- Registration Rights Agreement dated as of December 23, 1996 by and among
First Security Capital I, First Security Corporation, Lehman Brothers Inc.
and J. P. Morgan Securities Inc.............................................
*4.3 -- Form of Capital Security Certificate (included as part of Exhibit 3.1)......
*4.4 -- Form of Security for 8.41% Junior Subordinated Debentures (included as part
of Exhibit 4.1).............................................................
*4.5 -- Guaranty Agreement dated December 23, 1996..................................
*5.1 -- Opinion of Richards Layton & Finger.........................................
*5.2 -- Opinion of Ray Quinney & Nebeker............................................
*8.1 -- Opinion of Ray Quinney & Nebeker as to tax matters concerning the Exchange
Offer (included in their opinion filed as Exhibit 5.2)......................
*10.1 -- First Security Corporation Comprehensive Management Incentive Plan (Exhibit
A to Prospectus in Registration Statement No. 33-21556 on Form S-8 filed
April 29, 1988, hereby incorporated by reference)...........................
*10.2 -- First Security Corporation Supplemental Executive Retirement Plan. (Exhibit
to FSC's Quarterly Report on Form 10-Q for the quarter ended March 31, 1989,
hereby incorporated by reference. [File No. 1-6906])........................
*10.3 -- Employment Agreement between First Security Corporation and Spencer F.
Eccles dated October 16, 1996...............................................
*10.4 -- Employment Agreement between First Security Corporation and Morgan J. Evans
dated October 16, 1996......................................................
*10.5 -- Employment Agreement between First Security Corporation and L. Scott Nelson
dated October 16, 1996......................................................
*10.6 -- Employment Agreement between First Security Corporation and J. Patrick
McMurray dated October 16, 1996.............................................
*10.7 -- Employment Agreement between First Security Corporation and Scott C. Ulbrich
dated October 16, 1996......................................................
*10.8 -- Employment Agreement between First Security Corporation and Brad D. Hardy
dated October 16, 1996......................................................
*10.9 -- Employment Agreement between First Security Corporation and Michael Caughlin
dated October 16, 1996......................................................
*10.10 -- Employment Agreement between First Security Corporation and Mark Howell
dated October 16, 1996......................................................
</TABLE>
II-8
<PAGE> 77
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ---------------------------------------------------------------------------- ------
<C> <C> <S> <C>
**12.1 -- Calculation of Ratio of Earnings to Fixed Charges...........................
*13.1 -- FSC's Annual Report to Shareholders for the year ended December 31, 1995,
hereby incorporated by reference [File No. 1-6906]..........................
*13.2 -- FSC's Quarterly Report on Form 10-Q for Quarter ended September 30, 1996,
hereby incorporated by reference [File No. 1-6906]..........................
*22.1 -- First Security Corporation's Subsidiaries (included in the Company's Annual
10-K Report for the year ended December 31, 1995 [File No. 1-6906], and
incorporated by reference)..................................................
*23.1 -- Consent of Deloitte & Touche LLP, Independent Public Accountants............
*23.2 -- Consent of Richards Layton & Finger (included in their opinion filed as
Exhibit 5.1 hereto).........................................................
*23.3 -- Consent of Ray Quinney & Nebeker (included in their opinion filed as Exhibit
5.2 hereto).................................................................
*24.1 -- Powers of Attorney (set forth on signature page)............................
*25.1 -- Form T-1 of The Bank of New York as to Declaration of Trust.................
*25.2 -- Form T-1 of the Bank of New York as to Guaranty Agreement...................
*25.3 -- Form T-1 of the Bank of New York as to Indenture............................
*99.1 -- Form of Letter of Transmittal...............................................
*99.2 -- Form of Guaranteed Delivery.................................................
*99.3 -- Form of Exchange Agent Agreement............................................
</TABLE>
- ---------------
* Filed herewith
** To be filed by amendment. The Company will furnish upon request of the
Commission any omitted schedule.
II-9
<PAGE> 78
EXPLANATION OF DIFFERENCES
BETWEEN PAPER AND ELECTRONIC FILING
On the Prospectus Front Cover a Red and Burgundy First Security Corporation
Logo appears where indicated.
On the Prospectus Back Cover a Red and Burgundy First Security Corporation
Logo appears where indicated.
II-10
<PAGE> 1
EXHIBIT 1.1
PURCHASE AGREEMENT
<PAGE> 2
Exhibit 1.1
$150,000,000
FIRST SECURITY CAPITAL I
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
PURCHASE AGREEMENT
December 23, 1996
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
First Security Capital I, a Delaware statutory business trust
(the "Trust"), proposes to sell to you (collectively, the "Initial Purchasers")
$150,000,000 8.41% Subordinated Capital Income Securities (liquidation amount
$1000 per Capital Security) (the "Capital Securities"), guaranteed (the
"Guarantee"; together with the Capital Securities, the "Securities") by the
Company (as defined herein) to the extent set forth in the Guarantee Agreement
(the "Guarantee Agreement") to be entered into between the Company and The Bank
of New York, as Guarantee Trustee (the "Guarantee Trustee"). First Security
Corporation, a Delaware corporation (the "Company"), will be the owner of all of
the beneficial ownership interests represented by common securities (the "Common
Securities") of the Trust. Concurrently with the issuance of the Securities and
the Company's purchase of all of the beneficial interests represented by common
securities of the Trust, the Trust will invest the proceeds of each thereof in
the Company's 8.41% Junior Subordinated Debentures (the "Junior Subordinated
Debentures"). The Junior Subordinated Debentures are to be issued pursuant to an
Indenture (the "Indenture") to be entered into between the Company and The Bank
of New York, as Indenture Trustee (the "Indenture Trustee").
The Securities will be offered without being registered under
the Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom.
In connection with the sale of the Securities, the Trust and
the Company will prepare a final offering memorandum (the "Memorandum") setting
forth or including a description of the terms of the Securities, the terms of
the offering, a description of the Company and the Trust and any material
developments relating to the Company occurring after the date of the most recent
financial statements included therein.
1. Representations, Warranties and Agreements of the
Company and the Trust. The Company and the Trust, jointly and
<PAGE> 3
2
severally, represent and warrant to, and agree with each of the Initial
Purchasers that as of the date hereof:
(a) The Memorandum will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
except that the representations and warranties set forth in
this Section 1(a) do not apply to statements or omissions in
the Memorandum based upon information furnished to the Company
or the Trust in writing by or on behalf of any Initial
Purchaser through you expressly for use therein. Reference
herein to the Memorandum shall be deemed to refer to and
include any document filed by the Company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") which is
incorporated in the Memorandum by reference.
(b) It is not required by applicable law or
regulation in connection with the offer, sale and delivery of
the Securities to you in the manner contemplated by this
Agreement to register the Securities or the Junior
Subordinated Debentures under the Securities Act or to qualify
the Declaration (as defined herein), the Guarantee Agreement
or the Indenture in respect of the Securities or the Junior
Subordinated Debentures under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
(c) The Company and each of its subsidiaries (as
defined in Section 14) have been duly incorporated and are
validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, save
where the failure to be so qualified could not reasonably be
expected to have a material adverse effect on the business or
property of the Company and its subsidiaries taken as a whole,
and each has all power and authority necessary to own or hold
their respective properties and to conduct the businesses in
which they are engaged.
(d) The Company has an authorized capitalization as
set forth, or incorporated by reference, in the Memorandum,
and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained, or incorporated by reference, in the Memorandum;
and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly
authorized and issued and are
<PAGE> 4
3
fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except that the Company only
owns in excess of 99.9% of the issued shares of capital stock
or First Security Bank, N.A. and First Security Bank of
Wyoming.
(e) The Trust has been duly created and is validly
existing as a statutory business trust in good standing under
the Business Trust Act of the State of Delaware (the "Delaware
Business Trust Act") with the trust power and authority to own
property and conduct its business as described in the
Memorandum, and has conducted and will conduct no business
other than the transactions contemplated by this Agreement as
described in the Memorandum; the Trust is not a party to or
bound by any agreement or instrument other than this
Agreement, the Registration Rights Agreement (the
"Registration Rights Agreement") to be entered into among the
Company, the Trust and the Initial Purchasers, the Amended and
Restated Declaration of Trust (the "Declaration") among the
Company, as sponsor, Brad D. Hardy, Scott C. Ulbrich, and
David R. Wilson (the "Trustees"), and the agreements and
instruments contemplated by the Declaration and described in
the Memorandum; the Trust has no liabilities or obligations
other than those arising out of the transactions contemplated
by this Agreement and the Declaration and described in the
Memorandum; and the Trust is not a party to or subject to any
action, suit or proceeding of any nature.
(f) The Declaration has been duly authorized and,
when duly executed and delivered by the Company, as Sponsor,
and the Trustees, and assuming due authorization, execution
and delivery of the Declaration by the Property Trustee and
the Delaware Trustee, the Declaration will be a valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing,
and will conform to all statements relating thereto in the
Memorandum.
(g) All of the outstanding beneficial interests in
the Trust have been, and the Capital Securities and the Common
Securities, upon issuance and delivery and payment therefor in
the manner described herein, will be, duly authorized, validly
issued, fully paid and non-assessable and will conform to the
descriptions of the Capital
<PAGE> 5
4
Securities and the Common Securities contained in the
Memorandum.
(h) Each of the Indenture and the Guarantee Agreement
has been duly authorized and, when duly executed and delivered
by the proper officers of the Company (assuming, in the case
of the Indenture, due execution and delivery by the Indenture
Trustee and, in the case of the Guarantee Agreement, due
execution and delivery by the Guarantee Trustee) and delivered
by the Company, will each constitute a valid and legally
binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing;
and the Junior Subordinated Debentures and the Guarantee have
been duly authorized, and, when duly executed, authenticated,
issued and delivered as provided in the Indenture and the
Guarantee Agreement, respectively, and delivered against
payment of the purchase price therefor as provided in this
Agreement, will be duly and validly issued and outstanding,
and will constitute valid and legally binding obligations of
the Company entitled to the benefits of the Indenture and the
Guarantee Agreement, respectively, and enforceable against the
Company in accordance with their terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing;
and the Junior Subordinated Debentures and the Guarantee, when
issued and delivered, will conform to the descriptions thereof
contained in the Memorandum.
(i) This Agreement has been duly authorized, executed
and delivered by each of the Trust and the Company and the
Registration Rights Agreement has been duly authorized and
will be duly delivered and executed by each of the Trust and
the Company.
(j) The execution, delivery and performance of this
Agreement, the Declaration, the Registration Rights Agreement,
the Common Securities and the Capital Securities by the Trust,
the purchase of the Junior Subordinated Debentures by the
Trust from the Company, the distribution of the Junior
Subordinated Debentures upon the liquidation of the Trust in
the circumstances contemplated by the Declaration and
described in the
<PAGE> 6
5
Memorandum, and the consummation of the transactions
contemplated herein and in the Declaration (the "Trust
Transactions"), will not conflict with or result in a
violation of any statute or order, rule or regulation of any
court or governmental agency or body having jurisdiction over
the Trust or any of its assets; and except for such consents,
approvals, authorizations, registrations or qualifications as
may be required under applicable state securities laws in
connection with the purchase and distribution of the Capital
Securities by the Initial Purchasers, no consent, approval,
authorization or order of or filing or registration with, any
such court or governmental agency or body is required for the
Trust Transactions.
(k) The execution, delivery and performance of this
Agreement, the Guarantee Agreement, the Registration Rights
Agreement, the Indenture and the Junior Subordinated
Debentures by the Company, the purchase of the Common
Securities by the Company from the Trust, and the consummation
by the Company of the transactions herein (the "Company
Transactions") will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of
the properties or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or any statute or order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, any of its subsidiaries
or any of their properties or assets; and except for such
consents, approvals, authorizations, registrations or
qualifications as may be required under applicable state
securities laws in connection with the purchase and
distribution of the Capital Securities by the Initial
Purchasers, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental
agency or body is required for the Company Transactions.
(l) Neither the Company nor any of its subsidiaries
has sustained, since the date of the latest quarterly
financial statements included in the Memorandum, any material
loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated
in the Memorandum; and, since such date, there has not been
any change in the capital stock or long-term debt of the
Company or any of
<PAGE> 7
6
its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change,
in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or
contemplated in the Memorandum.
(m) The financial statements (including the related
notes and supporting schedules) incorporated in the Memorandum
present fairly the financial condition and results of
operations of the entities purported to be shown thereby, at
the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved.
(n) Deloitte & Touche LLP, who have certified certain
financial statements of the Company, whose report is
incorporated by reference in the Memorandum and who have
delivered the initial letter referred to in Section 7(e)
hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations during the
periods covered by the financial statements on which they
reported contained in the Memorandum.
(o) There are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a
party or of which any property or asset of the Company or any
of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, might
have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries
taken as a whole; and to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(p) No relationship, direct or indirect, exists
between or among the Company and the Trust on the one hand,
and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required
to be described in the Memorandum which is not so described.
(q) Since the date as of which information is given
in the Memorandum through the date hereof, and except as may
otherwise be disclosed in the Memorandum, neither the Company
nor the Trust has (i) issued or granted any securities, (ii)
incurred any liability or obligation, direct or contingent,
other than liabilities and obligations which were incurred in
the ordinary course of business, (iii) entered into any
transaction not in the
<PAGE> 8
7
ordinary course of business or (iv) in the case of the
Company, declared or paid any dividend on its capital stock.
(r) Neither the Company nor any of its subsidiaries
(i) is in violation of its charter or by-laws, (ii) is in
default in any material respect, and no event has occurred
which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any
term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it
is bound or to which any of its properties or assets is
subject or (iii) is in violation in any material respect of
any law, ordinance, governmental rule, regulation or court
decree to which it or its properties or assets may be subject
or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or
permit necessary to the ownership of its properties or assets
or to the conduct of its business.
(s) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment
of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of its subsidiaries (or, to
the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the properties now or
previously owned or leased by the Company or its subsidiaries
in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except
for any violation or remedial action which would not have, or
could not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions, a
material adverse effect on the general affairs, management,
financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; there has been
no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or
into the environment surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of
its subsidiaries or with respect to which the Company or any
of its subsidiaries have knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely
to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings
and releases, a material adverse effect on the general
affairs,
<PAGE> 9
8
management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries; and
the terms "hazardous wastes", "toxic wastes", "hazardous
substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign
laws or regulations with respect to environmental protection.
(t) Neither the Company nor any subsidiary nor the
Trust is an "investment company" within the meaning of such
term under the Investment Company Act of 1940, as amended, and
the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder.
(u) The Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"); and the deposit accounts of First Security
Bank, N.A. and First Security Bank of New Mexico, N.A. are
insured by the Federal Deposit Insurance Corporation ("FDIC")
to the fullest extent permitted by law and the rules and
regulations of the FDIC, and no proceedings for the
termination of such insurance are pending or threatened.
(v) The Company and each of its subsidiaries are in
compliance in all material respects with all laws administered
by and regulations of the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the
Utah Division of Financial Institutions and any other federal
or state bank regulatory authority with jurisdiction over the
Company or any of its subsidiaries (the "Bank Regulatory
Authorities"), other than where such failures to comply would
not have a material adverse effect on the Company and its
subsidiaries, taken as a whole. Neither the Company nor any of
its subsidiaries is a party to any written agreement or
memorandum of understanding with, or a party to any commitment
letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions
at the request of, any Bank Regulatory Authority which
restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit policies or
its management, nor have any of them been advised by any Bank
Regulatory Authority that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing
or requesting) any such order, decree, agreement, memorandum
of understanding, extraordinary supervisory letter, commitment
letter or similar submission, or any such board resolutions.
(w) Neither the Company nor any of its
affiliates (as defined in Rule 501(b) of Regulation D under
the
<PAGE> 10
9
Securities Act, an "Affiliate") has directly, or through any
agent, (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined
in the Securities Act) which is or will be integrated with the
sale of the Capital Securities in a manner that would require
the registration under the Securities Act of the Securities or
(ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Securities
(as those terms are used in Regulation D under the Securities
Act), or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
2. Purchase of the Capital Securities by the Initial
Purchasers. (i) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Trust
agrees to sell to you, and each of you, severally and not jointly, agrees to
purchase from the Trust, the liquidation amount of the Capital Securities as set
forth opposite each Initial Purchaser's name in Schedule 1 hereto, at a purchase
price equal to 100% of their liquidation amount.
As compensation to the Initial Purchasers for their
commitments hereunder, the Company agrees to pay the Initial Purchasers a
commission of 1% of the purchase price of the Capital Securities set forth in
Schedule I opposite each Initial Purchaser's name.
(ii) The Company shall not be obligated to deliver any of the
Capital Securities, except upon payment for all of the Capital Securities to be
purchased as hereinafter provided.
3. Sale and Resale of the Capital Securities by the Initial
Purchasers. You have advised the Company that you propose to offer the Capital
Securities for resale upon the terms and conditions set forth in this Agreement
and in the Offering Memorandum. You hereby represent and warrant to, and agree
with, the Company that you (i) are purchasing the Capital Securities pursuant to
a private sale exempt from registration under the Securities Act, (ii) will not
solicit offers for, or offer or sell, the Capital Securities by means of any
form of general solicitation or general advertising or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act, and
(iii) will solicit offers for the Capital Securities only from, and will offer,
sell or deliver the Capital Securities, as part of their initial offering, only
to (A) in the case of offers inside the United States, (1) persons whom you
reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act, as such
rule may be amended from time to time ("Rule 144A") or, if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to you that each such
account is a Qualified
<PAGE> 11
10
Institutional Buyer, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A or (2) institutional accredited investors
("Accredited Investors") as defined in Rule 501(a)(1)(2), (3) or (7) under
Regulation D who execute letters of representation in the form included as
Appendix A to the Offering Memorandum in private sales exempt from registration
under the Securities Act and (B) in the case of offers outside the United
States, to persons other than U.S. persons ("foreign purchasers", which term
shall include dealers or other professional fiduciaries in the United States
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)).
4. Delivery of and Payment for the Capital Securities. (a)
Payment of the purchase price for, and delivery of, the Capital Securities shall
be made at the offices of Simpson Thacher & Bartlett, New York, New York or at
such other place as shall be agreed upon by the Company and you, at 9:30 a.m.
(New York time), on December 20, 1996 or at such other time or date as you and
the Company shall determine (such date and time of payment and delivery being
herein called the "Closing Date").
(b) On the Closing Date, payment shall be made to the Company
in same-day funds by wire transfer to such account or accounts as the Company
shall specify prior to the Closing Date or by such means as the parties hereto
shall agree prior to the Closing Date against delivery to you of the
certificates evidencing the Capital Securities. Upon delivery, the Capital
Securities shall be registered in such names and in such denominations as the
Initial Purchasers shall request in writing not less than two full business days
prior to the Closing Date. For the purpose of expediting the checking and
packaging of certificates evidencing the Capital Securities, the Company agrees
to make such certificates available for inspection at least 24 hours prior to
the Closing Date.
5. Further Agreements of the Company. Each of the
Company and the Trust agrees:
(a) To furnish to you, without charge, as many copies
of the Memorandum and any supplements and amendments thereto
as you may reasonably request.
(b) Prior to making any amendment or supplement to
the Memorandum, the Company shall furnish a copy thereof to
the Initial Purchasers and counsel to the Initial Purchasers
and will not effect any such amendment or supplement to which
the Initial Purchasers shall reasonably object by notice to
the Company after a reasonable period to review, which shall
not in any case be longer than five business days after
receipt of such copy.
<PAGE> 12
11
(c) If, at any time prior to completion of the
distribution of the Capital Securities by you to purchasers,
any event shall occur or condition exist as a result of which
it is necessary, in the opinion of counsel for you or counsel
for the Company, to amend or supplement the Memorandum in
order that the Memorandum will not include an untrue statement
of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in
light of the circumstances existing at the time it is
delivered to a purchaser, or if it is necessary to amend or
supplement the Memorandum to comply with applicable law, to
promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or so
that the Memorandum, as so amended or supplemented, will
comply with applicable law and to furnish you such number of
copies as you may reasonably request.
(d) So long as the Capital Securities are outstanding
and are "Restricted Securities" within the meaning of Rule
144(a)(3) under the Securities Act, to furnish to holders of
the Capital Securities and prospective purchasers of Capital
Securities designated by such holders, upon request of such
holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
(e) For a period of five years following the date of
the Memorandum, to furnish to the Initial Purchasers copies of
all materials furnished by the Company to its shareholders and
all public reports and all reports and financial statements
furnished by each of the Company and the Trust to the
principal national securities exchange upon which the Capital
Securities may be listed pursuant to requirements of or
agreements with such exchange or to the Commission pursuant to
the Exchange Act or any rule or regulation of the Commission
thereunder.
(f) Promptly from time to time to take such action as
the Initial Purchasers may reasonably request to qualify the
Capital Securities, the Guarantee Agreement and the Junior
Subordinated Debentures for offering and sale under the
securities laws of such jurisdictions as the Initial
Purchasers may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Capital Securities.
(g) Not to offer, sell, contract to sell or otherwise
dispose of any additional securities of the Trust or the
Company substantially similar to the Capital Securities or any
securities convertible into or
<PAGE> 13
12
exchangeable for or that represent the right to receive any
such similar securities, without the consent (which consent
shall not be unreasonably withheld) of the Initial Purchasers
during the period beginning from the date of this Agreement
and continuing to and including the earlier of (i) the
termination of trading restrictions on the Capital Securities,
as communicated to the Company by the Initial Purchasers, and
(ii) 90 days following the Closing Date.
(h) To use its best efforts to permit the Capital
Securities to be designated Private Offerings, Resales and
Trading through Automated Linkages Market ("PORTAL")
securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market and to permit
the Capital Securities to be eligible for clearance and
settlement through The Depository Trust Company (the "DTC").
(i) To apply the net proceeds from the sale of the
Capital Securities being sold by the Trust as set forth in the
Memorandum.
(j) Except following the effectiveness of the
Registration Statement (as defined in the Registration Rights
Agreement), not to, and will cause its affiliates not to,
solicit any offer to buy or offer to sell the Capital
Securities by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities
Act.
(k) Not to, and will cause its affiliates not to,
sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the
Securities Act) in a transaction that could be integrated with
the sale of the Capital Securities in a manner that would
require the registration under the Securities Act of the
Capital Securities.
(l) To take such steps as shall be necessary to
ensure that neither the Company, any subsidiary of the Company
nor the Trust shall become an "investment company" within the
meaning of such term under the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder.
6. Expenses. The Company agrees to pay (i) the costs
incident to the authorization, issuance, sale and delivery of the
Capital Securities and any taxes payable in that connection; (ii)
the costs incident to the preparation and printing of the
<PAGE> 14
13
Memorandum and any amendments or supplements thereto; (iii) the costs of
distributing the Memorandum and any amendments or supplements thereto; (iv) the
fees and expenses of qualifying the Capital Securities under the securities laws
of the several jurisdictions as provided in Section 5(f) and of preparing,
printing and distributing a Blue Sky Memorandum and a Legal Investment Survey
(including related fees and expenses of counsel to the Initial Purchasers); (v)
any fees charged by securities rating services for rating the Capital
Securities; (vi) all fees and expenses, if any, incurred in connection with the
admission of such Securities for trading in PORTAL; (vii) the fees and expenses
of the Property Trustee (as defined in the Declaration), the Guarantee Trustee
and the Indenture Trustee; and (viii) all other costs and expenses incident to
the performance of the obligations of the Company and the Trust.
7. Conditions to the Initial Purchasers' Obligations. The
respective obligations of the Initial Purchasers hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties of the Company and the Trust contained herein, to the performance by
the Company and the Trust of their respective obligations hereunder, and to each
of the following additional terms and conditions:
(a) No Initial Purchaser shall have discovered and
disclosed to the Company and the Trust on or prior to the
Closing Date that the Memorandum or any amendment or
supplement thereto contains any untrue statement of a fact
which, in the opinion of Simpson Thacher & Bartlett, counsel
for the Initial Purchasers, is material or omits to state any
fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to made the
statements therein not misleading.
(b) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this
Agreement, the Indenture, the Junior Subordinated Debentures,
the Guarantee Agreement, the Capital Securities, the Common
Securities, the Memorandum, and all other legal matters
relating to this Agreement and the transactions contemplated
hereby shall be satisfactory in all respects to counsel for
the Initial Purchasers, and the Company and the Trust shall
have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon
such matters.
(c) Ray, Quinney & Nebeker shall have furnished to
the Initial Purchasers their written opinion, as counsel to
the Company, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance satisfactory to the
Initial Purchasers, to the effect set forth in Exhibit A
hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request.
<PAGE> 15
14
(d) Richards, Layton & Finger shall have furnished to
the Initial Purchasers their written opinion, on certain
matters of Delaware law relating to the validity of the
Capital Securities, addressed to the Initial Purchasers and
dated the Closing Date, in form and substance satisfactory to
the Initial Purchasers, to the effect set forth in Exhibit B
hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request.
(e) You shall have received on the Closing Date a
letter, dated the date hereof and the Closing Date, as the
case may be, in form and substance satisfactory to you, from
Deloitte & Touche LLP, independent public accountants,
containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information, including the financial information, contained or
incorporated by reference in the Memorandum as identified by
you.
(f) The Company and the Trust shall have furnished to
the Initial Purchasers a certificate, dated the Closing Date,
of the Chairman of the Board, President or a Vice President of
the Company and its chief financial officer stating that:
(i) The representations, warranties and
agreements of the Company and the Trust in Section 1
are true and correct as of the Closing Date and the
Company has complied with all its agreements
contained herein;
(ii) (A) Neither the Company nor any of its
subsidiaries has sustained since the date of the
latest quarterly financial statements included or
incorporated by reference in the Memorandum any
material loss or interference with its business from
fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute
or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the
Memorandum or (B) since such date there has not been
any change in the capital stock or long-term debt of
the Company or any of its subsidiaries or any change,
or any development involving a prospective change, in
or affecting the general affairs, management,
financial position, stockholders' equity or results
of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the
Memorandum; and
(iii) They have carefully examined the
Memorandum and, in their opinion (A) the
<PAGE> 16
15
Memorandum, as of its date, did not include any
untrue statement of a material fact and did not omit
to state any material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading, and (B)
since the date of the Memorandum no event has
occurred which should have been set forth in a
supplement or amendment to the Memorandum.
(g) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included or incorporated by
reference in the Memorandum any loss or interference with its
business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Memorandum or (ii)
since such date there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Memorandum,
the effect of which, in any such case described in clause (i)
or (ii), is, in the judgment of the Initial Purchasers, so
material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of
the Capital Securities on the terms and in the manner
contemplated in the Memorandum.
(h) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Trust's Capital Securities by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of the Trust's Capital Securities.
(i) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall
<PAGE> 17
16
have been declared by Federal or state authorities, (iii) the United
States shall have become engaged in hostilities, there shall have been
an escalation in hostilities involving the United States or there shall
have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the effect
of international conditions on the financial markets in the United
States shall be such) as to make it, in the judgment of a majority in
interest of the Initial Purchasers, impracticable or inadvisable to
proceed with the offering or delivery of the Capital Securities on the
terms and in the manner contemplated in the Memorandum.
(j) The Initial Purchasers shall have received on the
date hereof the Registration Rights Agreement executed by the Company
and the Trust.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance satisfactory to
counsel for the Initial Purchasers.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Initial
Purchaser, its officers and employees and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Capital Securities), to which that
Initial Purchaser, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in the Memorandum or
in any amendment or supplement thereto, or (B) in any blue sky application or
other document prepared or executed by the Company or the Trust (or based upon
any written information furnished by the Company or the Trust) specifically for
the purpose of qualifying any or all of the Capital Securities under the
securities laws of any state or other jurisdiction (any such application,
document or information being hereinafter called a "Blue Sky Application"), or
(ii) the omission or alleged omission to state in the Memorandum or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action arising
out of or based upon matters covered by clause (i) or (ii) above and shall
reimburse each Initial Purchaser and each such officer, employee and controlling
person promptly
<PAGE> 18
17
upon demand for any legal or other expenses reasonably incurred by that Initial
Purchaser, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in the Memorandum or in any such amendment or supplement, or in any Blue
Sky Application in reliance upon and in conformity with the written information
furnished to the Company or the Trust by or on behalf of any Initial Purchaser
specifically for inclusion therein and described in Section 8.(e). The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Initial Purchaser or to any officer, employee or
controlling person of that Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors and each Trustee, and each person, if any, who controls the Company or
the Trust within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company, any such director or officer, or any such Trustee or any
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in the Memorandum or in any amendment or supplement thereto,
or (B) in any Blue Sky Application or (ii) the omission or alleged omission to
state in the Memorandum or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with the written
information furnished to the Company or the Trustee by or on behalf of that
Initial Purchaser specifically for inclusion therein and described in Section
8.(e), and shall reimburse the Company and any such director or officer, or the
Trust or any such Trustee, or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director or officer, or the Trust
or any such Trustee, or any controlling person in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability which any Initial Purchaser may
otherwise have to the Company or any such director or officer, or the Trust or
any such Trustee, or any controlling person.
(c) Promptly after receipt by an indemnified party under this
Section of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof
<PAGE> 19
18
is to be made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8 except to
the extent it has been materially prejudiced by such failure and, provided
further, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under this Section 8. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the Initial Purchasers shall have the right to employ counsel to
represent jointly the Initial Purchasers and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Initial Purchasers
against the Company under this Section 8 if, in the reasonable judgment of the
Initial Purchasers, it is advisable for the Initial Purchasers and those
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company. Each indemnified party, as a condition of
the indemnity agreements contained in Sections 8.(a) and 8.(b), shall use its
best efforts to cooperate with the indemnifying party in the defense of any such
action or claim. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with its written consent or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss of liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold
<PAGE> 20
19
harmless an indemnified party under Section 8.(a) or 8.(b) in respect of any
loss, claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Trust on the one hand and the Initial
Purchasers on the other from the offering of the Capital Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Trust on the one hand and the Initial Purchasers on the other with respect
to the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Trust on
the one hand and the Initial Purchasers on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Capital Securities purchased under this Agreement
(before deducting expenses) received by the Trust on the one hand, and the total
underwriting commissions received by the Initial Purchasers with respect to the
Capital Securities purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Capital
Securities under this Agreement, in each case as set forth in the table on the
cover page of the Memorandum. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company and the Trust on the one hand or the Initial Purchasers,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 8.(d) were to be determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8.(d) shall be
deemed to include, for purposes of this Section 8.(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8.(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Capital Securities sold and distributed by it was offered to the purchasers
exceeds the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No
<PAGE> 21
20
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligations to contribute as provided in this Section 8.(d) are several in
proportion to their respective underwriting obligations and not joint.
(e) The Initial Purchasers severally confirm that the
statements with respect to the offering of the Capital Securities set forth in
the bottom paragraph on the cover page of, and under the caption "Plan of
Distribution" in, the Memorandum are correct and constitute the only information
furnished in writing to the Company or the Trust by or on behalf of the Initial
Purchasers specifically for inclusion in the Memorandum.
9. Termination. The obligations of the Initial Purchasers
hereunder may be terminated by them by notice given to and received by the
Company or the Trust prior to delivery of and payment for the Capital Securities
if, prior to that time, any of the events described in Sections 7(h), 7(i) or
7(j) shall have occurred or if the Initial Purchasers shall decline to purchase
the Capital Securities for any reason permitted under this Agreement.
10. Reimbursement of Initial Purchasers' Expenses. If (a) the
Trust shall fail to tender the Capital Securities for delivery to the Initial
Purchasers for any reason, or (b) the Initial Purchasers shall decline to
purchase the Capital Securities for any reason permitted under this Agreement,
the Company shall reimburse the Initial Purchasers for the reasonable fees and
expenses of their counsel and for such other out-of-pocket expenses as shall
have been incurred by them in connection with this Agreement and the proposed
purchase of the Capital Securities, and upon demand the Company shall pay the
full amount thereof to the Initial Purchasers.
11. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered
or sent by mail, telex or facsimile transmission to
Lehman Brothers Inc., Three World Financial Center, New
York, New York 10285, Attention: Syndicate Department
(Fax: 212-528-8822);
(b) if to the Company or the Trust shall be
delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in
the Memorandum, Attention: Chief Financial Officer (Fax:
801-359-6928).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company and the Trust shall be entitled to act and
rely upon any request, consent, notice
<PAGE> 22
21
or agreement given or made on behalf of the Initial Purchasers by
Lehman Brothers Inc.
12. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company, the Trust and their respective successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons, except
that (x) the representations, warranties, indemnities and agreements of the
Company and the Trust contained in this Agreement shall also be deemed to be for
the benefit of the officers and employees of each Initial Purchaser and the
person or persons, if any, who control each Initial Purchaser within the meaning
of Section 15 of the Securities Act and (y) the indemnity agreement of the
Initial Purchasers contained in Section 8.(b) of this Agreement shall be deemed
to be for the benefit of directors, officers and employees of the Company and
the Trust and any person controlling the Company or the Trust within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 12, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
13. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Trust and the Initial Purchasers
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Capital Securities and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
14. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) "business day" means any day on which the
New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
15. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of New York.
16. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
<PAGE> 23
If the foregoing correctly sets forth the agreement among the
Company, the Trust and the Initial Purchasers, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
FIRST SECURITY CORPORATION
By: /s/ Scott C. Ulbrich
-----------------------------
Scott C. Ulbrich
FIRST SECURITY CAPITAL I
By: /s/ Brad D. Hardy
-----------------------------
Regular Trustee
Accepted:
LEHMAN BROTHERS INC.
By /s/ Robert H. (?)
----------------------------------
For itself and the several other Initial Purchasers
named in Schedule 1 hereto
<PAGE> 24
SCHEDULE 1
<TABLE>
<CAPTION>
Liquidation
Amount of
Initial Purchasers Capital Securities
------------------ ------------------
<S> <C>
Lehman Brothers Inc. $112,500,000
J.P. Morgan Securities Inc. $ 37,500,000
------------
Total $150,000,000
</TABLE>
<PAGE> 25
EXHIBIT A
December 23, 1996
Lehman Brothers Inc., as representative of the several Purchasers
named in Schedule I to the Purchase Agreement,
dated December 23, 1996, with First Security Capital I
and First Security Corporation
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Re: 8.41% $150,000,000 Subordinated Capital Income Securities of First
Security Capital I, a Delaware Business Trust, and 8.41% of Related
First Security Corporation Junior Subordinated Debentures
Ladies and Gentlemen:
We have acted as counsel to First Security Corporation, a Delaware
corporation (the "Company"), and First Security Capital I, a Delaware business
trust (the "Trust"), in connection with the Trust's offering and issuance to
the Initial Purchasers of $150,000,000 8.41% Subordinated Capital Income
Securities (the "Capital Securities"), which offer is more fully described in
that certain final offering memorandum dated December 23, 1996 (the
"Memorandum"), and with respect to the Trust's subsequent investment in the
Company's 8.41% Junior Subordinated Debentures, maturing on December 15, 2026,
which shall be issued under, and shall be subject to the terms of, that certain
Indenture, dated as of December 23, 1996 (the "Indenture") between the Company
and Bank of New York, as Indenture Trustee (the "Indenture Trustee"). This
opinion is delivered pursuant to Section 7(c) of that certain Purchase
Agreement, dated December 23, 1996, between the Company and the Trust and
accepted by you as representative of the Initial Purchasers (the "Purchase
Agreements"). Unless otherwise indicated herein, capitalized terms used herein
without definition shall have the respective meanings set forth in the Purchase
Agreement.
<PAGE> 26
Lehman Brothers, Inc.
December __, 1996
Page 2
In connection with this opinion, we have investigated such questions of
law, examined such corporate documents and records of the Company and the
Trust, and certificates of public officials and other documents concerning the
Company and/or the Trust, and received such information from officers and
representatives of the Company and the Trust as we have deemed necessary or
appropriate for the purposes of this opinion. We have examined, among other
documents, the Memorandum, the Purchase Agreement, the Declaration, the
Indenture, the Junior Subordinated Debentures and the Guarantee Agreement
(collectively, the "Transaction Documents"), and certificates of responsible
officers of the Company and the Trust concerning matters of fact within the
respective areas of responsibility of such officers.
Based upon the foregoing, and subject to the qualifications and
exceptions heretofore and hereinafter set forth, we are of the opinion that:
1. The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Delaware,
with all corporate power and authority necessary to own or holds its properties
and conduct its business as described in the memorandum; and the Company is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which it owns or leases substantial properties or in
which the conduct of its business otherwise requires such qualification, other
than such jurisdictions where the failure to be so qualified or in good
standing would not have a material adverse effect upon the Company.
2. Each of the Company's subsidiaries, including the Trust, has
been duly incorporated and is validly existing as a corporation or other legal
entity in good standing under the laws of its jurisdiction of incorporation or
organization, with all corporate power and authority to own or hold its
properties and conduct its business, and has been duly qualified to do business
as a foreign corporation or entity in good standing in each jurisdiction in
which it owns or leases substantial properties or in which the conduct of its
business otherwise requires such qualification, other than such jurisdictions
where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a whole.
3. Each of the Purchase Agreement and the Registration Rights
Agreement has been duly authorized, executed and delivered by the Company and
has been duly executed and delivered by the Trust.
4. The Indenture has been duly authorized, executed and delivered
by the Company and, when duly authorized, executed and delivered by the
Indenture Trustee, will constitute a valid and legally binding obligation of
the Company, enforceable against the Company, in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles, (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
<PAGE> 27
Lehman Brothers, Inc.
December __, 1996
Page 3
5. The Junior Subordinated Debentures have been duly authorized,
executed and delivered by the Company and, when duly authenticated by the
Indenture Trustee and upon payment and delivery as described in the Purchase
Agreement, will constitute valid and legally binding obligations of the
Company, enforceable against the Company, in accordance with their terms,
subject to the efforts of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles, (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
6. The Guarantee Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery by the Guarantee Trustee, will constitute a valid and legally binding
obligation of the Company, enforceable against the Company, in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles, (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
7. The Declaration has been duly authorized, executed and
delivered by the Company.
8. The execution, delivery and performance of the Transaction
Documents by the Company and the Trust, as applicable, will not (a) constitute
a material breach of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument which has been
identified to us by management as material to the business of the Company and
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, the effect of which
breach or default would be material to the Company and its subsidiaries taken
as a whole; (b) result in any violation of any provision of the Certificate of
Incorporation, or the bylaws, of the Company or any such subsidiary, the effect
of which violation would be material to the Company and its subsidiaries taken
as a whole; or (c) result in a violation of any Federal or State of Utah
statute, order, rule or regulation of any court or governmental agency having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets, the effects of which violation would be
material to the Company and its subsidiaries taken as a whole.
9. All of the outstanding shares of capital stock of First
Security Bank, N.A. and First Security Bank of New Mexico, N.A. have been duly
authorized and validly issued, and are fully-paid and non-assessable, and the
Company owns directly or indirectly, free and clear of any pledge, lien,
encumbrance, security interest, charge, claim, equitable right or encumbrance
of any kind, 100% of the capital stock of First Security Bank of New Mexico,
N.A. and in excess of 99.9% of the capital stock of First Security Bank, N.A.
<PAGE> 28
Lehman Brothers, Inc.
December __, 1996
Page 4
10. No consent, approval, authorization, order, registration or
qualification of any Federal or Utah governmental agency or body, or any
Delaware governmental agency or body acting pursuant to the Delaware General
Corporation Law or, to our knowledge, any Federal or Utah court or any Delaware
court acting pursuant to the Delaware General Corporation Law is required for
the issue and sale by the Trust of the Capital Securities, the issuance by the
Company of the Junior Subordinated Debentures, the issuance of the Guarantee
Agreement by the Company and the compliance by the Company with all of the
provisions of the Purchase Agreement, except for such consents, approvals,
authorizations, registrations or qualifications as have been obtained and made
and such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Capital Securities and the
Guarantee Agreement by the Initial Purchasers.
11. The statements made in the Memorandum under the captions
"Description of Junior Subordinated Debentures", "The Trust", "Description of
Capital Securities", "Description of Guarantee" and "Relationship Among the
Capital Securities, the Junior Subordinated Debentures and the Guarantee",
insofar as such statements purport to constitute summaries of the terms of the
Capital Securities, the Junior Subordinated Debentures and the Guarantee,
constitute accurate summaries of the terms of the Capital Securities, the
Junior Subordinated Debentures and the Guarantee.
12. a. The Trust will be characterized as a grantor trust for
United States Federal income tax purposes and not as an association taxable as
a corporation.
b. The Junior Subordinated Debentures will constitute
indebtedness of the Company for United States Federal income tax purposes; and
c. Subject to the qualifications set forth therein, the
statements made in the Memorandum under the caption "Certain United States
Federal Income Tax Consequences" fairly present in all material respects the
principal United States Federal income tax consequences of an investment in the
Capital Securities.
13. All descriptions in the Memorandum of contracts and other
documents which the Company or its subsidiaries are a party are accurate in all
material respects; to the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Memorandum other
than those described or referred to therein.
14. To our knowledge, there is not pending or threatened any legal
or governmental proceeding required to be described in the Memorandum which is
not described as required.
15. To our knowledge, the Trust is not a party to or otherwise bound
by any agreement other than those described in the Memorandum.
<PAGE> 29
Lehman Brothers Inc.
December __, 1996
Page 5
16. Neither the Company nor the Trust is required to be registered as
an "investment company" under the Investment Company Act of 1940, as amended.
17. The Company is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"); and the deposit
accounts of First Security Bank, N.A. and First Security Bank of New Mexico,
N.A. are insured by the Federal Deposit Insurance Corporation ("FDIC") to the
fullest extent permitted by law and the rules and regulations of the FDIC, and,
to our knowledge, no proceedings for the termination of such insurance are
pending or threatened.
18. The Company, First Security Bank, N.A. and First Security Bank of
New Mexico, N.A. are in compliance in all material respects with all laws
administered by and regulations of the Board of Governors of the Federal
Reserve System, the FDIC, the Comptroller of the Currency, the banking
authority in the states in which such banks do business, as applicable, and any
other Federal or state bank regulatory authority with jurisdiction over the
Company, First Security Bank, N.A. and First Security Bank of New Mexico, N.A.
(the "Bank Regulatory Authorities"), other than where such failures to comply
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
19. To our knowledge, neither the Company, First Security Bank, N.A.
nor First Security Bank of New Mexico, N.A. is a party to any written agreement
or memorandum or understanding with, or a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of, any Bank Regulatory Authority which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit policies or its management, nor have any of
them been advised by any Bank Regulatory Authority that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter or similar submission, or
any such board resolutions.
20. No registration of the Securities, the Guarantee or the Junior
Subordinated Debentures under the Securities Act of 1933, as amended (the
"Act"), and no qualification of the Declaration, the Guarantee or the Indenture
under the Trust Indenture Act of 1939, as amended, is required for the offer
and sale of the Securities by the Company to the Initial Purchasers or the
initial reoffer and resale of the Securities by the Initial Purchasers solely
in the manner contemplated by the Memorandum.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
a. In rendering our opinions we have assumed the genuineness of
all signatures on all documents, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals and the conformity
with original documents of all
<PAGE> 30
Lehman Brothers Inc.
December __, 1996
Page 6
documents submitted to us as copies, the authenticity of the originals of such
copies, the due authorization, execution and delivery of all instruments and
documents by parties other than the Company, and that such instruments and
documents are the valid, binding and enforceable obligations of such persons.
b. We are members of the Bar of the State of Utah, and except
as to matters governed by the Delaware General Corporation Law with respect to
our opinions expressed in paragraphs 1, 2 and 10 above, we render no opinion
herein as to matters involving the laws of any jurisdiction other than the
State of Utah and the United States of America. Although we are not members of
the Bar of the State of Delaware, we are generally familiar with the Delaware
General Corporation Law and, for the limited purpose of our opinions in
paragraphs 1, 2 and 10 above, we did not deem it necessary to obtain the
opinion of Delaware counsel, although we have relied with your permission on
the opinion of Richard, Layton & Finger, special counsel, with respect to
matters concerning the Trust discussed in this opinion.
c. As to factual matters material to the opinions rendered
herein, with your permission we have relied upon certificates of responsible
officers of the Company concerning matters of fact within the respective areas
of responsibility of such officers, and upon certificates of public officials.
We have made no independent factual inquiries or investigation as to the
matters covered by any of the aforesaid certificates. However, in the course of
our representation of the Company, nothing has come to our attention that would
cause us to believe that such certificates contain any material misstatement of
fact or omit to state any material fact necessary to make the facts set forth
therein not materially misleading, and we believe that we and you are entitled
to rely upon such certificates. In this connection, please note that we have not
undertaken to apprise or inform all members of our firm who have performed
legal service for the Company on other matters, of the details of this set of
transactions and accordingly, the representation in the immediately preceding
sentence is limited in scope to those attorneys in our firm having detailed
knowledge of the subject transactions and the substance of this Opinion.
d. This opinion is limited to the present laws of the States of
Utah and Delaware and the United States of America, and to the facts bearing
upon this opinion as they presently exist. We assume no obligation to revise or
supplement this opinion.
e. We express no opinion on the enforceability of any choice of
law or choice of venue provisions contained in any of the documents.
f. The opinions set forth in paragraph 14 of this letter is,
with your permission, rendered solely in reliance upon our examination on
November 21, 1996, of the records of the Third District Court, Salt Lake County,
State of Utah, the United States District Court, District of Utah, and United
States Bankruptcy Court, State of Utah for cases involving the Company and
First Security Bank, N.A., a review of our internal docket system, and the
certificate of an officer of the Company referenced in paragraph c. of this
letter. With your
<PAGE> 31
Lehman Brothers Inc.
December __, 1996
Page 7
permission, we have not examined the records of any other court, administrative
tribunal, governmental agency or authority, or other similar entity in
connection with this opinion.
g. We have not independently verified the accuracy,
completeness or fairness of, and render no opinion on, the statements made or
included in the Memorandum or in the documents incorporated by reference
therein (the "Exchange Act Documents") and take no responsibility therefor,
except as and to the extent set forth in paragraphs 10 and 12c above. In the
course of the preparation by the Company of the Memorandum, we participated in
conferences with certain officers and employees of the Company, with
representatives of the Initial Purchasers and with counsel to the Initial
Purchasers. Based only on our examination of the Memorandum and the Exchange
Act Documents, our investigations made in connection with the preparation of
the Memorandum and our participation in the conferences referred to above, we
have no reason to believe that the Memorandum (including the Exchange Act
Documents) contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with your permission, we express no opinion as to the financial
statements and other financial data contained in the Offering Memorandum or any
amendment of supplement thereto.
h. In rendering our opinions, we have assumed that the
transactions contemplated in the Transaction Documents will occur fully in
accordance with the terms and provisions thereof insofar as they are pertinent
to this opinion.
i. The opinions and conclusions set forth in paragraph 12 are
based upon the Federal income tax laws of the United States, including the
Internal Revenue Code of 1986, as amended, Treasury Regulations and judicial
and administrative interpretations thereof, as they exist as of the date of this
opinion. There can be no assurance that the legal authorities upon which our
opinion is based will not be modified, revoked, supplemented or otherwise
changed. To the extent of any such changes, our opinion is not applicable.
Furthermore, we undertake no obligation to reexamine or in any way revise our
opinion in the light of any such changes.
This opinion is rendered to you in connection with the Purchase
Agreement and the transactions related thereto and may not be relied upon by
any other person or by you in any other context or for any other purpose. This
opinion may not be quoted in whole or in part, nor may copies thereof be
furnished or delivered to any other person without the prior written consent of
this Firm.
Very truly yours,
RAY, QUINNEY & NEBEKER
<PAGE> 32
EXHIBIT B
[Letterhead of Richards, Layton & Finger]
December __, 1996
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Re: First Security Capital I
------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for First Security
Corporation, a Delaware corporation (the "Company"), and First Security Capital
I, a Delaware business trust (the "Trust"), in connection with the matters set
forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of December 13,
1996 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on December 13, 1996;
(b) The Declaration of Trust of the Trust, dated as of December 13,
1996, by and among the Company and the trustees of the Trust named therein;
(c) The Amended and Restated Declaration of Trust of the Trust,
dated as of December __, 1996 (including Exhibits A and B thereto) (the
"Declaration"), among the Company, as depositor, the trustees of the Trust
named therein (the "Trustees") and the holders, from time to time, of undivided
beneficial interests in the assets of the Trust;
<PAGE> 33
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
December __, 1996
Page 2
(d) The Purchase Agreement, dated December 23, 1996 (the "Purchase
Agreement"), among the Company, the Trust, and Lehman Brothers Inc. and J.P.
Morgan Securities Inc. (the "Initial Purchasers");
(e) The Registration Rights Agreement, dated as of December __,
1996 (the "Registration Rights Agreement"), among the Trust, the Company and
the Initial Purchasers;
(f) The Offering memorandum, dated December 23, 1996 (the
"Memorandum"), relating to the $150,000,000 8.41% Subordinated Capital Income
Securities of the Trust, representing undivided beneficial interests in the
assets of the Trust (each, a "Capital Security" and collectively, the "Capital
Securities"); and
(g) A Certificate of Good Standing for the Trust, dated December
__, 1996, obtained from the Secretary of State.
Capitalized terms used herein and not otherwise defined are used as
defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (g) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (g) above) that is referred to in our incorporated by reference in
to the documents reviewed by us. We have assumed that there exists no provision
in any document that we have not reviewed that is inconsistent with the
opinions stated herein. We have conducted no independent factual investigation
of our own but rather have relied solely upon the foregoing documents, the
statements and information set forth therein and the additional matters recited
or assumed herein, all of which we have assumed to be true, complete and
accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
<PAGE> 34
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
December __, 1996
Page 3
For purposes of this opinion, we have assumed (i) that the Declaration
constitutes the entire agreement among the parties thereto with respect to the
subject matter thereof, including with respect to the creation, operation, and
termination of the Trust, and that the Declaration and the Certificate are in
full force and effect and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due creation, due formation or due
organization, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its creation, formation or organization, (iii) the legal capacity of
each natural person who is a party to the documents examined by us, (iv) except
to the extent set forth in paragraph 1 below, that each of the parties to the
documents examined by us has the power and authority to execute and deliver,
and to perform its obligations under, such documents (v) except to the extent
provided in paragraph 4 below, that each of the parties to the documents
examined by us has duly authorized, executed and delivered such documents, (vi)
the receipt by each Person to whom a Capital Security is to be issued by the
Trust (the "Capital Security Holders") of a Capital Security Certificate for
the Capital Security and the payment for the Capital Security acquired by it,
in accordance with the Declaration, and as described in the Memorandum, (vii)
that the Capital Securities are issued and sold by the Capital Security Holders
in accordance with the Declaration, and as described in the Memorandum, (viii)
the receipt by the Company (the "Common Security Holder") to whom an 8.41%
Common Security of the Trust representing common undivided beneficial interests
in the assets of the Trust (each, a "Common Security" and collectively, the
"Common Securities") (the Capital Securities and the Common Securities being
hereinafter collectively referred to as "Trust Securities") is to be issued by
the Trust of a Common Security Certificate for the Common Security and the
payment for the Common Security acquired by it, in accordance with the
Declaration, and as described in the Memorandum, (ix) that the Common
Securities are issued and sold to the Common Security Holder in accordance with
the Declaration, and as described in the Memorandum, and (x) that the trust
derives no income from or connected with sources within the State of Delaware
and has no assets, activities (other than having a Delaware trustee as required
by the Delaware Business Trust Act and filing documents with the Secretary of
State) or employees in the State of Delaware. We have not participated in the
preparation of the Memorandum and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and
<PAGE> 35
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
December __, 1996
Page 4
regulations relating thereto. Our opinions are rendered only with respect to
Delaware laws and rules, regulations and orders thereunder that are currently
in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, and, under
the Declaration and the Delaware Business Trust Act, has the trust power and
authority to own its properties and conduct its business, all as described in
the Memorandum, and to enter into and perform its obligations under each of the
Purchase Agreement, the Registration Rights Agreement, the Trust Securities and
the Declaration.
2. The Common Securities have been duly and validly authorized by
the Declaration, and, when issued and delivered by the Trust to the Common
Security Holder as described in the Memorandum and the Declaration, will be
validly issued undivided beneficial interests in the assets of the Trust. Under
the Declaration and the Delaware Business Trust Act, the issuance of the Common
Securities is not subject to preemptive or other similar rights.
3. The Capital Securities have been duly authorized by the
Declaration and are duly and validly issued and, subject to the qualifications
set forth herein, fully paid and nonassessable undivided beneficial interests
in the assets of the Trust and will be entitled to the benefits of the
Declaration. Under the Declaration and the Delaware Business Trust Act, the
issuance of the Capital Securities is not subject to any preemptive or similar
rights. The Capital Security Holders, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Capital Security
Holders may be obligated, pursuant to the Declaration, (A) to provide indemnity
and/or security in connection with and pay taxes or governmental charges
arising from transfers or exchanges of Capital Security Certificates and the
issuance of replacement Capital Security Certificates, and (B)
to provide security or indemnity in connection with requests of or directions
to the Property Trustee to exercise its rights and powers under the Declaration.
<PAGE> 36
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
December __, 1996
Page 5
4. Under the Declaration and the Delaware Business Trust Act, all
necessary trust action has been taken on the part of the Trust to duly
authorize the execution and delivery of the Purchase Agreement and the
Registration Rights Agreement by the Trust.
5. The Declaration constitutes a valid and binding obligation of
the Company and the Trustees, and is enforceable against the Company and the
Trustees, in accordance with its terms.
6. The execution, delivery and performance of the Purchase
Agreement and Registration Rights Agreement by the Trust and the consummation
of the transactions contemplated therein do not violate the Declaration or the
Certificate. After due inquiry on December __, 1996 limited to, and solely to
the extent disclosed thereby, court dockets for active cases of the Court of
Chancery of the State of Delaware in and for New Castle County, Delaware, of
the Superior Court of the State of Delaware in and for New Castle County,
Delaware, and of the United States District Court sitting in the State of
Delaware, we are not aware of any legal or governmental proceeding pending
against the Trust.
7. No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Delaware court or Delaware
governmental authority or Delaware agency is necessary or required solely in
connection with the due authorization, execution and delivery of the Purchase
Agreement and the Registration Rights Agreement by the Trust or for the
offering, issuance, sale or delivery of the Capital Securities by the Trust in
accordance with the Declaration and the Memorandum.
The opinion expressed in paragraph 5 above is subject, as to
enforcement, to the effect upon the Declaration of (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent conveyance or
transfer or other similar laws relating to or affecting the rights and remedies
of creditors generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.
We consent to your relying at to matters of Delaware law upon this
opinion in connection with the Purchase Agreement. We also consent to Ray,
Quinney & Nebeker's and Simpson Thacher & Bartlett's relying as to matters of
Delaware law upon this opinion in connection with opinions to be rendered by
them on the date hereof
<PAGE> 37
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
December __, 1996
Page 6
pursuant to the Purchase Agreement. Except as stated above, without our prior
written consent, this opinion may not be furnished or quoted to, or relied
upon by, any other Person for any purpose.
Very truly yours,
CDK/BJK
<PAGE> 1
EXHIBIT 3.1
DECLARATION OF TRUST
<PAGE> 2
EXHIBIT 3.1
AMENDED AND RESTATED DECLARATION OF TRUST
FIRST SECURITY CAPITAL I
Dated as of December 23, 1996
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1
INTERPRETATION AND DEFINITIONS
<S> <C>
Section 1.1 Interpretation and Definitions............................................................ 1
Affiliate.............................................................................................. 2
Authorized Officer..................................................................................... 2
Business Day........................................................................................... 2
Business Trust Act..................................................................................... 2
Capital Security....................................................................................... 2
Cedel .............................................................................................. 2
Certificate............................................................................................ 2
Certificate of Trust................................................................................... 2
Closing Date........................................................................................... 2
Code .............................................................................................. 3
Commission............................................................................................. 3
Common Securities Holder............................................................................... 3
Common Security........................................................................................ 3
Common Security Certificate............................................................................ 3
Corporate Trust Office................................................................................. 3
Covered Person......................................................................................... 3
Debenture Issuer....................................................................................... 3
Debenture Issuer Indemnified Person.................................................................... 3
Debenture Trustee...................................................................................... 3
Debentures............................................................................................. 3
Delaware Trustee....................................................................................... 3
Depositary............................................................................................. 4
Distribution........................................................................................... 4
DTC .............................................................................................. 4
DWAC .............................................................................................. 4
Euroclear.............................................................................................. 4
Exchange Act........................................................................................... 4
Federal Reserve........................................................................................ 4
Fiduciary Indemnified Person........................................................................... 4
Fiscal Year............................................................................................ 4
Global Security........................................................................................ 4
Guarantee.............................................................................................. 4
Holder .............................................................................................. 4
Indemnified Person..................................................................................... 4
Indenture.............................................................................................. 4
Initial Purchasers..................................................................................... 5
Institutional Accredited Investor...................................................................... 5
Investment Company..................................................................................... 5
Investment Company Act................................................................................. 5
Investment Company Event............................................................................... 5
Legal Action........................................................................................... 5
List of Holders........................................................................................ 5
Majority in Liquidation Amount......................................................................... 5
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New Capital Securities................................................................................. 5
New Capital Security Certificate....................................................................... 5
Officers' Certificate.................................................................................. 5
Paying Agent........................................................................................... 6
Payment Amount......................................................................................... 6
Person .............................................................................................. 6
Private Placement Legend............................................................................... 6
Property Account....................................................................................... 6
Property Trustee....................................................................................... 6
Pro Rata .............................................................................................. 6
Qualified Institutional Buyer.......................................................................... 6
Quorum .............................................................................................. 6
Registration Rights Agreement.......................................................................... 7
Regular Trustee........................................................................................ 7
Regulation S........................................................................................... 7
Regulation S Global Security........................................................................... 7
Regulatory Capital Event............................................................................... 7
Related Party.......................................................................................... 7
Responsible Officer.................................................................................... 7
Restricted Global Security............................................................................. 7
Restricted Period...................................................................................... 7
Restricted Security.................................................................................... 8
Rule 144A.............................................................................................. 8
Rule 3a-5.............................................................................................. 8
Securities............................................................................................. 8
Securities Act......................................................................................... 8
Special Event.......................................................................................... 8
Sponsor .............................................................................................. 8
Successor Delaware Trustee............................................................................. 8
Successor Entity....................................................................................... 8
Successor Property Trustee............................................................................. 8
Successor Security..................................................................................... 8
Super Majority......................................................................................... 8
Tax Event.............................................................................................. 8
10% in Liquidation Amount.............................................................................. 9
Transfer Restricted Securities......................................................................... 9
Transfer Restricted Securities Certificate............................................................. 9
Treasury Regulations................................................................................... 9
Trust Enforcement Event................................................................................ 9
Trust Indenture Act.................................................................................... 9
Trustee" or "Trustees.................................................................................. 9
Trustees' Authorization Certificate.................................................................... 9
ARTICLE 2
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.......................................................... 9
Section 2.2 Lists of Holders of Securities............................................................ 10
Section 2.3 Reports by the Property Trustee........................................................... 10
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Section 2.4 Periodic Reports to the Property Trustee.................................................. 10
Section 2.5 Evidence of Compliance with Conditions Precedent.......................................... 11
Section 2.6 Trust Enforcement Events; Waiver.......................................................... 11
Section 2.7 Trust Enforcement Event; Notice........................................................... 13
ARTICLE 3
ORGANIZATION
Section 3.1 Name and Organization..................................................................... 13
Section 3.2 Office.................................................................................... 13
Section 3.3 Purpose................................................................................... 14
Section 3.4 Authority................................................................................. 14
Section 3.5 Title to Property of the Trust............................................................ 15
Section 3.6 Powers and Duties of the Regular Trustees................................................. 15
Section 3.7 Prohibition of Actions by the Trust and the Trustees...................................... 18
Section 3.8 Powers and Duties of the Property Trustee................................................. 19
Section 3.9 Certain Duties and Responsibilities of the Property Trustee............................... 21
Section 3.10 Certain Rights of Property Trustee....................................................... 23
Section 3.11 Delaware Trustee......................................................................... 26
Section 3.12 Execution of Documents................................................................... 26
Section 3.13 Not Responsible for Recitals or Issuance of Securities................................... 26
Section 3.14 Duration of Trust........................................................................ 26
Section 3.15 Mergers.................................................................................. 26
Section 3.16 Property Trustee May File Proofs of Claim................................................ 28
ARTICLE 4
SPONSOR
Section 4.1 Responsibilities of the Sponsor........................................................... 29
Section 4.2 Compensation Indemnification and Expenses of the Trustee.................................. 30
ARTICLE 5
TRUST COMMON SECURITIES HOLDER
Section 5.1 Debenture Issuer's Purchase of Common Securities.......................................... 30
Section 5.2 Covenants of the Common Securities Holder................................................. 30
ARTICLE 6
DELAWARE TRUSTEES
Section 6.1 Number of Trustees........................................................................ 31
Section 6.2 Delaware Trustee.......................................................................... 31
Section 6.3 Property Trustee; Eligibility............................................................. 32
Section 6.4 Qualifications of Regular Trustees and Delaware Trustee Generally......................... 32
Section 6.5 Initial Trustees.......................................................................... 33
Section 6.6 Appointment, Removal and Resignation of Trustees.......................................... 33
</TABLE>
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Section 6.7 Vacancies among Trustees.................................................................. 34
Section 6.8 Effect of Vacancies....................................................................... 34
Section 6.9 Meetings.................................................................................. 35
Section 6.10 Delegation of Power...................................................................... 35
Section 6.11 Merger, Conversion, Consolidation or Succession to Business.............................. 35
ARTICLE 7
THE SECURITIES
Section 7.1 General Provisions Regarding Securities................................................... 36
Section 7.2 Distributions............................................................................. 38
Section 7.3 Redemption of Securities.................................................................. 38
Section 7.4 Redemption Procedures..................................................................... 39
Section 7.5 Voting Rights of Capital Securities....................................................... 41
Section 7.6 Voting Rights of Common Securities........................................................ 43
Section 7.7 Paying Agent.............................................................................. 44
Section 7.8 Transfer of Securities.................................................................... 44
Section 7.9 Mutilated, Destroyed, Lost or Stolen Certificates......................................... 45
Section 7.10 Deemed Security Holders.................................................................. 46
Section 7.11 Global Securities........................................................................ 46
Section 7.12 Restrictive Legend....................................................................... 49
Section 7.13 Special Transfer Provisions.............................................................. 50
ARTICLE 8
DISSOLUTION AND TERMINATION OF TRUST
Section 8.1 Dissolution and Termination of Trust...................................................... 53
Section 8.2 Liquidation Distribution Upon Termination and
Dissolution of the Trust............................................................... 54
ARTICLE 9
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 9.1 Liability................................................................................. 55
Section 9.2 Exculpation............................................................................... 55
Section 9.3 Fiduciary Duty............................................................................ 56
Section 9.4 Indemnification........................................................................... 57
Section 9.5 Outside Businesses........................................................................ 59
ARTICLE 10
ACCOUNTING
Section 10.1 Fiscal Year.............................................................................. 60
Section 10.2 Certain Accounting Matters............................................................... 60
Section 10.3 Banking.................................................................................. 60
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<S> <C>
Section 10.4 Withholding.............................................................................. 61
ARTICLE 11
AMENDMENTS AND MEETINGS
Section 11.1 Amendments............................................................................... 61
Section 11.2 Meetings of the Holders of Securities; Action by Written Consent......................... 63
ARTICLE 12
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 12.1 Representations and Warranties of the Property Trustee................................... 65
Section 12.2 Representations and Warranties of the Delaware Trustee................................... 66
ARTICLE 13
MISCELLANEOUS
Section 13.1 Notices.................................................................................. 66
Section 13.2 Governing Law............................................................................ 67
Section 13.3 Intention of the Parties................................................................. 68
Section 13.4 Headings................................................................................. 68
Section 13.5 Successors and Assigns................................................................... 68
Section 13.6 Partial Enforceability................................................................... 68
Section 13.7 Counterparts............................................................................. 68
Section 13.8 Undertaking for Costs.................................................................... 68
</TABLE>
v
<PAGE> 8
AMENDED AND RESTATED DECLARATION OF TRUST
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated as of December 23, 1996 between First Security Corporation, a Delaware
corporation, as Sponsor, and BRAD D. HARDY, SCOTT C. ULBRICH and DAVID R. WILSON
as the initial Regular Trustees, THE BANK OF NEW YORK, as the initial Property
Trustee and THE BANK OF NEW YORK (DELAWARE) as the initial Delaware Trustee, not
in their individual capacities but solely as Trustees, and the holders, from
time to time, of undivided beneficial ownership interests in the assets of the
Trust to be issued pursuant to this Declaration.
WHEREAS, the Trustees and the Sponsor established First
Security Capital I (the "Trust"), a business trust under the Business Trust Act
(as defined, together with other capitalized terms, herein) pursuant to a
Declaration of Trust dated as of December 13, 1996 (the "Original Declaration")
and a Certificate of Trust (the "Certificate of Trust") filed with the Secretary
of State of the State of Delaware on December 13, 1996; and
WHEREAS, the sole purpose of the Trust shall be to issue and
sell certain securities representing undivided beneficial ownership interests in
the assets of the Trust, to invest the proceeds from such sales in the
Debentures issued by the Debenture Issuer and to engage in only those activities
necessary or incidental thereto; and
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration.
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act, the
Trustees hereby declare that all assets contributed to the Trust be held in
trust for the benefit of the Holders, from time to time, of the Securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
Section 1.1 Interpretation and Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
<PAGE> 9
2
(c) all references to "the Declaration" or "this Declaration"
are to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and
Sections are to Articles and Sections of this Declaration unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa and a reference to any masculine form of a term shall include the feminine
form of a term, as applicable.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President,
a Vice President, the principal financial officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company.
"Business Day" means any day other than a Saturday or Sunday
or a day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Property Trustee is closed for business.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time
to time, or any successor legislation.
"Capital Security" has the meaning specified in Section 7.1.
"Capital Security Certificate" means a certificate
representing a Capital Security.
"Cedel" means Cedel, S.A.
"Certificate" means a Common Security Certificate or a Capital
Security Certificate.
"Certificate of Trust" has the meaning specified in the
recitals hereto.
"Closing Date" means the date on which the Capital Securities
are issued and sold.
<PAGE> 10
3
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation. A reference to a specific
section of the Code refers not only to such specific section but also to any
corresponding provision of any federal tax statute enacted after the date of
this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Securities Holder" means First Security Corporation in
its capacity as purchaser and holder of all of the Common Securities issued by
the Trust.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security.
"Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Property Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Declaration is located at 101 Barclay Street, Floor 21 West,
New York, New York 10286; Attention: Corporate Trust Administration.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means First Security Corporation in its
capacity as issuer of the Debentures under the Indenture.
"Debenture Issuer Indemnified Person" means (a) any Regular
Trustee; (b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee or any Affiliate thereof; or (d) any officer, employee or agent
of the Trust or its Affiliates.
"Debenture Trustee" means The Bank of New York, in its
capacity as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means the Securities (as defined in the
Indenture) to be issued by the Debenture Issuer and to be held by the Property
Trustee.
"Delaware Trustee" has the meaning set forth in Section 6.2.
<PAGE> 11
4
"Depositary" means, with respect to Securities issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 7.2.
"DTC" means The Depository Trust Company, the initial
Depositary.
"DWAC" means Deposit and Withdrawal At Custodian Service.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 9.4(b).
"Fiscal Year" has the meaning set forth in Section 10.1.
"Global Security" has the meaning set forth in Section 7.11.
"Guarantee" means the guarantee agreement of the Sponsor in
respect of the Capital Securities and the Common Securities.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act; provided, however, that in
determining whether the Holders of the requisite liquidation amount of Capital
Securities have voted on any matter provided for in this Declaration, then for
the purpose of such determination only (and not for any other purpose
hereunder), if the Capital Securities remain in the form of one or more Global
Securities, the term "Holders" shall mean the holder of the Global Security
acting at the direction of the Capital Security Beneficial Owners.
"Indemnified Person" means a Debenture Issuer Indemnified
Person or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of December 23, 1996,
among the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
<PAGE> 12
5
"Indenture Event of Default" means an "Event of Default" as
defined in the Indenture.
"Initial Purchasers" means Lehman Brothers Inc. and J.P.
Morgan Securities Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as the term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Investment Company" means an investment company as defined in
the Investment Company Act and the regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" means the receipt by the Trust of
an opinion of counsel, rendered by a law firm having a recognized national
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which Change in 1940 Act Law becomes effective on or after the
Closing Date.
"Legal Action" has the meaning set forth in Section 3.6(g).
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in
the terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities, voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"New Capital Securities" has the meaning specified in Section
7.1.
"New Capital Security Certificate" has the meaning specified
in Section 7.1.
"Officers' Certificate" means, with respect to any Person
(other than Regular Trustees who are natural persons), a certificate signed by
two Authorized Officers of such Person on behalf of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
<PAGE> 13
6
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer on behalf of such Person
in rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer and on behalf of such Person, such condition or covenant has been
complied with; provided, that the term "Officers' Certificate", when used with
reference to Regular Trustees who are natural persons shall mean a certificate
signed by two of the Regular Trustees which otherwise satisfies the foregoing
requirements.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 7.2(a).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof or any other entity of
whatever nature.
"Private Placement Legend" as defined in Section 314 of the
Indenture.
"Property Account" has the meaning specified in Section
3.8(c).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section .
"Pro Rata" means pro rata to each Holder of Securities
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding.
"Qualified Institutional Buyer" or "QIB" has the meaning
specified in Rule 144A under the Securities Act.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Redemption Price" has the meaning specified in Section
7.3(a).
<PAGE> 14
7
"Registration Rights Agreement" means the Registration Rights
Agreement dated the date hereof between the Debenture Issuer, the Trust and the
Initial Purchasers for the benefit of themselves and the Holders as the same may
be amended from time to time in accordance with the terms thereof.
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Regulation S" means Regulation S under the Securities Act and
any successor regulation thereto.
"Regulation S Global Security" means any Global Security or
Securities evidencing Securities that are to be traded pursuant to Regulation S.
"Regulatory Capital Event" means that the Debenture Issuer
shall have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of (a) any amendment
to or change (including any announced prospective change) in the laws (or any
regulations thereunder) of the United States or any rules, guidelines or
policies of the Federal Reserve or (b) any official administrative pronouncement
or judicial decision for interpreting or applying such laws or regulations which
amendment or change is effective or such pronouncement or decision is announced
on or after the date of original issuance of the Capital Securities, the Capital
Securities do not constitute, or within 90 days of the date thereof, will not
constitute Tier I capital (or its then equivalent); provided, however, that the
distribution of the Securities in connection with the liquidation of the Trust
by the Debenture Issuer shall not in and of itself constitute a Regulatory
Capital Event unless such liquidation shall have occurred in connection with a
Tax Event or an Investment Company Event.
"Related Party" means, with respect to the Sponsor, any direct
or wholly owned subsidiary of the Sponsor or any Person that owns, directly or
indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any officer within the Corporate Trust Office of the Property Trustee,
including any vice-president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Property Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Restricted Global Security" means any Global Security or
Securities evidencing Securities that are to be traded pursuant to Rule 144A.
"Restricted Period" shall have the meaning specified in
Section 7.13(g).
<PAGE> 15
8
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) of the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act
or any successor rule thereunder.
"Securities" means the Common Securities and the Capital
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Special Event" means a Tax Event, a Regulatory Capital Event
or an Investment Company Event.
"Sponsor" means First Security Corporation, a Delaware
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in
Section 6.6(b).
"Successor Entity" has the meaning specified in Section
3.15(b)(i).
"Successor Property Trustee" has the meaning specified in
Section 6.6(b).
"Successor Security" has the meaning specified in Section
3.15(b)(i)b.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" means the receipt by the Debenture Issuer of an
opinion of counsel, rendered by a law firm having a national tax practice, to
the effect that, as a result of any amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United States
or any political subdivision or taxing authority thereof or therein, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
adopted or which proposed change, pronouncement or decision is announced on or
after the Closing Date, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date of such opinion, subject to the
United States Federal income tax with respect to income received or accrued on
the Debentures, (ii) interest payable by the Debenture Issuer on such Debentures
is not, or within 90 days of the date of such opinion, will not be deductible by
the Debenture Issuer, in whole or in part, for United States Federal income tax
purposes, or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimus amount of other taxes, duties or
other governmental charges.
<PAGE> 16
9
"10% in Liquidation Amount" means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities, voting separately as a class, who are the record owners of
10% or more of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Transfer Restricted Securities" has the meaning specified in
Section 7.1.
"Transfer Restricted Securities Certificate" has the meaning
specified in Section 7.1.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Enforcement Event" in respect of the Securities means
an Indenture Event of Default has occurred and is continuing in respect of the
Debentures.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trustees' Authorization Certificate" means a written
certificate signed by two of the Regular Trustees for the purpose of
establishing the terms and form of the Capital Securities and the Common
Securities as determined by the Regular Trustees.
ARTICLE 2
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
<PAGE> 17
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(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration conflicts with the duties imposed by Sections 310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the Trust's classification as a grantor trust for
United States Federal income tax purposes and shall not affect the nature of the
Securities as equity securities representing undivided beneficial ownership
interests in the assets of the Trust.
Section 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide the Property Trustee with a list, in such form as the
Property Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders"), (i) not later than December 15
and June 15 of each year and current as of such date, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request from the
Property Trustee for a List of Holders as of a date no more than 15 days before
such List of Holders is given to the Property Trustee; provided that neither the
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations
under, and shall be entitled to the benefits of, Sections 311(a), 311(b) and
312(b) of the Trust Indenture Act.
Section 2.3 Reports by the Property Trustee.
Within 60 days after December 15 of each year (commencing in
the year of the first anniversary of the issuance of the Capital Securities),
the Property Trustee shall provide to the Holders of the Capital Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Property Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
Section 2.4 Periodic Reports to the Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by
<PAGE> 18
11
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
Section 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
Section 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in Liquidation Amount of the
Capital Securities may, by vote or written consent, on behalf of the Holders of
all of the Capital Securities, waive any past Trust Enforcement Event in respect
of the Capital Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, the
Trust Enforcement Event under the
Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than
a majority in principal amount of the
holders of the Debentures (a "Super
Majority") to be waived under the Indenture,
the Trust Enforcement Event under the
Declaration may only be waived by the vote
or written consent of the Holders of at
least the proportion in liquidation amount
of the Capital Securities that the relevant
Super Majority represents of the aggregate
principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Upon
such waiver, any such default shall cease to exist, and any Trust Enforcement
Event with respect to the Capital Securities arising therefrom shall be deemed
to have been cured, for every purpose of this Declaration and the Capital
Securities, but no such waiver shall extend to any subsequent or other Trust
Enforcement Event with respect to the Capital Securities or impair any right
consequent thereon. Any waiver by the Holders of the Capital Securities of a
Trust Enforcement Event with respect to the Capital Securities shall also be
deemed to constitute a waiver by the Holders of the Common Securities of any
such Trust Enforcement Event with respect to the Common Securities for all
purposes of this Declaration without any further act, vote, or consent of the
Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the
Common Securities may, by vote or written consent, on behalf of the Holders of
all of the Common
<PAGE> 19
12
Securities, waive any past Trust Enforcement Event in respect of the Common
Securities and its consequences, provided that, if the underlying Indenture
Event of Default:
(i) is not waivable under the Indenture, except
where the Holders of the Common Securities
are deemed to have waived such Trust
Enforcement Event under the Declaration as
provided below in this Section 2.6(b), the
Trust Enforcement Event under the
Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super
Majority to be waived under the Indenture,
except where the Holders of the Common
Securities are deemed to have waived such
Trust Enforcement Event under the
Declaration as provided below in this
Section 2.6(b), the Trust Enforcement Event
under the Declaration may only be waived by
the vote or written consent of the Holders
of at least the proportion in liquidation
amount of the Common Securities that the
relevant Super Majority represents of the
aggregate principal amount of the Debentures
outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any Trust Enforcement Event and all Trust Enforcement Events with respect to the
Common Securities and the consequences thereof until all Trust Enforcement
Events with respect to the Capital Securities have been cured, waived or
otherwise eliminated, and until such Trust Enforcement Events with respect to
the Capital Securities have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b)
, upon such waiver, any such default shall cease to exist and any Trust
Enforcement Event with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other Trust Enforcement Event with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Capital Securities constitutes a
waiver of the corresponding Trust Enforcement Event with respect to the Capital
Securities under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
<PAGE> 20
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Section 2.7 Trust Enforcement Event; Notice.
(a) The Property Trustee shall, within 90 days after the
occurrence of a Trust Enforcement Event, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Indenture Event of Default, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures, the Property Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Property Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 501(1) and 501(2)
of the Indenture; or
(ii) any default as to which the Property Trustee
shall have received written notice or of
which a Responsible Officer of the Property
Trustee charged with the administration of
this Declaration shall have actual
knowledge.
ARTICLE 3
ORGANIZATION
Section 3.1 Name and Organization.
The Trust hereby continued is named "First Security Capital I"
as such name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
Section 3.2 Office.
The address of the principal executive office of the Trust is
c/o First Security Corporation, Attn: Chief Financial Officer, 79 South Main
Street, Salt Lake City, Utah 84111. On 10 Business Days' written notice to the
Holders of Securities, the Regular Trustees may designate another principal
office.
<PAGE> 21
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Section 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the gross proceeds from such sale to acquire
the Debentures, and (b) except as otherwise limited herein, to engage in only
those other activities necessary or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments,
mortgage, pledge any of its assets or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified as a
grantor trust for United States Federal income tax purposes.
By the acceptance of this Trust, none of the Trustees, the
Sponsor, the Holders of the Capital Securities or Common Securities or the
Capital Securities Beneficial Owners will take any position for United States
Federal income tax purposes which is contrary to the classification of the Trust
as a grantor trust.
Section 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting on behalf of
the Trust, no person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any matter
over which the Regular Trustees have power to act, any power of the Regular
Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6(b), provided, that the registration statements
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by or on behalf of a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 6.
<PAGE> 22
15
Section 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial ownership interest in the assets
of the Trust.
Section 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to establish the terms and form of the Capital Securities
and the Common Securities in the manner specified in Section 7.1 and issue and
sell the Capital Securities and the Common Securities in accordance with this
Declaration; provided, however, that the Trust may issue no more than two series
of Capital Securities (which will consist exclusively of the Transfer Restricted
Securities and the New Capital Securities) and no more than one series of Common
Securities, and, provided further, that there shall be no interests in the Trust
other than the Securities, and the issuance of Securities shall be limited to a
one-time, simultaneous issuance of both Transfer Restricted Securities and
Common Securities on the Closing Date and a one-time issuance of New Capital
Securities pursuant to an exchange offer required pursuant to the Registration
Rights Agreement;
(b) in connection with the issue and sale of the Capital
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission one or
more registration statements on the
applicable forms prepared by the Sponsor,
including any amendments thereto, pertaining
to the Capital Securities, the Guarantee and
the Debentures;
(ii) if deemed necessary or desirable by the
Sponsor, execute and file an application,
prepared by the Sponsor, to the New York
Stock Exchange, Inc. or any other national
stock exchange or the Nasdaq National Market
for listing of any Capital Securities, the
Guarantee and the Debentures;
(iii) if deemed necessary or desirable by the
Sponsor, execute and file with the
Commission a registration statement on Form
8-A, including any amendments thereto,
prepared by the Sponsor, relating to the
registration of the Capital Securities, the
Guarantee and the Debentures under Section
12(b) of the Exchange Act;
(iv) execute and file any documents prepared by
the Sponsor, or take any acts as determined
by the Sponsor to be necessary, in order to
qualify or
<PAGE> 23
16
register all or part of the Capital
Securities in any State in which the Sponsor
has determined to qualify or register such
Capital Securities for sale;
(v) execute and enter into a purchase agreement
and other related agreements providing for
the sale of the Capital Securities to the
Initial Purchasers; and
(vi) execute and enter into the Registration
Rights Agreement.
(c) to acquire the Debentures with the proceeds of the sale of
the Capital Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Capital Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before taking
or refraining from taking any action in relation to any such Special Event;
(e) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of this Agreement and the
Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors
and consultants to conduct only those services that the Regular Trustees have
authority to conduct directly, and to and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of
the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
<PAGE> 24
17
(k) to incur expenses that are necessary or incidental to
carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar
and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Debentures as authorized by the Indenture;
(n) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under the laws
of the State of Delaware and of each other jurisdiction in which such existence
is necessary to protect the limited liability of the Holders of the Capital
Securities and the Holders of the Common Securities or to enable the Trust to
effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with applicable law,
that the Regular Trustees determine in their discretion to be necessary or
desirable in carrying out the purposes and functions of the Trust as set out in
Section 3.3 or the activities of the Trust as set out in this Section 3.6,
including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered
under the Investment Company Act;
(ii) causing the Trust to be classified as a
grantor trust for United States Federal
income tax purposes; and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated
as indebtedness of the Debenture Issuer for
United States Federal income tax purposes.
(p) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of
the Trust; and
(q) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.
The Regular Trustees shall exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall have no
power to, and shall not, take any action that is inconsistent with the purposes
and functions of the Trust set forth in Section 3.3.
<PAGE> 25
18
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
Section 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including the
Property Trustee) shall cause the Trust not to, engage in any activity other
than as required or authorized by this Declaration. In particular, the Trust
shall not and the Trustees (including the Property Trustee) shall cause the
Trust not to:
(i) invest any proceeds received by the Trust
from holding the Debentures, but shall
distribute all such proceeds to Holders of
Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than the Debentures
(and any interest or proceeds received
thereon) and the Guarantee (and the proceeds
received thereon or with respect thereto);
(iii) possess Trust property for other than a
Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a
way as to vary the Trust assets;
(vi) possess any power or otherwise act in such a
way as to vary the terms of the Securities
in any way whatsoever (except to the extent
expressly authorized in this Declaration or
by the terms of the Securities);
(vii) issue any securities or other evidences of
beneficial ownership of, or beneficial
interest in, the Trust other than the
Securities; or
(viii) other than as provided in this Declaration
or by the terms of the Securities, (A)
direct the time, method and place of
exercising any trust or power conferred upon
the Debenture Trustee with respect to the
Debentures, (B) waive any past default that
is waivable under the Indenture, (C)
exercise any right to rescind or annul any
declaration that the principal of all the
Debentures shall be due and payable, or (D)
consent to any amendment, modification or
termination of the Indenture or the
Debentures where such consent shall be
required unless, in each case, the Trust
shall have received (A) the prior approval
of the Majority in Liquidation Amount of the
Capital Securities; provided, however, that
where a consent or action under the
Indenture would
<PAGE> 26
19
require the consent or act of the holders of
more than a majority of the aggregate
liquidation amount of Debentures affected
thereby, only the Holders of the percentage
of the aggregate stated liquidation amount
of the Capital Securities which is at least
equal to the percentage required under the
Indenture may direct the Property Trustee to
give such consent to take such action and
(B) an opinion of counsel to the effect that
such modification will not cause more than
an insubstantial risk that the Trust will be
deemed an Investment Company required to be
registered under the Investment Company Act,
or the Trust will not be classified as a
grantor trust for United States Federal
income tax purposes; or
(ix) take any action inconsistent with the status
of the Trust as a grantor trust for United
States Federal income tax purposes; or
(x) revoke any action previously authorized or
approved by a vote of the Holders of the
Capital Securities except pursuant to a
subsequent vote of the Holders of the
Capital Securities.
Section 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Trust and the Holders of the Securities. The right, title and interest of
the Property Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Property Trustee in accordance with Section .
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Property Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated
non-interest bearing trust account (the
"Property Account") in the name of and under
the exclusive control of the Property
Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments
of funds made in respect of the Debentures
held by the Property Trustee, deposit such
funds into the Property Account and make
payments to the Holders of the Capital
Securities and Holders of the Common
Securities from the Property Account in
accordance with Section 7.2. Funds in the
Property Account shall be held uninvested
until disbursed in accordance with this
Declaration. The Property Account shall be
an account that is maintained with a banking
institution the rating on whose long-term
unsecured indebtedness is at least equal to
the rating assigned to the
<PAGE> 27
20
Capital Securities by a "nationally
recognized statistical rating organization",
as that term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as
shall be necessary or appropriate to effect
the redemption of the Capital Securities and
the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued
by the Regular Trustees in accordance with
the terms of the Securities, engage in such
ministerial activities as so directed and as
shall be necessary or appropriate to effect
the distribution of the Debentures to
Holders of Securities upon the occurrence of
a Special Event.
(d) The Property Trustee shall take all actions and perform
such duties as may be specifically required of the Property Trustee pursuant to
the terms of this Agreement and the Securities.
(e) The Property Trustee shall take any Legal Action which
arises out of or in connection with a Trust Enforcement Event of which a
Responsible Officer of the Property Trustee has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act.
(f) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and
the proceeds of the liquidation distributed
to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a Successor Property Trustee has been
appointed and has accepted that appointment
in accordance with Section 6.6.
(g) Subject to such limitations as are necessary to insure
compliance with Section 3.3, the Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if a Trust Enforcement Event actually known to a
Responsible Officer of the Property Trustee occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all Securities and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee. In the event the Capital Securities do not
<PAGE> 28
21
remain in the form of one or more Global Securities, the Property Trustee will
act as Paying Agent and may designate an additional or substitute Paying Agent
at any time.
(i) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
The Property Trustee shall exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Property Trustee shall have no
power to, and shall not, take any action that is inconsistent with the purposes
and functions of the Trust set out in Section 3.3.
Section 3.9 Certain Duties and Responsibilities of the
Property Trustee.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing of all Trust Enforcement Events that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Property Trustee. In case a Trust Enforcement Event has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust
Enforcement Event and after the curing or
waiving of all such Trust Enforcement Events
that may have occurred:
a. the duties and obligations of the
Property Trustee shall be
determined solely by the express
provisions of this Declaration and
the Property Trustee shall not be
liable except for the performance
of such duties and obligations as
are specifically set forth in this
Declaration, and no implied
covenants or obligations shall be
read into this Declaration against
the Property Trustee; and
b. in the absence of bad faith on the
part of the Property Trustee, the
Property Trustee may conclusively
rely, as to the truth of the
statements and the correctness of
the opinions expressed therein,
upon any certificates or opinions
furnished to the Property Trustee
and conforming to the requirements
of this Declaration; but in the
case of any such certificates or
opinions that by any provision
hereof are specifically required to
be furnished to the
<PAGE> 29
22
Property Trustee, the Property
Trustee shall be under a duty to
examine the same to determine
whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for
any error of judgment made in good faith by
a Responsible Officer of the Property
Trustee, unless it shall be proved that the
Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable
with respect to any action taken or omitted
to be taken by it without negligence, in
good faith in accordance with the direction
of the Holders of not less than a Majority
in Liquidation Amount of the Securities
relating to the time, method and place of
conducting any proceeding for any remedy
available to the Property Trustee, or
exercising any trust or power conferred upon
the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall
require the Property Trustee to expend or
risk its own funds or otherwise incur
personal financial liability in the
performance of any of its duties or in the
exercise of any of its rights or powers, if
it shall have reasonable grounds for
believing that the repayment of such funds
or liability is not reasonably assured to it
under the terms of this Declaration or
indemnity reasonably satisfactory to the
Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with
respect to the custody, safe-keeping and
physical preservation of the Debentures and
the Property Account shall be to deal with
such property in a similar manner as the
Property Trustee deals with similar property
for its own account, subject to the
protections and limitations on liability
afforded to the Property Trustee under this
Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value,
genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or
assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable for
any interest on any money received by it
except as it may otherwise agree with the
Sponsor. Money held by the Property Trustee
need not be segregated from other funds held
by it except in relation to the Property
Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to
the extent otherwise required by law; and
<PAGE> 30
23
(viii) the Property Trustee shall not be
responsible for monitoring the compliance by
the Regular Trustees or the Sponsor with
their respective duties under this
Declaration, nor shall the Property Trustee
be liable for any default or misconduct of
the Regular Trustees or the Sponsor.
(ix) Money held by the Trustee in trust hereunder
need not be segregated from other funds
except to the extent required by law. The
Trustee shall be under no liability for
interest on any money received by it
hereunder except as otherwise agreed in
writing with the Debenture Issuer.
Section 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely
and shall be fully protected in acting or
refraining from acting upon any resolution,
certificate, statement, instrument, opinion,
report, notice, request, direction, consent,
order, bond, debenture, note, other evidence
of indebtedness or other paper or document
believed by it to be genuine and to have
been signed, sent or presented by the proper
party or parties;
(ii) any direction or act of the Sponsor or the
Regular Trustees contemplated by this
Declaration shall be sufficiently evidenced
by an Officers' Certificate (or, with
respect to the establishment of the terms
and form of the Securities by the Regular
Trustees, by a Trustees' Authorization
Certificate);
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem
it desirable that a matter be proved or
established before taking, suffering or
omitting any action hereunder, the Property
Trustee (unless other evidence is herein
specifically prescribed) may, in the absence
of bad faith on its part, request and
conclusively rely upon an Officers'
Certificate which, upon receipt of such
request, shall be promptly delivered by the
Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to
see to any recording, filing or registration
of any instrument (including any financing
or continuation statement or any filing
under tax or securities laws) or any
rerecording, refiling or registration
thereof;
(v) the Property Trustee may consult with
counsel of its choice or other experts and
the advice or opinion of such counsel and
experts with respect to legal matters or
advice within the scope of such experts'
area of expertise shall be full and complete
authorization and protection in respect of
any action taken, suffered or omitted by it
hereunder in good
<PAGE> 31
24
faith and in accordance with such advice or
opinion, such counsel may be counsel to the
Sponsor or any of its Affiliates, and may
include any of its employees. The Property
Trustee shall have the right at any time to
seek instructions concerning the
administration of this Declaration from any
court of competent jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or
powers vested in it by this Declaration at
the request or direction of any Holder,
unless such Holder shall have provided to
the Property Trustee security and indemnity,
reasonably satisfactory to the Property
Trustee, against the costs, expenses
(including attorneys, fees and expenses and
the expenses of the Property Trustee's
agents, nominees or custodians) and
liabilities that might be incurred by it in
complying with such request or direction,
including such reasonable advances as may be
requested by the Property Trustee; provided
that, nothing contained in this Section
3.10(a) shall be taken to relieve the
Property Trustee, upon the occurrence of
an Indenture Event of Default, of its
obligation to exercise the rights and
powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to
make any investigation into the facts or
matters stated in any resolution,
certificate, statement, instrument, opinion,
report, notice, request, direction, consent,
order, bond, debenture, note, other evidence
of indebtedness or other paper or document,
but the Property Trustee, in its discretion,
may make such further inquiry or
investigation into such facts or matters as
it may see fit;
(viii) the Property Trustee may execute any of the
trusts or powers hereunder or perform any
duties hereunder either directly or by or
through agents, custodians, nominees or
attorneys and the Property Trustee shall not
be responsible for any misconduct or
negligence on the part of any agent or
attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or
its agents hereunder shall bind the Trust
and the Holders of the Securities, and the
signature of the Property Trustee or its
agents alone shall be sufficient and
effective to perform any such action and no
third party shall be required to inquire as
to the authority of the Property Trustee to
so act or as to its compliance with any of
the terms and provisions of this
Declaration, both of which shall be
conclusively evidenced by the Property
Trustee's or its agent's taking such action;
(x) whenever in the administration of this
Declaration the Property Trustee shall deem
it desirable to receive instructions with
respect to enforcing any remedy or right or
taking any other action hereunder, the
Property
<PAGE> 32
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Trustee (i) may request instructions from
the Holders of the Securities, the Regular
Trustees or the Sponsor which instructions
may only be given by the Holders of the same
proportion in liquidation amount of the
Securities as would be entitled to direct
the Property Trustee under the terms of the
Securities in respect of such remedy, right
or action, (ii) may refrain from enforcing
such remedy or right or taking such other
action until such instructions are received,
and (iii) shall be protected in conclusively
relying on or acting in or accordance with
such instructions;
(xi) If no Trust Enforcement Event has occurred
and is continuing and the Property Trustee
is required to decide between alternative
causes of action, construe ambiguous
provisions in this Declaration or is unsure
of the application of any provision of this
Declaration, and the matter is not one on
which Holders of Capital Securities are
entitled under the Declaration to vote, then
the Property Trustee may, but shall be under
no duty to, take such action as is directed
by the Company and, if not so directed,
shall take such action as it deems advisable
and in the best interests of the Holders of
the Securities and will have no liability
except for its own bad faith, negligence or
willful misconduct;
(xii) except as otherwise expressly provided by
this Declaration, the Property Trustee shall
not be under any obligation to take any
action that is discretionary under the
provisions of this Declaration; and
(xiii) the Property Trustee shall not be liable for
any action taken, suffered or omitted to be
taken by it without negligence, in good
faith and reasonably believed by it to be
authorized or within the discretion, rights
or powers conferred upon it by this
Declaration.
(xiv) The Property Trustee shall have a lien prior
to the Securities as to all property and
funds held by it hereunder for any amount
owing it or any predecessor Property
Trustee, except with respect to funds held
in trust for the benefit of the Holders of
Securities.
(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
<PAGE> 33
26
Section 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 6.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Property Trustee described in
this Declaration. Except as set forth in Section 6.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
Section 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, any Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6.
Section 3.13 Not Responsible for Recitals or Issuance of
Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities, the Debentures or the Indenture.
Section 3.14 Duration of Trust.
The Trust shall exist until terminated pursuant to the
provisions of Article 8 hereof.
Section 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the
consent of the Regular Trustees or, if there are more than two, a majority of
the Regular Trustees and without the consent of the Holders of the Securities,
the Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties
substantially as an entirety to a trust organized as such under the laws of any
State; provided that:
(i) if the Trust is not the successor, such
successor entity (the "Successor Entity")
either:
<PAGE> 34
27
a. expressly assumes all of the
obligations of the Trust under the
Securities; or
b. substitutes for the Capital
Securities other securities having
substantially the same terms as the
Capital Securities (the "Successor
Securities") so long as the
Successor Securities rank the same
as the Capital Securities rank with
respect to Distributions and
payments upon liquidation,
redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of
such Successor Entity that possesses the
same powers and duties as the Property
Trustee as the holder of the Debentures;
(iii) the Capital Securities or any Successor
Securities are listed, or any Successor
Securities will be listed upon notification
of issuance, on any national securities
exchange or with any other or organization
on which the Capital Securities are then
listed or quoted;
(iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease
does not cause the Capital Securities
(including any Successor Securities) to be
downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease
does not adversely affect the rights,
preferences and privileges of the Holders of
the Capital Securities (including any
Successor Securities) in any material
respect;
(vi) such Successor Entity has a purpose
identical to that of the Trust;
(vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance,
transfer or lease the Sponsor has received
an opinion of independent counsel to the
Trust experienced in such matters to the
effect that:
a. such merger, consolidation,
amalgamation, replacement,
conveyance, transfer or lease does
not adversely affect the rights,
preferences and privileges of the
Holders of the Capital Securities
(including any Successor
Securities) in any material
respect;
b. following such merger,
consolidation, amalgamation,
replacement, conveyance, transfer
or lease neither the Trust nor the
Successor Entity will be required
to register as an Investment
Company; and
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28
c. following such merger,
consolidation, amalgamation or
replacement, the Trust (or the
Successor Entity) will continue to
be classified as a grantor trust
for United States Federal income
tax purposes;
(viii) the Sponsor or any permitted successor or
assignee owns all of the Common Securities
and guarantees the obligations of such
Successor Entity under the Successor
Securities at least to the extent provided
by the Guarantee; and
(ix) such Successor Entity expressly assumes all
of the obligations of the Trust with respect
to the Trustees.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States Federal income tax purposes and each
Holder of the Securities not to be treated as owning an undivided interest in
the Debentures.
Section 3.16 Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other similar judicial proceeding relative to the Trust or any other obligor
upon the Securities or the property of the Trust or of such other obligor or
their creditors, the Property Trustee (irrespective of whether any Distributions
on the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount Securities, such portion of the
liquidation amount as may be specified in the terms of such Securities) and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
<PAGE> 36
29
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the
Property Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement adjustment or compensation
affecting the Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
ARTICLE 4
SPONSOR
Section 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the Commission one
or more registration statements on the applicable forms, including any
amendments thereto, pertaining to the Capital Securities, the Guarantee and the
Debentures;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Capital Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(c) to prepare any filing by the Trust of an application to
the New York Stock Exchange, Inc. or any other national stock exchange or the
Nasdaq National Market for listing, if such filing is determined to be necessary
or desirable by the Sponsor;
(d) to prepare any filing by the Trust with the Commission of
a registration statement on Form 8-A, including any amendments thereto, if such
filing is determined to be necessary or desirable by the Sponsor;
(e) to negotiate the terms of a purchase agreement and other
related agreements providing for the sale of the Capital Securities to the
Initial Purchasers; and
(f) to negotiate the terms of the Registration Rights
Agreement.
<PAGE> 37
30
Section 4.2 Compensation Indemnification and Expenses of the
Trustee.
The Sponsor, in its capacity as Debenture issuer, agrees:
(1) to pay to the Trustee from time to time such compensation
as the Debenture Issuer and the Trustee shall from time to time agree
in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
compensation and the expenses and disbursements of its agent and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Property Trustee and the Delaware Trustee
and their authorized agents for, and to hold each of them harmless
against, any loss, liability or expense including taxes (other than
taxes based upon, measured by or determined by the income of any
Trustee) incurred without negligence or bad faith on the part of the
Property Trustee, the Delaware Trustee or their respective authorized
agents, as the case may be, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending any of them against any
claim or liability in connection with the exercise or performance of
any of their respective powers or duties hereunder; the provisions of
this Section shall survive the resignation or removal of the Delaware
Trustee or the Property Trustee or the termination of this Declaration.
ARTICLE 5
TRUST COMMON SECURITIES HOLDER
Section 5.1 Debenture Issuer's Purchase of Common Securities.
On the Closing Date the Debenture Issuer will purchase all of
the Common Securities issued by the Trust, for an amount at least equal to 3% of
the capital of the Trust, at the same time as the Capital Securities are sold.
Section 5.2 Covenants of the Common Securities Holder.
For so long as the Capital Securities remain outstanding, the
Common Securities Holder will covenant (i) to maintain directly 100% ownership
of the Common Securities, (ii) to cause the Trust to remain a statutory business
trust and not to voluntarily dissolve, wind up, liquidate or be terminated,
except as permitted by this Declaration, (iii) to use its commercially
reasonable efforts to ensure that the Trust will not be an investment
<PAGE> 38
31
company for purposes of the Investment Company Act, and (iv) to take no action
which would be reasonably likely to cause the Trust to be classified as an
association or a publicly traded partnership taxable as a corporation for United
States Federal income tax purposes.
ARTICLE 6
DELAWARE TRUSTEES
Section 6.1 Number of Trustees.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities or by written consent in lieu of such
meeting; provided that the number of Trustees shall be at least three; and
provided further that (1) the Delaware Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, is an entity which has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law; (2) at
least one Regular Trustee is an employee or officer of, or is affiliated with,
the Sponsor; and (3) one Trustee shall be the Property Trustee for so long as
this Declaration is required to qualify as an indenture under the Trust
Indenture Act, and such Trustee may also serve as Delaware Trustee if it meets
the applicable requirements.
Section 6.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
<PAGE> 39
32
Section 6.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing
business under the laws of the United States
of America or any State or Territory thereof
or of the District of Columbia, or a
corporation or other Person permitted by the
Commission to act as an institutional
trustee under the Trust Indenture Act,
authorized under such laws to exercise
corporate trust owners, having a combined
capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal,
State, Territorial or District of Columbia
authority. If such corporation publishes
reports of condition at least annually,
pursuant to law or to the requirements of
the supervising or examining authority
referred to above, then for the purposes of
this Section 6.3(a)(ii), the combined
capital and surplus of such corporation
shall be deemed to be its combined capital
and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 6.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 6.6(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities (as
if it were the Obliger referred to in Section 310(b) of the Trust Indenture Act)
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
(d) The Guarantee shall be deemed to be specifically described
in this Declaration for purposes of clause (i) of the first provision contained
in Section 310(b) of the Trust Indenture Act.
Section 6.4 Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
<PAGE> 40
33
Section 6.5 Initial Trustees.
The initial Regular Trustees shall be:
Brad D. Hardy, Scott C. Ulbrich and David R. Wilson, the
business address of all of whom is c/o First Security Corporation, Attn: Chief
Financial Officer, 79 South Main Street, Salt Lake City, Utah 84111.
Section 6.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 6.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Sponsor;
and
(ii) after the issuance of any Securities, by
vote of the Holders of a Majority in
Liquidation Amount of the Common Securities
voting as a class at a meeting of the
Holders of the Common Securities.
(b) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 6.6(a) until a successor Trustee possessing
the qualifications to act as Property Trustee under Section 3.8(h) (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor. The Trustee that acts as Delaware Trustee
shall not be removed in accordance with Section until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 6.2 and
6.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
or its successor shall have been appointed, until his death or its dissolution
or until his or its removal or resignation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts
as the Property Trustee shall be effective:
a. until a Successor Property Trustee
has been appointed and has accepted
such appointment by instrument
executed by such Successor Property
Trustee and delivered to the Trust,
the Sponsor and the resigning
Property Trustee; or
<PAGE> 41
34
b. until the assets of the Trust have
been completely liquidated and the
proceeds thereof distributed to the
holders of the Securities; and
(ii) no such resignation of the Trustee that acts
as the Delaware Trustee shall be effective
until a Successor Delaware Trustee has been
appointed and has accepted such appointment
by instrument executed by such Successor
Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 6.6.
(e) If no Successor Property Trustee or Successor Delaware
Trustee, as the case may be, shall have been appointed and accepted appointment
as provided in this Section 6.6 within 60 days after delivery to the Sponsor and
the Trust of an instrument of resignation or removal, the resigning or removed
Property Trustee or Delaware Trustee, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee or
Successor Delaware Trustee, as applicable. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
Section 6.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 6.1, or if the number of
Trustees is increased pursuant to Section 6.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 6.6.
Section 6.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
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35
Section 6.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 24
hours before a meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in person
or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Regular Trustee attends a meeting for the
express purpose of objecting to the transaction of any activity on the ground
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Regular Trustees may be taken
at a meeting by vote of a majority of the Regular Trustees present (whether in
person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Regular Trustees. In the event there is only one Regular Trustee,
any and all action of such Regular Trustee shall be evidenced by a written
consent of such Regular Trustee.
Section 6.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any natural person over the age of 21 his, her
or its power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing.
(b) The Regular Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
Section 6.11 Merger, Conversion, Consolidation or Succession
to Business.
Any corporation into which the Property Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or with which
either may be consolidated, or any corporation resulting from an merger,
conversion or consolidation to which the Property Trustee or the Delaware
Trustee, as the case may be, shall be a party, or any corporation succeeding to
all or substantially all the corporate trust business of the Property Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
<PAGE> 43
36
ARTICLE 7
THE SECURITIES
Section 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue a
class of capital securities representing undivided beneficial ownership
interests in the assets of the Trust (the "Transfer Restricted Securities"), a
class of capital securities to be only issued in exchange for the Transfer
Restricted Securities (the "New Capital Securities," and together with the
Transfer Restricted Securities the "Capital Securities"), and one class of
common securities representing undivided beneficial ownership interests in the
assets of the Trust (the "Common Securities").
(i) Capital Securities. The Capital Securities
of the Trust have an aggregate liquidation
amount with respect to the assets of the
Trust of $150,000,000 and a liquidation
amount with respect to the assets of the
Trust of $1,000 per Capital Security. The
New Capital Security Certificates and the
Transfer Restricted Capital Certificates
evidencing the Capital Securities shall be
substantially in the form of Exhibit A to
the Declaration provided, that the New
Capital Security Certificate shall not
contain any of the provisions following the
Trustee's authentication, with such changes
and additions thereto or deletions therefrom
as may be required by ordinary usage, custom
or practice or to conform to the rules of
any stock exchange on which the Capital
Securities are listed.
(ii) Common Securities. The Common Securities of
the Trust have an aggregate liquidation
amount with respect to the assets of the
Trust of $4,640,000 and a liquidation amount
with respect to the assets of the Trust of
$1,000 per Common Security. The Common
Security Certificates evidencing the Common
Securities shall be substantially in the
form of Exhibit B to the Declaration, with
such changes and additions thereto or
deletions therefrom as may be required by
ordinary usage, custom or practice.
(b) Payment of distributions on, and amounts payable on
redemption of, the Capital Securities and the Common Securities, as applicable,
shall be made Pro Rata based on the liquidation amount of such Capital
Securities and Common Securities; provided, however, that if on any date on
which amounts payable on distribution or redemption an Indenture Event of
Default shall have occurred and be continuing, no payment of any distribution
on, or redemption amount of, any of the Common Securities, and no other payment
on account of the redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid distributions on all of the outstanding Capital Securities for all
distribution periods terminating on or prior thereto, or in the case of amounts
payable on redemption the full amount of such redemption amounts on
<PAGE> 44
37
all of the outstanding Capital Securities then called for redemption, shall have
been made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all distributions on, or
amounts payable on redemption of, the Capital Securities then due and payable.
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Capital Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by
a Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case a Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Securities may be listed, or to conform to usage.
A Certificate shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. Such
signature shall be conclusive evidence that the Certificate has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular
Trustee, the Property Trustee shall authenticate the Certificates for original
issue. The aggregate number of Capital Securities outstanding at any time shall
not exceed the liquidation amount set forth in Section 7(a)(i).
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Certificates. An authenticating agent
may authenticate Certificates whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor.
(d) The consideration received by the Trust for the issuance
of the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
<PAGE> 45
38
(f) Every Person, by virtue of having become a Holder or a
Capital Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration and the terms of the Securities, the
Guarantee, the Indenture and the Debentures.
(g) The Securities shall have no preemptive rights.
Section 7.2 Distributions.
(a) Holders of Securities shall be entitled to receive
cumulative cash distributions at the rate per annum of 8.41% of the stated
liquidation amount of $1,000 per Security, calculated on the basis of a 360-day
year consisting of twelve 30-day months. For any period shorter than a full
180-day semi-annual period, distributions will be computed on the basis of the
actual number of days elapsed in such 180-day semi-annual period. Subject to
Section 7.1(b), distributions shall be made on the Capital Securities and the
Common Securities on a Pro Rata basis. Distributions on the Securities shall,
from the date of original issue, accrue and be cumulative and shall be payable
semi-annually only to the extent that the Trust has funds available for the
payment of such Distributions in the Property Account. Distributions not paid on
the scheduled payment date will accumulate and compound semi-annually at the
rate of 8.41% per annum, to the extent permitted by applicable law, ("Compounded
Distributions"). "Distributions" shall mean ordinary cumulative distributions
together with any Compounded Distributions. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest (as
defined in the Indenture)), premium and/or principal on the Debentures held by
the Property Trustee (the amount of any such payment being a "Payment Amount"),
the Property Trustee shall and is directed, to the extent funds are available
for that purpose, to make a Pro Rata distribution (a "Distribution") of the
Payment Amount to Holders, subject to the terms of Section 7.1(b).
(b) Distributions on the Securities will be cumulative, will
accrue from the date of initial issuance and will be payable semi-annually in
arrears on each December 15 and June 15, commencing June 15, 1997, when, as and
if available for payment, by the Property Trustee, except as otherwise described
below. If Distributions are not paid when scheduled, the accrued Distributions
shall be paid to the Holders of record of Securities as they appear on the books
and records of the Trust on the record date as determined under Section 7.2(c).
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which relevant record date shall be the 15th of the month
prior to the relevant payment dates. In the event that any date on which
distributions are payable on the Securities is not a Business Day, payment of
the distribution payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay) with the same force and effect as if made on such date.
Section 7.3 Redemption of Securities.
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(a) Upon the repayment or redemption, in whole or in part, of
the Debentures, the proceeds from such repayment or redemption shall be
simultaneously applied Pro Rata (subject to Section 7.1(b)) to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed for an amount equal to the redemption
price paid by the Debenture Issuer in respect of such Debentures plus an amount
equal to accrued and unpaid Distributions thereon through the date of the
redemption or such lesser amount as shall be received by the Trust in respect of
the Debentures so repaid or redeemed (the "Redemption Price"). Holders will be
given not less than 30 or more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed
(subject to Section 7.1(b)) Pro Rata and the Capital Securities to be redeemed
will be redeemed as described in Section 7.4 below.
(c) If, at any time, a Special Event shall occur and be
continuing, the Regular Trustees may elect to, unless the Debentures are
redeemed, within 90 days following the occurrence of such Special Event, subject
to the receipt of any necessary approval by the Federal Reserve, dissolve the
Trust upon not less than 30 nor more than 60 days' notice and, after
satisfaction of creditors, if any, cause the Debentures to be distributed to the
holders of the Capital Securities in liquidation of the Trust.
(d) On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Capital Securities and the Common Securities
will no longer be deemed to be outstanding and (ii) certificates representing
Securities will be deemed to represent the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid distributions equal to accrued and unpaid distributions on, such
Securities until such certificates are presented to the Sponsor or its agent for
transfer or reissuance.
Section 7.4 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 7.4, a Redemption/Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
<PAGE> 47
40
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed and
the Capital Securities to be redeemed will be redeemed as described below. The
Trust may not redeem the Securities in part unless all accrued and unpaid
interest has been paid in full on all Securities then outstanding plus accrued
but unpaid interest to the date of redemption. For all purposes of this
Declaration, unless the context otherwise requires, all provisions relating to
the redemption of Capital Securities shall relate, in the case of any Capital
Security redeemed or to be redeemed only in part, to the portion of the
aggregate liquidation amount of Capital Securities which has been or is to be
redeemed.
(c) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 7.4 (which notice will be
irrevocable), then (A) by 12:00 noon, New York City time, on the redemption
date, the Property Trustee, upon receipt of such funds, will deposit irrevocably
with the DTC (in the case of book-entry form Capital Securities) or its nominee
(or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Capital Securities and will give
the DTC irrevocable instructions and authority to pay the Redemption Price to
the Holders of the Capital Securities, and (B) with respect to Capital
Securities and Common Securities issued in definitive form, the Property Trustee
will pay the relevant Redemption Price to the Holders of such Securities by
check mailed to the address of the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, then immediately prior to
the close of business on the date of such deposit, distributions will cease to
accrue on the Securities so called for redemption and all rights of Holders of
such Securities will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption Price.
If any date fixed for redemption of Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid either by the Property
Trustee or by the Sponsor as guarantor pursuant to the Guarantee, Distributions
on such Securities will continue to accrue at the then applicable rate from the
original redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price. For these purposes, the applicable Redemption
Price shall not include Distributions which are being paid to Holders who were
Holders on a relevant record date. Upon satisfaction of the foregoing
conditions, then immediately prior to the close of business on the date of such
deposit or payment, all rights of Holders of such Debentures so called for
redemption will cease, except the right of the Holders to receive the Redemption
Price, but without interest on such Redemption Price, and from and after the
date fixed for redemption, such Debentures will not accrue distributions or bear
interest.
<PAGE> 48
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Neither the Regular Trustees nor the Trust shall be required
to register or cause to be registered the transfer or exchange of any Securities
that have been called for redemption, except in the case of any Securities being
redeemed in part, any portion thereof not to be redeemed.
(d) Subject to the foregoing and applicable law (including,
without limitation, United States Federal securities laws), the Debenture Issuer
or its subsidiaries may at any time and from time to time purchase outstanding
Capital Securities by tender, in the open market or by private agreement.
Section 7.5 Voting Rights of Capital Securities.
(a) Except as provided under this Article VII and as otherwise
required by the Business Trust Act, the Trust Indenture Act and other applicable
law, the Holders of the Capital Securities will have no voting rights.
(b) Subject to the requirement of the Property Trustee
obtaining a tax opinion in certain circumstances set forth in Section 7.5 (d)
below, the Holders of a Majority in liquidation amount of the Capital Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or to direct the exercise of
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as Holder of the Debentures,
to (i) exercise the remedies available to it under the Indenture as a Holder of
the Debentures or (ii) consent to any amendment or modification of the Indenture
or the Debentures where such consent shall be required; provided, however, that
where a consent or action under the Indenture would require the consent or act
of the Holders of more than a majority of the aggregate liquidation amount of
Debentures affected thereby, only the Holders of the percentage of the aggregate
stated liquidation amount of the Capital Securities which is at least equal to
the percentage required under the Indenture may direct the Property Trustee to
give such consent to take such action.
(c) If the Property Trustee fails to enforce its rights under
the Debentures after a Holder of record of Capital Securities has made a written
request, such Holder of record of Capital Securities may, to the extent
permitted by applicable law, institute a legal proceeding directly against the
Debenture Issuer to enforce the Property Trustee's rights under the Indenture
without first instituting any legal proceeding against the Property Trustee or
any other person or entity. Notwithstanding the foregoing, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of the Debenture Issuer to make any required payment when due
under the Indenture, then a Holder of Capital Securities may directly institute
a proceeding against the Debenture Issuer for enforcement of such payment under
the Indenture.
(d) The Property Trustee shall notify all Holders of the
Capital Securities of any notice of any Indenture Event of Default received from
the Debenture Issuer with respect to the Debentures. Such notice shall state
that such Indenture Event of Default also constitutes a Trust Enforcement Event.
Except with respect to directing the time, method,
<PAGE> 49
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and place of conducting a proceeding for a remedy, the Property Trustee shall be
under no obligation to take any of the actions described in clause 7.5(b)(i) and
(ii) above unless the Property Trustee has obtained an opinion of independent
tax counsel to the effect that as a result of such action, the Trust will not
fail to be classified as a grantor trust for United States Federal income tax
purposes and each Holder will be treated as owning an undivided beneficial
ownership interest in the Debentures.
(e) In the event the consent of the Property Trustee, as the
Holder of the Debentures, is required under the Indenture with respect to any
amendment or modification of the Indenture, the Property Trustee shall request
the direction of the Holders of the Securities with respect to such amendment or
modification and shall vote with respect to such amendment or modification as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the Holders of more than a majority of the
aggregate principal amount of the Debentures, the Property Trustee may only give
such consent at the direction of the Holders of at least the same proportion in
aggregate stated liquidation amount of the Securities. The Property Trustee
shall not take any such action in accordance with the directions of the Holders
of the Securities unless the Property Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, the Trust will not be
classified as other than a grantor trust for United States Federal income tax
purposes and each Holder will be treated as owning an undivided beneficial
ownership interest in the Debentures.
(f) A waiver of an Indenture Event of Default with respect to
the Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
(g) Any required approval or direction of Holders of Capital
Securities may be given at a separate meeting of Holders of Capital Securities
convened for such purpose, at a meeting of all of the Holders of Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.
(h) No vote or consent of the Holders of Capital Securities
will be required for the Trust to redeem and cancel Capital Securities or
distribute Debentures in accordance with the Declaration.
(i) Notwithstanding that Holders of Capital Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Securities that are owned at such time by the Debenture Issuer or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, the Debenture Issuer, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Securities
were not outstanding, provided, however that persons otherwise eligible to vote
to
<PAGE> 50
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whom the Debenture Issuer or any of its subsidiaries have pledged Capital
Securities may vote or consent with respect to such pledged Capital Securities
under any of the circumstances described herein.
(j) Holders of the Capital Securities will have no rights to
appoint or remove the Trustees, who may be appointed, removed or replaced solely
by the Debenture Issuer, as the Holder of all of the Common Securities. If an
Indenture Event of Default has occurred and is continuing, the Property Trustee
and the Delaware Trustee may be removed at such time by a Majority in
Liquidation Amount of the Capital Securities.
Section 7.6 Voting Rights of Common Securities.
(a) Except as provided under Section 6.1(b) or this Section
7.6 or as otherwise required by the Business Trust Act, the Trust Indenture Act
or other applicable law or provided by the Declaration, the Holders of the
Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article 5 of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after
all Trust Enforcement Events with respect to the Capital Securities have been
cured, waived, or otherwise eliminated and subject to the requirement of the
Property Trustee obtaining a tax opinion in certain circumstances set forth in
this paragraph (c), the Holders of a Majority in liquidation amount of the
Common Securities have the right to direct the time, method and place of
conduction any proceeding for any remedy available to the Property Trustee, or
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Debentures, to (i) exercise the remedies available to it under the
Indenture as a Holder of the Debentures, or (ii) consent to any amendment or
modification of the Indenture or the Debentures where such consent shall be
required; provided, however, that where a consent or action under the Indenture
would require the consent or act of the Holders of more than a majority of the
aggregate liquidation amount of Debentures affected thereby, only the Holders of
the percentage of the aggregate stated liquidation amount of the Common
Securities which is at least equal to the percentage required under the
Indenture may direct the Property Trustee to have such consent or take such
action. Except with respect to directing the time, method, and place of
conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 7.6(c)(i) and (ii)
above unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that, as a result of such action, for United States
Federal income tax purposes the Trust will not fail to be classified as a
grantor trust and each Holder will be treated as owning an undivided beneficial
ownership interest in the Debentures.
(d) If the Property Trustee fails to enforce its rights under
the Debentures after a Holder of record of Common Securities has made a written
request, such Holder of record
<PAGE> 51
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of Common Securities may, to the extent permitted by applicable law, directly
institute a legal proceeding directly against the Debenture Issuer, as sponsor
of the Trust, to enforce the Property Trustee's rights under the Debentures
without first instituting any legal proceeding against the Property Trustee or
any other person or entity.
(e) A waiver of an Indenture Event of Default with respect to
the Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
(f) Any required approval or direction of Holders of Common
Securities may be given at a separate meeting of Holders of Common Securities
convened for such purpose, at a meeting of all of the Holders of Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Trust Common Securities are entitled to vote, or of
any matter on which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.
(g) No vote or consent of the holders Of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute Debentures in accordance with the Declaration and the terms of the
Securities.
Section 7.7 Paying Agent.
In the event that any Capital Securities are not in book-entry
only form, the Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where the Trust Capital Securities
may be presented for payment ("Paying Agent"). The Trust may appoint the paying
agent and may appoint one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Trust may change any Paying Agent without prior notice to the
Holders. The Trust shall notify the Property Trustee of the name and address of
any Paying Agent not a party to this Declaration. If the Trust fails to appoint
or maintain another entity as Paying Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent. The Bank of
New York shall initially act as Paying Agent for the Capital Securities and the
Common Securities. In the event the Property Trustee shall no longer be the
Paying Agent, the Regular Trustees shall appoint a successor (which shall be a
bank or trust company acceptable to the Regular Trustees and the Debenture
Issuer) to act as Paying Agent. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Property Trustee and the
Debenture Issuer.
Section 7.8 Transfer of Securities.
(a) The Trust shall cause to be kept at the Corporate Trust
Office of the Property Trustee a register (the register maintained in such
office being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as it
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may prescribe, the Trust shall provide for the registration of Capital
Securities and of transfers of Capital Securities. The Property Trustee is
hereby appointed "Security Registrar" for the purpose of registering Capital
Securities and transfers of Capital Securities as herein provided.
(b) Upon surrender for registration of transfer of any
Security at an office or agency of the Trust designated for such purpose, the
Trust shall execute, and the Property Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Securities
of any authorized denominations and of a like aggregate principal amount.
(c) At the option of the Holder, Securities may be exchanged
for other Securities of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Trust shall execute, and the Property Trustee shall authenticate and deliver,
the Securities which the Holder making the exchange is entitled to receive.
(d) Every Security presented or surrendered for registration
of transfer or for exchange shall (if so required by the Trust or the Property
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Trust and the Security Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of
transfer or exchange of Securities, but the Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities.
(f) If the Securities are to be redeemed in part, the Trust
shall not be required (A) to issue, register the transfer of or exchange any
Securities during a period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of any such Securities selected
for redemption under Section 7.4 and ending at the close of business on the day
of such mailing, or (B) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
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Section 7.9 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such
security or indemnity as may be required by them to keep each of them, the
Sponsor and the Trust harmless, then, in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, any Regular
Trustee on behalf of the Trust shall execute and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the issuance of any new
Certificate under this Section 7.9, the Regular Trustees may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in
the relevant Securities, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 7.10 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.
Section 7.11 Global Securities.
If the Trust shall establish that the Capital Securities are
to be issued in the form of one or more Global Securities, then a Regular
Trustee on behalf of the Trust shall execute and the Property Trustee shall
authenticate and deliver one or more Global Securities that (i) shall represent
and shall be denominated in an amount equal to the aggregate liquidation amount
of all of the Capital Securities to be issued in the form of Global Securities
and not yet cancelled, (ii) shall be registered in the name of the Depositary
for such Global Security or Capital Securities or the nominee of such
Depositary, and (iii) shall be delivered by the Property Trustee to such
Depositary or pursuant to such Depositary's instructions. Global Securities
shall bear a legend substantially to the following effect:
"This Capital Security is a Global Security within the meaning
of the Declaration hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. Notwithstanding the provisions of
Section 7.8 of the Declaration, unless and until it is exchanged in whole or in
part for Capital Securities in definitive registered form, a
<PAGE> 54
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Global Security representing all or a part of the Capital Securities may not be
transferred in the manner provided in Section 7.8 of the Declaration except as a
whole by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Every Capital Security delivered upon registration or
transfer of, or in exchange for, or in lieu of, this Global Security shall be a
Global Security subject to the foregoing, except in the limited circumstances
described above. Unless this certificate is presented by an authorized
representative of DTC to the Trust or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is to be made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein."
Definitive Capital Securities issued in exchange for all or a
part of a Global Security pursuant to this Section 7.11 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Property Trustee. Upon execution and authentication, the Property
Trustee shall deliver such definitive Capital Securities to the persons in whose
names such definitive Capital Securities are so registered.
At such time as all interests in Global Securities have been
redeemed, repurchased or canceled, such Global Securities shall be, upon receipt
thereof, canceled by the Property Trustee in accordance with standing procedures
and instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in Global Securities is exchanged
for definitive Capital Securities, redeemed, canceled or transferred to a
transferee who receives definitive Capital Securities therefor or any definitive
Capital Security is exchanged or transferred for part of Global Securities, the
principal amount of such Global Securities shall, in accordance with the
standing procedures and instructions existing between the Depositary and the
Custodian, be reduced or increased, as the case may be, and an endorsement shall
be made on such Global Securities by the Property Trustee or the Custodian, at
the direction of the Property Trustee, to reflect such reduction or increase.
The Trust and the Property Trustee may for all purposes,
including the making of payments due on the Capital Securities, deal with the
Depositary as the authorized representative of the Holders for the purposes of
exercising the rights of Holders hereunder. The rights of the owner of any
beneficial interest in a Global Security shall be limited to those established
by law and agreements between such owners and depository participants or
Euroclear and Cedel; provided, that no such agreement shall give any rights to
any person against the Trust or the Property Trustee without the written consent
of the parties so affected. Multiple requests and directions from and votes of
the Depositary as holder of Capital Securities in global form with respect to
any particular matter shall not be deemed
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inconsistent to the extent they do not represent an amount of Capital Securities
in excess of those held in the name of the Depositary or its nominee.
If at any time the Depositary for any Capital Securities
represented by one or more Global Securities notifies the Trust that it is
unwilling or unable to continue as Depositary for such Capital Securities or if
at any time the Depositary for such Capital Securities shall no longer be
eligible under this Section 7.11, the Trust shall appoint a successor Depositary
with respect to such Capital Securities. If a successor Depositary for such
Capital Securities is not appointed by the Trust within 90 days after the Trust
receives such notice or becomes aware of such ineligibility, the Trust's
election that such Capital Securities be represented by one or more Global
Securities shall no longer be effective and a Regular Trustee on behalf of the
Trust shall execute, and the Property Trustee will authenticate and deliver
Capital Securities in definitive registered form, in any authorized
denominations, in an aggregate liquidation amount equal to the principal amount
of the Global Security or Capital Securities representing such Capital
Securities in exchange for such Global Security or Capital Securities.
The Trust may at any time and in its sole discretion determine
that the Capital Securities issued in the form of one or more Global Securities
shall no longer be represented by a Global Security or Capital Securities. In
such event a Regular Trustee on behalf of the Trust shall execute, and the
Property Trustee, shall authenticate and deliver, Capital Securities in
definitive registered form, in any authorized denominations, in an aggregate
liquidation amount equal to the principal amount of the Global Security or
Capital Securities representing such Capital Securities, in exchange for such
Global Security or Capital Securities.
Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in Section 314(a)), Global Securities may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
Interests of beneficial owners in Global Security may be
transferred or exchanged for definitive Capital Securities and definitive
Capital Securities may be transferred or exchange for Global Securities in
accordance with rules of the Depositary and the provisions of Section 7.13.
Any Capital Security in global form may be endorsed with or
have incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Declaration as may be required by the
Custodian, the Depositary or by the National Association of Securities Dealers,
Inc. in order for the Capital Securities to be tradeable on the PORTAL Market or
as may be required for the Capital Securities to be tradeable on any other
market developed for trading of securities pursuant to Rule 144A or required to
comply with any applicable law or any regulation thereunder or with Regulation S
or with the rules and regulations of any securities exchange upon which the
Capital Securities may be listed or traded or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular Capital Securities are subject.
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Section 7.12 Restrictive Legend.
(a) Each Global Security and definitive Capital Security that
constitutes a Restricted Security shall bear the following legend (the "Private
Placement Legend") on the face thereof until three years after the later of the
date of original issue and the last date on which the Sponsor or any affiliate
of the Sponsor was the owner of such Capital Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date"), unless otherwise agreed by
the Trust and the Holder thereof:
"THIS CAPITAL SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS
CAPITAL SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS CAPITAL SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS CAPITAL SECURITY,
BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE
BENEFIT OF THE TRUST THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY
WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL
NOT OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY PRIOR TO
THE LATER OF THE DATE WHICH IS THREE YEARS AFTER THE DATE OF ORIGINAL
ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE
OF THE TRUST WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY
PREDECESSOR) EXCEPT (A) TO THE TRUST, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(D) OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 904 UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE
JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THIS CAPITAL SECURITY OF THE RESALE
RESTRICTIONS SET FORTH IN (II) ABOVE, ANY OFFER, SALE OR OTHER
DISPOSITION PURSUANT TO THE FOREGOING CLAUSES (II)(D) AND (E) IS
SUBJECT TO THE RIGHT OF THE ISSUER OF THIS CAPITAL SECURITY AND THE
PROPERTY TRUSTEE FOR SUCH CAPITAL SECURITIES TO REQUIRE
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THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER
INFORMATION ACCEPTABLE TO THEM IN FORM AND SUBSTANCE."
Any Capital Security (or security issued in exchange or
substitution therefor) as to which such restrictions on transfer shall have
expired in accordance with their terms may, upon satisfaction of the
requirements of Section 7.12(b) and surrender of such Capital Security for
exchange to the Capital Security Registrar in accordance with the provisions of
this Section 7.12(a), be exchanged for a new Capital Security or Capital
Securities, of like tenor and aggregate liquidation amount, which shall not bear
the restrictive legend required by this Section 7.12(a).
Upon any sale or transfer of any Restricted Security
(including any interest in a Global Security) (i) that is effected pursuant to
an effective registration statement under the Securities Act or (ii) in
connection with which the Property Trustee receives certificates and other
information (including an opinion of counsel, if requested) reasonably
acceptable to the Company and the Property Trustee to the effect that such
security will no longer be subject to the resale restrictions under federal and
state securities laws, then (A) in the case of a Restricted Security in
definitive form, the Capital Security registrar or co-registrar shall permit the
holder thereof to exchange such Restricted Security for a security that does not
bear the legend set forth in Section 314(a), and shall rescind any such
restrictions on transfer and (B) in the case of Restricted Securities
represented by a Global Security, such Capital Security shall no longer be
subject to the restrictions contained in the legend set forth in Section 7.12(a)
(but still subject to the other provisions hereof). In addition, any Capital
Security (or security issued in exchange or substitution therefor) as to which
the restrictions on transfer described in the legend set forth in Section
7.12(a) have expired by their terms, may, upon surrender thereof (in accordance
with the terms of this Indenture) together with such certifications and other
information (including an opinion of counsel having substantial experience in
practice under the Securities Act and otherwise reasonably acceptable to the
Company, addressed to the Company and the Property Trustee and in a form
acceptable to the Company, to the effect that the transfer of such Restricted
Security has been made in compliance with Rule 144 or such successor provision)
acceptable to the Company and the Property Trustee as either of them may
reasonably require, be exchanged for a new Capital Security or Capital
Securities of like tenor and aggregate liquidation amount, which shall not bear
the restrictive legends set forth in Section 7.12(a).
Section 7.13 Special Transfer Provisions.
(a) At any time at the request of the beneficial holder of a
Capital Security in global form, such beneficial holder shall be entitled to
obtain a definitive Capital Security upon written request to the Property
Trustee in accordance with the standing instructions and procedures existing
between the Depositary and the Property Trustee for the issuance thereof. Any
transfer of a beneficial interest in a Capital Security in global form which
cannot be effected through book-entry settlement must be effected by the
delivery to the transferee (or its nominee) of a definitive Capital Security or
Securities registered in the name of the transferee (or its nominee) on the
books maintained by the Security Registrar. With respect to any such transfer,
the Property Trustee will cause, in accordance with the standing
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instructions and procedures existing between the Depositary and the Property
Trustee, the aggregate liquidation amount of the Global Security to be reduced
and, following such reduction, the Property Trustee will cause Definitive
Capital Securities in the appropriate aggregate liquidation amount in the name
of such transferee (or its nominee) and bearing such restrictive legends as may
be required by this Declaration to be delivered. In connection with any such
transfer, the Property Trustee may request such representations and agreements
relating to the restrictions on transfer of such Capital Securities from such
transferee (or such transferee's nominee) as the Property Trustee may reasonably
require.
(b) So long as the Capital Securities are eligible for
book-entry settlement, or unless otherwise required by law, upon any transfer of
a definitive Capital Security to a QIB in accordance with Rule 144A, unless
otherwise requested by the transferor, and upon receipt of the definitive
Capital Security being so transferred, together with a certification from the
transferor that the transferor reasonably believes the transferee is a QIB (or
other evidence satisfactory to the Property Trustee), the Property Trustee shall
make an endorsement on the Restricted Global Security to reflect an increase in
the aggregate liquidation amount of the Restricted Global Security, and the
Property Trustee shall cancel such definitive Capital Security and cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Property Trustees, the aggregate liquidation amount of
Capital Securities represented by the Restricted Global Security to be increased
accordingly.
(c) So long as the Capital Securities are eligible for
book-entry settlement, or unless otherwise required by law, upon any transfer of
a definitive Capital Security in accordance with Regulation S, if requested by
the transferor, and upon receipt of the definitive Capital Security or Capital
Securities being so transferred, together with a certification from the
transferor that the transfer was made in accordance with Rule 903 or 904 of
Regulation S or Rule 144 under the Securities Act (or other evidence
satisfactory to the Property Trustee), the Property Trustee shall make or direct
the Custodian to make, an endorsement on the Regulation S Global Security to
reflect an increase in the aggregate liquidation amount of the Capital
Securities represented by the Regulation S Global Security, the Property Trustee
shall cancel such definitive Capital Security or Capital Securities and cause,
or direct the Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Property Trustee, the
aggregate liquidation amount of Capital Securities represented by the Regulation
S Global Security to be increased accordingly.
(d) If a holder of a beneficial interest in the Restricted
Global Security wishes at any time to exchange its interest in the Restricted
Global Security for an interest in the Regulation S Global Security, or to
transfer its interest in the Restricted Global Security to a person who wishes
to take delivery thereof in the form of an interest in the Regulation S Global
Security, such holder may, subject to the rules and procedures of the Depositary
and to the requirements set forth in the following sentence, exchange or cause
the exchange or transfer or cause the transfer of such interest for an
equivalent beneficial interest in the Regulation S Global Security. Upon receipt
by the Property Trustee, as transfer agent of (1) instructions given in
accordance with the Depositary's procedures from or on behalf of a holder of a
beneficial interest in the Restricted Global Security, directing the Property
Trustee
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(via DWAC), as transfer agent, to credit or cause to be credited a beneficial
interest in the Regulation S Global Security in an amount equal to the
beneficial interest in the Restricted Global Security to be exchanged or
transferred, (2) a written order given in accordance with the Depositary's
procedures containing information regarding the Euroclear or Cedel account to be
credited with such increase and the name of such account, and (3) a certificate
given by the holder of such beneficial interest stating that the exchange or
transfer of such interest has been made pursuant to and in accordance with Rule
903 or Rule 904 of Regulation S or Rule 144 under the Securities Act (or other
evidence satisfactory to the Property Trustee), the Property Trustee, as
transfer agent, shall promptly deliver appropriate instructions to the
Depositary (via DWAC), its nominee, or the custodian for the Depositary, as the
case may be, to reduce or reflect on its records a reduction of the Restricted
Global Security by the aggregate liquidation amount of the beneficial interest
in such Restricted Global Security to be so exchanged or transferred from the
relevant participant, and the Property Trustee, as transfer agent, shall
promptly deliver appropriate instructions (via DWAC) to the Depositary, its
nominee, or the custodian for the Depositary, as the case may be, concurrently
with such reduction, to increase or reflect on its records an increase of the
liquidation amount of such Regulation S Global Security by the aggregate
liquidation amount of the beneficial interest in such Restricted Global Security
to be so exchanged or transferred, and to credit or cause to be credited to the
account of the person specified in such instructions (who may be Morgan Guaranty
Trust Company of New York, Brussels office, as operator of Euroclear or Cedel or
another agent member of Euroclear or Cedel, or both, as the case may be, acting
for and on behalf of them) a beneficial interest in such Regulation S Global
Security equal to the reduction in the liquidation amount of such Restricted
Global Security.
(e) If a holder of a beneficial interest in the Regulation S
Global Security wishes at any time to exchange its interest in the Regulation S
Global Security for an interest in the Restricted Global Security, or to
transfer its interest in the Regulation S Global Security to a person who wishes
to take delivery thereof in the form of an interest in the Restricted Global
Security, such holder may, subject to the rules and procedures of Euroclear or
Cedel and the Depositary, as the case may be, and to the requirements set forth
in the following sentence, exchange or cause the exchange or transfer or cause
the transfer of such interest for an equivalent beneficial interest in such
Restricted Global Security. Upon receipt by the Property Trustee, as transfer
agent of (l) instructions given in accordance with the procedures of Euroclear
or Cedel and the Depositary, as the case may be, from or on behalf of a
beneficial owner of an interest in the Regulation S Global Security directing
the Property Trustee, as transfer agent, to credit or cause to be credited a
beneficial interest in the Restricted Global Security in an amount equal to the
beneficial interest in the Regulation S Global Security to be exchanged or
transferred, (2) a written order given in accordance with the procedures of
Euroclear or Cedel and the Depositary, as the case may be, containing
information regarding the account with the Depositary to be credited with such
increase and the name of such account, and (3) prior to the expiration of the
Restricted Period, a certificate given by the holder of such beneficial interest
and stating that the person transferring such interest in such Regulation S
Global Security reasonably believes that the person acquiring such interest in
the Restricted Global Security is a QIB and is obtaining such beneficial
interest in a transaction meeting the requirements of Rule 144A and any
applicable securities laws of any state of the United States or any other
jurisdiction (or other evidence satisfactory
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to the Property Trustee), the Property Trustee, as transfer agent, shall
promptly deliver (via DWAC) appropriate instructions to the Depositary, its
nominee, or the custodian for the Depositary, as the case may be, to reduce or
reflect on its records a reduction of the Regulation S Global Security by the
aggregate liquidation amount of the beneficial interest in such Regulation S
Global Security to be exchanged or transferred, and the Property Trustee, as
transfer agent, shall promptly deliver (via DWAC) appropriate instructions to
the Depositary, its nominee, or the custodian for the Depositary, as the case
may be, concurrently with such reduction, to increase or reflect on its records
an increase of the liquidation amount of the Restricted Global Security by the
aggregate liquidation amount of the beneficial interest in the Regulation S
Global Security to be so exchanged or transferred, and to credit or cause to be
credited to the account of the person specified in such instructions a
beneficial interest in the Restricted Global Security equal to the reduction in
the liquidation amount of the Regulation S Global Security. After the expiration
of the Restricted Period, the certification requirement set forth in clause (3)
of the second sentence of this Section 7.13(e) will no longer apply to such
exchanges and transfers.
(f) Any beneficial interest in one of the Global Securities
that is transferred to a person who takes delivery in the form of an interest in
the other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions and other
procedures applicable to beneficial interests in such other Global Security for
as long as it remains such an interest.
(g) Prior to or on the 40th day after the later of the
commencement of the offering of the Capital Securities and the Closing Date (the
"Restricted Period"), beneficial interests in a Regulation S Global Security may
only be held through Morgan Guaranty Trust Company of New York, Brussels office,
as operator of Euroclear or Cedel or another agent member of Euroclear and Cedel
acting for and on behalf of them, unless delivery is made through the Restricted
Global Security in accordance with the certification requirements hereof. During
the Restricted Period, interests in the Regulation S Global Security, may be
exchanged for interests in the Restricted Global Security or for definitive
Securities only in accordance with the certification requirements described
above.
ARTICLE 8
DISSOLUTION AND TERMINATION OF TRUST
Section 8.1 Dissolution and Termination of Trust.
(a) The Trust shall dissolve upon the earliest of:
(i) the bankruptcy of the Holder of the Common
Securities or the Sponsor;
(ii) the filing of a certificate of dissolution
or its equivalent with respect to the
Sponsor; the consent of the Holder of at
least a Majority in
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Liquidation Amount of the Securities to the
filing of a certificate of cancellation with
respect to the Trust or the revocation of
the Sponsor's charter and the expiration of
90 days after the date of revocation without
a reinstatement thereof;
(iii) the entry of a decree of judicial
dissolution of the Sponsor or the Trust;
(iv) the time when all of the Securities shall
have matured or been called for redemption
and the amounts then due shall have been
paid to the Holders in accordance with the
terms of the Securities;
(v) upon the election of the Regular Trustees,
following the occurrence and continuation of
a Special Event and subject to the receipt
of any necessary approvals by the Federal
Reserve, pursuant to which the Trust shall
have been dissolved in accordance with the
terms of the Securities, and all of the
Debentures shall have been distributed to
the Holders of Securities in exchange for
all of the Securities; or
(vi) the time when all of the Regular Trustees
and the Sponsor shall have consented to
termination of the Trust provided such
action is taken before the issuance of any
Securities.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and upon completion of the winding up of the
Trust, the Trustees shall terminate by filing a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article 10 shall
survive the termination of the Trust.
Section 8.2 Liquidation Distribution Upon Termination and
Dissolution of the Trust.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a "Liquidation"), the
Holders of the Capital Securities on the date of the Liquidation will be
entitled to receive, out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of the Trusts' liabilities and
creditors, distributions in cash or other immediately available funds in an
amount equal to the aggregate of the stated liquidation amount of $1,000 per
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such Liquidation, Debentures in an aggregate stated liquidation amount equal to
the aggregate stated liquidation amount of, with a distribution rate identical
to the distribution rate of, and accrued and unpaid distributions equal to
accrued and unpaid distributions on, such Securities shall be distributed on a
Pro Rata basis to the Holders of the Securities in exchange for such Securities.
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(b) If, upon any such Liquidation, the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a Pro
Rata basis. The Holders of the Common Securities will be entitled to receive
distributions upon any such Liquidation Pro Rata with the Holders of the Capital
Securities except that if an Indenture Event of Default has occurred and is
continuing, the Capital Securities shall have a preference over the Common
Securities with regard to such distributions.
ARTICLE 9
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 9.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Guarantee and the terms of the Securities, the Sponsor:
(i) shall not be personally liable for the
return of any portion of the capital
contributions (or any return thereon) of the
Holders of the Securities which shall be
made solely from assets of the Trust; and
(ii) shall not be required to pay to the Trust or
to any Holder of Securities any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for
all of the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
Section 9.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable or any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
Section 9.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to an other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between any Covered Persons; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein
provides that an Indemnified Person shall
act in a manner that is, or provides terms
that are, fair and reasonable to the Trust
or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person
shall be entitled to consider such interests
and factors as it desires, including its own
interests, and shall have no duty or
obligation
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to give any consideration to any interest of
or factors affecting the Trust or any other
Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act
under such express standard and shall not be
subject to any other or different standard
imposed by this Declaration or by applicable
law.
Section 9.4 Indemnification.
(a)(i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Debenture Issuer Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was a Debenture Issuer Indemnified Person against
expenses (including attorney fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good fait and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Debenture Issuer Indemnified Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Debenture Issuer Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a Judgment in its
favor by reason of the fact that he is or was a Debenture Issuer Indemnified
Person against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Debenture Issuer Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of
this Section 9.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Debenture Issuer Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made (1) by the
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Regular Trustees by a majority vote of a quorum consisting of such Regular
Trustees who were not parties to such action, suit or proceeding, (2) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion,
or (3) by the Common Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a
Debenture Issuer Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 9.4(a) shall be paid by the Debenture
Issuer in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Debenture Issuer
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Debenture Issuer as authorized
in this Section 9.4(a). Notwithstanding the foregoing, no advance shall be made
by the Debenture Issuer if a determination is reasonably and promptly made (i)
by the Regular Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion or (iii) the Common Security Holder of the Trust,
that, based upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Debenture Issuer
Indemnified Person acted in bad faith or in a manner that such person did not
believe to be in or not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Debenture Issuer Indemnified
Person believed or had reasonable cause to believe his conduct was unlawful. In
no event shall any advance be made in instances where the Regular Trustees,
independent legal counsel or Common Security Holder reasonably determine that
such person deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
(v) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 9.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors of the Debenture Issuer or
Capital Security Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 9.4(a) (a) shall be
deemed to be provided by a contract between the Debenture Issuer and each
Debenture Issuer Indemnified Person who serves in such capacity at any time
while this Section 9.4(a) is in effect. Any repeal or modification of this
Section 9.4(a) shall not affect any rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Debenture Issuer
Indemnified Person against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the Debenture Issuer would have the power to indemnify him against such
liability under the provisions of this Section 9.4(a).
(vii) For purposes of this Section 9.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is
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or was a director, trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity as a director,
trustee, officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section with respect to the resulting or
surviving entity as he would have with respect to such constituent entity if its
separate existence had continued.
(viii) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 9.4(a) shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a Debenture Issuer Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a person. The obligation to
indemnify as set forth in this Section 9.4(a) shall survive the satisfaction and
discharge of this Declaration.
(b) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) an Affiliate of the Property Trustee
and the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents of
the Property Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 9.4(a) shall
survive the satisfaction and discharge of this Declaration.
Section 9.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the activities of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the activities of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
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ARTICLE 10
ACCOUNTING
Section 10.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
Section 10.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account, records
and supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles. The Trust shall use the accrual method of accounting for United
States Federal income tax purposes. The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each Fiscal Year
of the Trust by a firm of independent certified public accountants selected by
the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, an annual United States Federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States Federal
income tax return, on a Form 1041 or such other form required by United States
Federal income tax law, and any other annual income tax returns required to be
filed by the Regular Trustees on behalf of the Trust with any state or local
taxing authority.
Section 10.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Account and no other funds of the Trust shall be
deposited in the Property Account. The sole signatories
<PAGE> 68
61
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Property Trustee shall designate the signatories for the
Property Account.
Section 10.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld shall
be deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE 11
AMENDMENTS AND MEETINGS
Section 11.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by (i) the Regular Trustees (or, if
there are more than two Regular Trustees, a majority of the Regular Trustees)
and (ii) by the Property Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee; and (iii) by the
Delaware Trustee if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed
amendment, the Property Trustee shall have
first received an Officers' Certificate from
each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to,
the terms of this Declaration (including the
terms of the Securities);
<PAGE> 69
62
(ii) unless, in the case of any proposed
amendment which affects the rights, powers,
duties, obligations or immunities of the
Property Trustee, the Property Trustee shall
have first received:
a. an Officers' Certificate from each
of the Trust and the Sponsor that
such amendment is permitted by, and
conforms to, the terms of this
Declaration (including the terms of
the Securities); and
b. an opinion of counsel (who may be
counsel to the Sponsor or the
Trust) that such amendment is
permitted by, and conforms to, the
terms of this Declaration
(including the terms of the
Securities); and
(iii) to the extent the result of such amendment
would be to:
a. cause the Trust to be classified
other than as a grantor trust for
United States Federal income tax
purposes;
b. reduce or otherwise adversely
affect the powers of the Property
Trustee in contravention of the
Trust Indenture Act; or
c. cause the Trust to be deemed to be
an Investment Company required to
be registered under the Investment
Company Act.
(c) At such time after the Trust has issued any Securities
that remain outstanding, any amendment that would (i) adversely affect the
powers, preferences or special rights of the Securities, whether by way of
amendment to the Declaration or otherwise or (ii) result in the dissolution,
winding-up or termination of the Trust other than pursuant to the terms of this
Declaration, (iii) change the amount or timing of any distribution of the
Securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the Securities as of a specified date or (iv) restrict
the right of a Holder of Securities to institute suit for the enforcement of any
such payment on or after such date, then the holders of the Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a Majority in Liquidation Amount of the Securities affected
thereby; provided that, if any amendment or proposal referred to in clause (i)
above would adversely affect only the Capital Securities or the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in Liquidation Amount of such class of
Securities.
(d) Section 7.8 and this Section 11.1 shall not be amended
without the consent of all of the Holders of the Securities.
(e) Article 4 shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities.
<PAGE> 70
63
(f) The rights of the Holders of the Common Securities under
Article 5 to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
Liquidation Amount of the Common Securities.
(g) Notwithstanding Section 11.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) to cure any ambiguity, correct or supplement
any provisions in this Declaration that may
be inconsistent with any other provision, or
to make any other provisions with respect to
matters or questions arising under this
Declaration that shall not be inconsistent
with the other provisions of this
Declaration;
(ii) to modify, eliminate or add to any
provisions of this Declaration to such
extent as shall be necessary to ensure that
the Trust will be classified as a grantor
trust for United States federal income tax
purposes at all times that any Securities
are outstanding or to ensure that the Trust
will not be required to register as an
"investment company" under the Investment
Company Act; or
(iii) to conform to any change in Rule 3a-5 or
written change in interpretation or
application of Rule 3a-5 by any legislative
body, court, government agency or regulatory
authority which amendment does not have a
material adverse effect on the rights,
preferences or privileges of the Holders.
provided, however, that such action shall not adversely affect in any material
respect the interests of any Holder of Capital Securities or Common Securities,
and any amendments of this Declaration shall become effective when notice
thereof is given to the Holders of Capital Securities and Common Securities.
(h) The issuance of a Trustees' Authorization Certificate by
the Regular Trustees for purposes of establishing the terms and form of the
Securities as contemplated by Section 8.1 shall not be deemed an amendment of
this Declaration subject to the provisions of this Section 12.1.
Section 11.2 Meetings of the Holders of Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10%
<PAGE> 71
64
in Liquidation Amount of such class of Securities. Such direction shall be given
by delivering to the Regular Trustees one or more calls in a writing stating
that the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Certificates held
by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to
all the Holders of Securities having a right
to vote thereat at least 7 days and not more
than 60 days before the date of such
meeting. Whenever a vote, consent or
approval of the Holders of Securities is
permitted or required under this Declaration
or the rules of any stock exchange on which
the Capital Securities are listed or
admitted for trading, such vote, consent or
approval may be given at a meeting of the
Holders of Securities. Any action that may
be taken at a meeting of the Holders of
Securities may be taken without a meeting if
a consent in writing setting forth the
action so taken is signed by the Holders of
Securities owning not less than the minimum
amount of Securities in liquidation amount
that would be necessary to authorize or take
such action at a meeting at which all
Holders of Securities having a right to vote
thereon were present and voting. Prompt
notice of the taking of action without a
meeting shall be given to the Holders of
Securities entitled to vote who have not
consented in writing. The Regular Trustees
may specify that any written ballot
submitted to the Security Holders for the
purpose of taking any action without a
meeting shall be returned to the Trust
within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters
in which a Holder of Securities is entitled
to participate, including waiving notice of
any meeting, or voting or participating at a
meeting. No proxy shall be valid after the
expiration of 11 months from the date
thereof unless otherwise provided in the
proxy. Every proxy shall be revocable at the
pleasure of the Holder of Securities
executing such proxy. Except as otherwise
provided herein, all matters relating to the
giving, voting or validity of proxies shall
be governed by the General Corporation Law
of the State of Delaware relating to
proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware
corporation and the Holders of the
Securities were stockholders of a Delaware
corporation;
<PAGE> 72
65
(iii) each meeting of the Holders of the
Securities shall be conducted by the Regular
Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this
Declaration, the terms of the Securities,
the Trust Indenture Act or the listing rules
of any stock exchange on which the Capital
Securities are then listed for trading,
otherwise provides, the Regular Trustees, in
their sole discretion, shall establish all
other provisions relating to meetings of
Holders of Securities, including notice of
the time, place or purpose of any meeting at
which any matter is to be voted on by any
Holders of Securities, waiver of any such
notice, action by consent without a meeting,
the establishment of a record date, quorum
requirements, voting in person or by proxy
or any other matter with respect to the
exercise of any such right to vote.
ARTICLE 12
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 12.1 Representations and Warranties of the Property
Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the Property Trustee satisfies the requirements set forth
in Section ;
(c) the execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. This Declaration has been duly
executed and delivered by the Property Trustee, and it constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
<PAGE> 73
66
(d) the execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or constitute a
breach of the articles of association or incorporation, as the case may be, or
the by-laws (or other similar organizational documents) of the Property Trustee;
and
(e) no consent, approval or authorization of, or registration
with or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
Section 12.2 Representations and Warranties of the Delaware
Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee satisfies the requirements set forth
in Section and has the power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and, if it
is not a natural person, is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
and
(c) no consent, approval or authorization of, or registration
with or notice to, any State or Federal banking authority is require for the
execution, delivery or performance by the Delaware Trustee of this Declaration.
ARTICLE 13
MISCELLANEOUS
Section 13.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
<PAGE> 74
67
(a) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Property Trustee, the Delaware Trustee and the Holders
of the Securities):
First Security Capital I
c/o First Security Corporation
79 South Main Street
Salt Lake City, UT 84111
Attention: Chief Financial Officer
(b) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as the Delaware Trustee may give notice
of to the Regular Trustees, the Property Trustee and the Holders of the
Securities):
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
Attention: Corporation Trust Department
(c) if given to the Property Trustee, at its Corporate Trust
Office (or such other address as the Property Trustee may give notice of to the
Regular Trustees, the Delaware Trustee and the Holders of the Securities).
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Property Trustee, the
Delaware Trustee and the Trust):
First Security Corporation
79 South Main Street
Salt Lake City, UT 84111
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed or mailed by first class mail, postage prepaid
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
Section 13.2 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware.
<PAGE> 75
68
Section 13.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States Federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted in a manner consistent with
such classification.
Section 13.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
Section 13.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
Section 13.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
Section 13.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
Section 13.8 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Declaration or in any suit against any Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorney's fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 14.8 does not apply to a suit by a Trustee, a
suit by a Holder to enforce its right to payment or a suit by Holders of more
than 10% in principal amount of the then outstanding Securities.
<PAGE> 76
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
FIRST SECURITY CORPORATION,
as Sponsor and Common Securities Holder
BY: /s/ MORGAN J. EVANS
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
BY: /s/ ROBERT E. PATTERSON III
-----------------------------------
Name: ROBERT E. PATTERSON III
Title: ASSISTANT VICE PRESIDENT
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
BY: /s/ JOSEPH G. ERNST
-----------------------------------
Name: JOSEPH G. ERNST
Title: ASSISTANT VICE PRESIDENT
Brad D. Hardy, as Regular Trustee
BY: /s/ BRAD D. HARDY
-----------------------------------
Name: BRAD D. HARDY
Title:
Scott C. Ulbrich, as Regular Trustee
BY: /s/ SCOTT C. ULBRICH
-----------------------------------
Name: SCOTT C. ULBRICH
Title:
David R. Wilson, as Regular Trustee
BY: /s/ DAVID R. WILSON
-----------------------------------
Name: DAVID R. WILSON
Title:
<PAGE> 77
EXHIBIT A
This Capital Security is a Global Certificate within the
meaning of the Declaration hereinafter referred to and is registered in the name
of The Depository Trust Company, a New York corporation (the "Depository"), or a
nominee of the Depository. This Capital Security is exchangeable for Capital
Securities registered in the name of a person other than the Depository or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Capital Security (other than a transfer of this Capital
Security as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the
Depository) may be registered except in limited circumstances.
Unless this Capital Security Certificate is presented by an
authorized representative of the Depository to First Security Capital I or its
agent for registration of transfer, exchange or payment, and any Capital
Security Certificate issued is registered in the name of Cede & Co. or such
other name as registered by an authorized representative of the Depository (and
any payment hereon is made to Cede & Co. or to such other entity as is requested
by an authorized representative of the Depository), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.
CERTIFICATE NO. 1 NUMBER OF CAPITAL SECURITIES: 150,000
CUSIP NO. 33620V AA 0
CERTIFICATE EVIDENCING CAPITAL SECURITIES
OF
FIRST SECURITY CAPITAL I
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FIRST SECURITY CAPITAL I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Cede & Co. (the "Holder") is the registered owner of 150,000 capital securities
of the Trust representing undivided beneficial ownership interests in the assets
of the Trust designated the 8.41% Subordinated Capital Income Securities
(liquidation amount $1,000 per Capital Security) (the "Capital Securities"). The
Capital Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer as provided in the Declaration (as
defined below). The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust, dated as of December 23, 1996 (as
the same may be amended from time to time (the "Declaration"), among First
Security Corporation, as Sponsor (the "Company"), Brad D. Hardy, Scott C.
Ulbrich and David R. Wilson, as Regular Trustees, The Bank of New York, as
Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Guarantee to
the extent described therein. The Sponsor will provide a copy of the
Declaration, the Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
<PAGE> 78
2
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of undivided indirect beneficial ownership interests in
the Debentures.
<PAGE> 79
3
IN WITNESS WHEREOF, the Trust has executed this certificate
this 23rd day of December, 1996.
FIRST SECURITY CAPITAL I
By:
-------------------------------
Name:
Title: Regular Trustee
This is one of the Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK
By:
-------------------------------
Authorized Officer
<PAGE> 80
4
In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act covering resales of this Security (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) three years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Capital Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date"), the
undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer:
[CHECK ONE]
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
as amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of
1933, as amended; or
(5) ___ pursuant to the exemption from registration provided by Rule
144 under the Securities Act of 1933, as amended; or
(6) ___ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3), (4), (5)
or (7) is checked, the Company or the Trustee may require, prior to registering
any such transfer of the Securities, in its sole discretion, such written legal
opinions, certifications (including an investment letter in the case of box (3)
or (4)) and other information as the Trustee or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
<PAGE> 81
5
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 315 of the Indenture shall have
been satisfied.
Dated: Signed:
--------------------- ------------------------------------------
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------------ ------------------------------------------------
NOTICE: To be executed by an executive officer
<PAGE> 82
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NO. 1 NUMBER OF COMMON SECURITIES: 4,640
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
FIRST SECURITY CAPITAL I
COMMON SECURITIES
(LIQUIDATION AMOUNT $1,000 PER COMMON SECURITY)
First Security Capital I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
First Security Corporation (the "Holder") is the registered owner of common
securities of the Trust representing an undivided beneficial ownership interest
in the assets of the Trust designated the 8.41% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). The Common
Securities are not transferable and any attempted transfer thereof shall be
void. The designation, rights, privileges, restrictions, preferences and other
terms and provisions of the Common Securities represented hereby are issued and
shall in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust, dated as of December 23, 1996 (as the same
may be amended from time to time, the "Declaration"), among First Security
Corporation, as Sponsor, Brad D. Hardy, Scott C. Ulbrich and David R. Wilson, as
Regular Trustees, The Bank of New York, as Property Trustee and The Bank of New
York (Delaware), as Delaware Trustee. The Holder is entitled to the benefits of
the Guarantee to the extent described therein. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Guarantee and the Indenture to a
Holder without charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of an undivided indirect beneficial ownership interest in
the Debentures.
<PAGE> 83
2
IN WITNESS WHEREOF, the Trust has executed this certificate
this 23rd day of December, 1996.
FIRST SECURITY CAPITAL I
By:
------------------------------
Name:
Title: Regular Trustee
This is one of the Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK
By:
------------------------------
Authorized Officer
<PAGE> 1
EXHIBIT 4.1
INDENTURE
<PAGE> 2
Exhibit 4.1
FIRST SECURITY CORPORATION
TO
THE BANK OF NEW YORK
a New York banking corporation, Trustee
INDENTURE
Dated as of December 23, 1996
$154,640,000
8.41% Junior Subordinated Debentures due 2026
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........................... 1
SECTION 101. Definitions....................................................................................... 1
Act .............................................................................................. 2
Adjusted Treasury Rate................................................................................. 2
Affiliate.............................................................................................. 2
Authenticating Agent................................................................................... 2
Board of Directors..................................................................................... 3
Board Resolution....................................................................................... 3
Business Day........................................................................................... 3
Capital Securities..................................................................................... 3
Cedel .............................................................................................. 3
Closing Date........................................................................................... 3
Commission............................................................................................. 3
Common Securities...................................................................................... 3
Company .............................................................................................. 3
Company Request........................................................................................ 3
Company Order.......................................................................................... 3
Comparable Treasury Issue.............................................................................. 3
Comparable Treasury Price.............................................................................. 4
Corporate Trust Office................................................................................. 4
Covenant Defeasance.................................................................................... 4
Custodian.............................................................................................. 4
Declaration............................................................................................ 4
Defaulted Interest..................................................................................... 4
Depositary............................................................................................. 4
DWAC .............................................................................................. 4
Event of Default....................................................................................... 4
Exchange Act........................................................................................... 4
Extension Period....................................................................................... 4
Euroclear.............................................................................................. 4
Federal Reserve........................................................................................ 4
Global Security........................................................................................ 4
Guarantee.............................................................................................. 4
Holder .............................................................................................. 5
Indebtedness........................................................................................... 5
Indenture.............................................................................................. 5
Initial Purchasers..................................................................................... 5
Institutional Accredited Investor...................................................................... 5
Interest Payment Date.................................................................................. 6
</TABLE>
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<TABLE>
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<S> <C>
Investment Company Event............................................................................... 6
Junior Subordinated Securities......................................................................... 6
Legal Defeasance....................................................................................... 6
Maturity .............................................................................................. 6
New Junior Subordinated Securities..................................................................... 6
Officers' Certificate.................................................................................. 6
Opinion of Counsel..................................................................................... 7
Outstanding............................................................................................ 7
Paying Agent........................................................................................... 7
Person .............................................................................................. 7
Predecessor Security................................................................................... 7
Private Placement Legend............................................................................... 7
Property Trustee....................................................................................... 8
Qualified Institutional Buyer" or "QIB................................................................. 8
Quotation Agent........................................................................................ 8
Redemption Date........................................................................................ 8
Redemption Price....................................................................................... 8
Reference Treasury Dealer Quotations................................................................... 8
Registration Rights Agreement.......................................................................... 8
Regular Record Date.................................................................................... 8
Regulation S........................................................................................... 8
Regulation S Global Security........................................................................... 8
Regulatory Capital Event............................................................................... 8
Remaining Life......................................................................................... 9
Responsible Officer.................................................................................... 9
Restricted Global Security............................................................................. 9
Restricted Period...................................................................................... 9
Restricted Security.................................................................................... 9
Rule 144A.............................................................................................. 9
Securities............................................................................................. 9
Securities Act......................................................................................... 9
Security Register...................................................................................... 9
Security Registrar..................................................................................... 9
Special Event.......................................................................................... 9
Special Record Date.................................................................................... 9
Stated Maturity"....................................................................................... 9
Subsidiary............................................................................................. 10
Tax Event.............................................................................................. 10
Treasury Rate.......................................................................................... 10
Trust .............................................................................................. 10
Trustee .............................................................................................. 10
Trust Indenture Act.................................................................................... 11
U.S. Government Obligations............................................................................ 11
</TABLE>
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<TABLE>
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<S> <C>
Vice President......................................................................................... 11
SECTION 102. Compliance Certificates and Opinions.............................................................. 11
SECTION 103. Form of Documents Delivered to Trustee............................................................ 11
SECTION 104. Acts of Holders; Record Dates..................................................................... 12
SECTION 105. Notices, Etc. to Trustee and the Company.......................................................... 13
SECTION 106. Notice to Holders; Waiver......................................................................... 13
SECTION 107. Conflict With Trust Indenture Act................................................................. 13
SECTION 108. Effect of Headings and Table of Contents.......................................................... 14
SECTION 109. Separability Clause............................................................................... 14
SECTION 110. Benefits of Indenture............................................................................. 14
SECTION 111. GOVERNING LAW..................................................................................... 14
SECTION 112. Legal Holidays.................................................................................... 14
ARTICLE TWO
SECURITY FORMS................................................ 15
ARTICLE THREE
THE SECURITIES................................................ 16
SECTION 301. Title and Terms................................................................................... 16
SECTION 302. Denominations..................................................................................... 17
SECTION 303. Execution, Authentication, Delivery and Dating.................................................... 17
SECTION 304. Temporary Securities.............................................................................. 18
SECTION 305. Registration; Registration of Transfer and Exchange............................................... 18
</TABLE>
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<TABLE>
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SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.................................................. 20
SECTION 307. Payment of Interest; Interest Rights Preserved.................................................... 20
SECTION 308. Persons Deemed Owners............................................................................. 21
SECTION 309. Cancellation...................................................................................... 22
SECTION 310. Computation of Interest........................................................................... 22
SECTION 311. Right of Set-off.................................................................................. 22
SECTION 312. CUSIP Numbers..................................................................................... 22
SECTION 313. Global Securities................................................................................. 22
SECTION 314. Restrictive Legend................................................................................ 25
SECTION 315. Special Transfer Provisions....................................................................... 27
ARTICLE FOUR
SATISFACTION AND DISCHARGE; DEFEASANCE.................................... 30
SECTION 401. Satisfaction and Discharge of Indenture........................................................... 30
SECTION 402. Legal Defeasance.................................................................................. 31
SECTION 403. Covenant Defeasance............................................................................... 31
SECTION 404. Conditions to Legal Defeasance or Covenant Defeasance............................................. 32
SECTION 405. Application of Trust Money........................................................................ 33
SECTION 406. Indemnity for U.S. Government Obligations......................................................... 33
ARTICLE FIVE
REMEDIES................................................... 33
SECTION 501. Events of Default................................................................................. 33
</TABLE>
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SECTION 502. Acceleration of Maturity; Rescission and Annulment................................................ 34
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee................................... 35
SECTION 504. Trustee may File Proofs of Claim.................................................................. 35
SECTION 505. Trustee may Enforce Claims Without Possession of Securities....................................... 36
SECTION 506. Application of Money Collected.................................................................... 36
SECTION 507. Limitation on Suits............................................................................... 36
SECTION 508. Unconditional Right of Holders to Receive Principal and Interest;
Capital Security Holders' Rights.......................................... 37
SECTION 509. Restoration of Rights and Remedies................................................................ 37
SECTION 510. Rights and Remedies Cumulative.................................................................... 38
SECTION 511. Delay or Omission not Waiver...................................................................... 38
SECTION 512. Control by Holders................................................................................ 38
SECTION 513. Waiver of Past Defaults........................................................................... 38
SECTION 514. Undertaking for Costs............................................................................. 39
SECTION 515. Waiver of Stay or Extension Laws.................................................................. 39
ARTICLE SIX
TRUSTEE................................................... 40
SECTION 601. Certain Duties and Responsibilities............................................................... 40
SECTION 602. Notice of Defaults................................................................................ 40
SECTION 603. Certain Rights of Trustee......................................................................... 40
SECTION 604. Not Responsible for Recitals or Issuance of Securities............................................ 41
SECTION 605. Trustee and Other Agents may Hold Securities...................................................... 42
</TABLE>
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SECTION 606. Money Held in Trust............................................................................... 42
SECTION 607. Compensation; Reimbursement; and Indemnity........................................................ 42
SECTION 608. Disqualification; Conflicting Interests........................................................... 43
SECTION 609. Corporate Trustee Required; Eligibility........................................................... 43
SECTION 610. Resignation and Removal; Appointment of Successor................................................. 43
SECTION 611. Acceptance of Appointment by Successor............................................................ 45
SECTION 612. Merger, Conversion, Consolidation or Succession to Business....................................... 45
SECTION 613. Preferential Collection of Claims Against Company................................................. 45
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.............................. 46
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders......................................... 46
SECTION 702. Preservation of Information; Communications to Holders............................................ 46
SECTION 703. Reports by Trustee................................................................................ 46
SECTION 704. Reports by Company................................................................................ 47
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE............................. 47
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.............................................. 47
SECTION 802. Successor Person Substituted...................................................................... 48
</TABLE>
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<TABLE>
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ARTICLE NINE
SUPPLEMENTAL INDENTURES........................................... 48
SECTION 901. Supplemental Indentures Without Consent of Holders................................................ 48
SECTION 902. Supplemental Indentures With Consent of Holders................................................... 49
SECTION 903. Execution of Supplemental Indentures.............................................................. 50
SECTION 904. Effect of Supplemental Indentures................................................................. 50
SECTION 905. Conformity With Trust Indenture Act............................................................... 50
SECTION 906. Reference in Securities to Supplemental Indentures................................................ 50
ARTICLE TEN
COVENANTS.................................................. 51
SECTION 1001. Payment of Principal and Interest................................................................ 51
SECTION 1002. Maintenance of Office or Agency.................................................................. 51
SECTION 1003. Money for Security Payments to be Held in Trust.................................................. 51
SECTION 1004. Statements by Officers as to Default............................................................. 52
SECTION 1005. Existence........................................................................................ 52
SECTION 1006. Maintenance of Properties........................................................................ 53
SECTION 1007. Payment of Taxes and Other Claims................................................................ 53
SECTION 1008. Waiver of Certain Covenants...................................................................... 53
SECTION 1009. Payment of the Trust's Costs and Expenses........................................................ 53
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES......................................... 55
SECTION 1101. Securities Subordinate to Indebtedness........................................................... 55
</TABLE>
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SECTION 1102. Default on Indebtedness.......................................................................... 55
SECTION 1103. Prior Payment of Indebtedness Upon Acceleration of Securities.................................... 55
SECTION 1104. Liquidation; Dissolution; Bankruptcy............................................................. 56
SECTION 1105. Subrogation...................................................................................... 58
SECTION 1106. Trustee to Effectuate Subordination.............................................................. 59
SECTION 1107. Notice by the Company............................................................................ 59
SECTION 1108. Rights of the Trustee; Holders of Indebtedness................................................... 60
SECTION 1109. Subordination May Not Be Impaired................................................................ 60
ARTICLE TWELVE
REDEMPTION OF SECURITIES........................................... 61
SECTION 1201. Optional Redemption; Conditions to Optional Redemption........................................... 61
SECTION 1202. Applicability of Article......................................................................... 62
SECTION 1203. Election to Redeem; Notice to Trustee............................................................ 62
SECTION 1204. Selection by Trustee of Securities to be Redeemed................................................ 62
SECTION 1205. Notice of Redemption............................................................................. 62
SECTION 1206. Deposit of Redemption Price...................................................................... 63
SECTION 1207. Securities Payable on Redemption Date............................................................ 63
</TABLE>
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Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
Section 310(a)(1) ............................................................... 609
(a)(2) ................................................................. 609
(a)(3) ................................................................. Not Applicable
(a)(4) ................................................................. Not Applicable
(b) .................................................................... 608, 610
Section 311(a) .................................................................. 613
(b) .................................................................... 613
Section 312(a) .................................................................. 701
(b) .................................................................... 702(b)
(c) .................................................................... 702(c)
Section 313(a) .................................................................. 703(a)
(a)(4) ................................................................ 101, 1004
(b) .................................................................... 703(a)
(c) .................................................................... 703(a)
(d) .................................................................... 703(b)
Section 314(a) .................................................................. 704
(b) .................................................................... Not Applicable
(c)(1) ................................................................. 102
(c)(2) ................................................................. 102
(c)(3) ................................................................. Not Applicable
(d) .................................................................... Not Applicable
(e) .................................................................... 102
Section 315(a) .................................................................. 601
(b) .................................................................... 602
(c) .................................................................... 601
(d) .................................................................... 601
(e) .................................................................... 514
Section 316(a) .................................................................. 101
(a)(1)(A) .............................................................. 502
(a)(1)(B) .............................................................. 513
(a)(2) ................................................................. Not Applicable
(b) .................................................................... 508
(c) .................................................................... 104(c)
Section 317(a)(1) ............................................................... 503
(a)(2) ................................................................. 504
(b) .................................................................... 1003
Section 318(a) .................................................................. 107
</TABLE>
<PAGE> 12
This INDENTURE is dated as of December 23, 1996, between FIRST
SECURITY CORPORATION, a corporation duly organized and existing under the laws
of the State of Delaware (herein called the "Company"), having its principal
office at 29 South Main Street, Salt Lake City, Utah 84111, and THE BANK OF NEW
YORK, a New York banking corporation, as Trustee (herein called the "Trustee").
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has
duly authorized the execution and delivery of this Indenture to provide for the
issuance of its 8.41% Junior Subordinated Debentures due 2026 (the "Junior
Subordinated Securities") and its 8.41% New Junior Subordinated Debentures due
2026 (the "New Junior Subordinated Securities", and together with the Junior
Subordinated Securities, the "Securities") to be issued
in exchange for the Junior Subordinated Securities.
WHEREAS, First Security Capital I (the "Trust") has offered to
the public $150,000,000 aggregate liquidation amount of its 8.41% Subordinated
Capital Income Securities (the "Capital Securities") representing undivided
beneficial interests in the assets of the Trust and proposes to invest the
proceeds from such offering and the $4,640,000 in proceeds from the issuance of
its Common Securities in $154,640,000 aggregate principal amount of the
Securities.
WHEREAS, to provide the terms and conditions upon which the
Securities are to be authenticated, issued and delivered, the Company has duly
authorized the execution of this Indenture.
WHEREAS, all things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as expressly
provided or unless the context otherwise requires:
<PAGE> 13
2
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular
and the masculine as well as the feminine;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(5) a reference to any Person shall include its successor and
assigns;
(6) a reference to any agreement or instrument shall mean such
agreement or instrument as supplemented, modified, amended or amended and
restated and in effect from time to time;
(7) a reference to any statute, law, rule or regulation, shall
include any amendments thereto applicable to the relevant Person, and any
successor statute, law, rule or regulation; and
(8) a reference to any particular rating category shall be
deemed to include any corresponding successor category, or any corresponding
rating category issued by a successor or subsequent rating agency.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Adjusted Treasury Rate" means, with respect to any Redemption
Date, the Treasury Rate plus (i) 1.46% if such Redemption Date occurs on or
before December 15, 1997 or (ii) 0.50% if such Redemption Date occurs after
December 15, 1997.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Securities.
<PAGE> 14
3
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board as the context
requires.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday or Sunday
or a day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Trustee, or the principal office of the Property
Trustee, under the Declaration, is closed for business.
"Capital Securities" has the meaning specified in the Recitals
to this instrument.
"Cedel" means Cedel, S.A.
"Closing Date" means December 23, 1996.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Securities" means the common securities issued by the
Trust.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Comparable Treasury Issue" means with respect to any
Redemption Date the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life. If no United States treasury security has a
maturity which is within a period from three months before to three months after
December 15, 2006, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities.
<PAGE> 15
4
"Comparable Treasury Price" means (A) the average of five
Reference Treasury Dealer Quotations for such Redemption Date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Indenture Trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Corporate Trust Office" means the principal office of the
Trustee in the City of New York, at which at any particular time its corporate
trust business shall be administered and which at the date of this Indenture is
located at 101 Barclay Street, Floor 21 West, New York, New York 10286,
Attention: Corporate Trust Administration.
"Covenant Defeasance" has the meaning specified in Section
403.
"Custodian" means the custodian for the time being of any
Global Security.
"Declaration" means the Amended and Restated Declaration of
Trust, dated as of December 23, 1996, as amended, modified or supplemented from
time to time, among the trustees of the Trust named therein, the Company, as
sponsor, and the holders from time to time of undivided beneficial ownership
interests in the assets of the Trust.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to Securities issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities.
"DWAC" means Deposit and Withdrawal At Custodian Service.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor legislation.
"Extension Period" has the meaning specified in Section 301.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
"Global Security" means a Security that evidences all or part
of the Securities and is authenticated and delivered to, and registered in the
name of, the Depositary for such Securities or a nominee thereof.
"Guarantee" means the Guarantee Agreement, dated as of
December 23, 1996, made by the Company in favor of The Bank of New York as
trustee thereunder for the
<PAGE> 16
5
benefit of the Holders (as defined therein) of the Capital Securities and the
holder of the Common Securities.
"Holder" means a Person in whose name a Security is registered
in the Security Register.
"Indebtedness" means, with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments of such Person, including obligations incurred in connection with
the acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every capital lease
obligation of such Person, (vi) every obligation of such Person for claims (as
defined in Section 101(4) of the United States Bankruptcy Code of 1978, as
amended) in respect of derivative products such as interest and foreign exchange
rate contracts, commodity contracts and similar arrangements and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise; provided that "Indebtedness" shall not include (a) any
obligations which, by their terms, are expressly stated to rank pari passu in
right of payment with, or to not be superior in right of payment to, the
Securities, (b) any Indebtedness of the Company which when incurred and without
respect to any election under Section 1111(b) of the United States Bankruptcy
Code of 1978, as amended, was without recourse to the Company, (c) any
Indebtedness of the Company to any of its subsidiaries, (d) Indebtedness of the
Company to any employee or (e) any indebtedness in respect of debt securities
issued to any trust, or a trustee of such trust, partnership or other entity
affiliated with the Company that is a financing entity of the Company in
connection with the issuance of such financing entity of securities that are
similar to the Capital Securities.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Lehman Brothers Inc. and J.P.
Morgan Securities Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as the term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
<PAGE> 17
6
"Interest Payment Date", when used with respect to any
installment of interest on a Security, means the date specified in such Security
as the fixed date on which an installment of interest with respect to the
Securities is due and payable.
"Investment Company Event" means the receipt by the Trust of
an Opinion of Counsel having a recognized national securities practice to the
effect that, as a result of the occurrence of a change in law or regulation or a
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), the Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940 as amended,
which Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Securities.
"Junior Subordinated Securities" has the meaning specified in
the Recitals to this instrument.
"Legal Defeasance" has the meaning specified in Section 402.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity (which may be extended as
therein or herein provided) or by declaration of acceleration, call for
redemption or otherwise.
"New Junior Subordinated Securities" has the meaning specified
in the Recitals to this instrument.
"Officers' Certificate" means a certificate signed on behalf
of the Company by the Chairman of the Board, a Vice Chairman of the Board, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee. One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the Company. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each officer signing the Officers'
Certificate on behalf of the Company has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer on behalf of the Company
in rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
<PAGE> 18
7
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company (and who may be an employee of the Company), and
who shall be reasonably acceptable to the Trustee. An opinion of counsel may
rely on certificates as to matters of fact.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities authenticated and delivered under
this Indenture, except: (i) Securities cancelled by the Trustee or delivered to
the Trustee for cancellation; (ii) Securities for whose payment or redemption
money in the necessary amount has been deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holder of
such Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and (iii) Securities which
have been paid pursuant to Section 306, or in exchange or for in lieu of which
other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Company; provided, however, that in determining whether the
holders of the requisite principal amount of Outstanding Notes are present at a
meeting of holders of Notes for quorum purposes or have consented to or voted in
favor of any request, demand, authorization, direction, notice, consent, waiver,
amendment or modification hereunder, Notes held for the account of the Company,
any of its subsidiaries or any of its affiliates shall be disregarded and deemed
not to be Outstanding, except that in determining whether the Trustee shall be
protected in making such a determination or relying upon any such quorum,
consent or vote, only Notes which the Trustee actually knows to be so owned
shall be so disregarded.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Securities on behalf of the Company.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Private Placement Legend" has the meaning specified in
Section 314 of this Indenture.
<PAGE> 19
8
"Property Trustee" has the meaning set forth in the
Declaration.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Quotation Agent" means (i) Lehman Brothers Inc. and its
successors; provided, however, that if the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer;
and (ii) any other Primary Treasury Dealer selected by the Company.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Company, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company and reported in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. New York City time, on the third business
day preceding such Redemption Date.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the date hereof between the Company and the Initial Purchasers
for the benefit of themselves and the Holders (as defined therein) of the
Capital Securities as the same may be amended from time to time in accordance
with the terms thereof.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the 1st day of the month of the relevant Interest Payment
Date.
"Regulation S" means Regulation S under the Securities Act and
any successor regulation thereto.
"Regulation S Global Security" means any Global Security or
Securities evidencing Securities that are to be traded pursuant to Regulation S.
"Regulatory Capital Event" means that the Company shall have
received an opinion of independent bank regulatory counsel experienced in such
matters to the effect that, as a result of (a) any amendment to or change
(including any announced prospective change) in the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of the
Federal Reserve or (b) any official administrative pronouncement or judicial
decision for interpreting or applying such laws or regulations which amendment
or change is effective or such pronouncement or decision is announced on or
after the date of original issuance of the Capital Securities, the Capital
Securities do not constitute, or within 90 days
<PAGE> 20
9
of the date thereof, will not constitute Tier I capital (or its then
equivalent); provided, however, that the distribution of the Securities in
connection with the liquidation of the Trust by the Company shall not in and of
itself constitute a Regulatory Capital Event unless such liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.
"Remaining Life" has the meaning specified in Section 1201.
"Responsible Officer", when used with respect to the Trustee,
means the Chairman or any Vice-Chairman of the board of directors, the Chairman
or any Vice-Chairman of the executive committee of the board of directors, the
Chairman of the trust committee, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer, the Controller or any Assistant
Controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Global Security" means any Global Security or
Securities evidencing Securities that are to be traded pursuant to Rule 144A.
"Restricted Period" shall have the meaning specified in
Section 315.
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) of the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities" has the meaning specified in the Recitals to this
instrument.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Special Event" means either an Investment Company Event, a
Regulatory Capital Event or a Tax Event.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the date on which the principal, together with any accrued and unpaid
interest, of such Security or such installment of interest is due and payable.
<PAGE> 21
10
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"Tax Event" means the receipt by the Trust of an Opinion of
Counsel, rendered by a law firm having a recognized national tax practice, to
the effect that, as a result of any amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United States
or any political subdivision or taxing authority thereof or therein, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
adopted or which pronouncement or decision is announced on or after the date of
original issuance of the Capital Securities under the Declaration, there is more
than an insubstantial risk that (i) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Securities, (ii) interest payable
by the Company on the Securities is not, or within 90 days of the date of such
opinion, will not be, deductible by the Company, in whole or in part, for United
States federal income tax purposes, or (iii) the Trust is, or will be within 90
days of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
"Treasury Rate" means (i) the yield, under the heading which
represents the average for the immediately prior week, appearing in the most
recently published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities", for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
business day preceding the Redemption Date.
"Trust" means First Security Capital I, a statutory business
trust declared and established pursuant to the Delaware Business Trust Act by
the Declaration.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended.
"U.S. Government Obligations" has the meaning specified in
Section 404.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in the
form of an Officers' Certificate, if to be given by an officer of the Company,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or given an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
<PAGE> 23
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SECTION 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee at the address specified in Section 105 and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section .
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the
Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders. If not set
by the Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 15th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 701) prior to such first solicitation or vote, as the case
may be.
With regard to any record date, only the Holders on such date
(or their duly designated proxies) shall be entitled to give or take, or vote
on, the relevant action.
(d) The ownership of Securities shall be proved by the
Security Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
<PAGE> 24
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SECTION 105. Notices, Etc. to Trustee and the Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the first
paragraph of this instrument or at any other address previously furnished in
writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made by telecopier or overnight air
courier guaranteeing next day delivery.
SECTION 107. Conflict With Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the provision of the Trust Indenture Act
shall control. If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as to modified or so
be excluded, as the case may be.
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SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 109. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Indebtedness, the holders of Capital
Securities (to the extent provided herein) and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF. THIS INDENTURE IS SUBJECT TO THE
PROVISIONS OF THE TRUST INDENTURE ACT THAT ARE REQUIRED TO BE PART OF THIS
INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH PROVISIONS.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal of the Securities need not be made on such
date, but may be made on the next succeeding Business Day (except that, if such
Business Day is in the next succeeding calendar year, such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be, shall be the
immediately preceding Business Day) with the same force and effect as if made on
the Interest Payment Date or Redemption Date, or at the Stated Maturity,
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
<PAGE> 26
15
ARTICLE TWO
SECURITY FORMS
The Junior Subordinated Securities in definitive form and the
New Junior Subordinated Securities in definitive form shall be in the form
attached hereto as Exhibit A; provided, that the New Junior Subordinated
Securities shall not contain any of the provisions following the Trustee's
authentication.
If the Securities are distributed to the holders of Capital
Securities and Common Securities, the record holder (including any Depositary)
of any Capital Securities or Common Securities shall be issued Securities in
definitive, fully registered form without interest coupons, substantially in the
form of Exhibit A hereto, with the legends in substantially the form of the
legends existing on the security representing the Capital Securities or Common
Securities to be exchanged (with such changes thereto as the officers executing
such Securities determine to be necessary or appropriate, as evidenced by their
execution of the Securities) and such other legends as may be applicable thereto
(including any legend required by Section 313 or Section 314 hereof), duly
executed by the Company and authenticated by the Trustee or the authenticating
agent as provided herein, which Securities, if to be held in global form by any
Depositary, may be deposited on behalf of the holders of the Securities
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of a nominee of the Depositary.
Any Global Security shall represent such of the outstanding
Securities as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be increased or reduced to reflect
transfers or exchanges permitted hereby. Any endorsement of a Global Security to
reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee or the Custodian, at
the direction of the Trustee, in such manner and upon instructions given by the
holder of such Securities in accordance with the Indenture. Payment of principal
of and interest and premium, if any, on any Global Security shall be made to the
holder of such Global Security.
The Securities shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these or other methods, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
<PAGE> 27
16
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $154,640,000
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 906 or 1208.
The Securities' Stated Maturity shall be December 15, 2026.
The Securities shall bear interest at the rate of 8.41% per
annum, from December 23, 1996 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
semi-annually (subject to deferral as set forth herein), in arrears, on June 15
and December 15 of each year, commencing June 15, 1997, until the principal
thereof is paid or made available for payment. Interest will compound
semi-annually and will accrue at the rate of 8.41% per annum, to the extent
permitted by applicable law, on any interest installment in arrears for more
than one semi-annual period or during an extension of an interest payment period
as set forth below in this Section 301. In the event that any date on which
interest is payable on the Securities is not a Business Day, then a payment of
the interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay).
The Company shall have the right, at any time during the term
of the Securities, from time to time, to defer payment of interest on such
Security for up to 10 consecutive semi-annual periods (an "Extension Period")
provided that no Extension Period may extend past the Maturity of the Security.
There may be multiple Extension Periods of varying lengths during the term of
the Securities. At the end of each Extension Period, if any, the Company shall
pay all interest then accrued and unpaid, together with interest thereon,
compounded semi-annually at the rate specified on this Security to the extent
permitted by applicable law. During any such Extension Period, the Company may
not, and may not permit any Subsidiary of the Company to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
with or junior in interest to the Securities or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any Subsidiary
of the Company if such guarantee ranks pari passu or junior in interest to the
Securities (other than (a) dividends or distributions in common stock of the
Company, (b) payments under the Guarantee, (c) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit
<PAGE> 28
17
plans). Prior to the termination of any such Extension Period, the Company may
further extend the interest payment period, provided that no Extension Period
may exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Securities. Upon the termination of any such Extension Period
and the payment of all amounts then due on any Interest Payment Date, the
Company may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company shall give the Property Trustee, the
Regular Trustees and the Debenture Trustee written notice of its election of
such Extension Period at least one Business Day prior to the record date for the
related interest payment.
The Trustee shall promptly give notice of the Company's
selection of such Extension Period to the Holders of the Capital Securities.
The principal of and interest on the Securities shall be
payable at the office or agency of the Paying Agent in the United States
maintained for such purpose and at any other office or agency maintained by the
Company for such purpose in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer in immediately available funds at such place and to such account as may
be designated by the Person entitled thereto as specified in the Security
Register.
The Securities shall be subordinated in right of payment to
Indebtedness as provided in Article Eleven.
The Securities shall be redeemable as provided in Article
Twelve.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form,
without coupons, and only in denominations of $1,000 and any integral multiple
thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or one
of its Vice Presidents. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for
<PAGE> 29
18
authentication, together with a Company Order for the authentication and
delivery of such Securities; and the Trustee in accordance with such Company
Order shall authenticate and make available for delivery such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.
SECTION 305. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at the principal office of
First Security Bank, N.A. a register (the register maintained in such office and
in any other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers of Securities. First
Security Bank, N.A. is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at
an office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated
<PAGE> 30
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transferee or transferees, one or more new Securities of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Sections 304, 906 or 1208 not involving any transfer.
If the Securities are to be redeemed in part, the Company
shall not be required (A) to issue, register the transfer of or exchange any
Securities during a period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of any such Securities selected
for redemption under Section 1204 and ending at the close of business on the day
of such mailing, or (B) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
So long as the Securities are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all
Securities to be traded on the PORTAL Market shall be represented by the
Restricted Global Security registered in the name of the Depositary or the
nominee of the Depositary.
The transfer and exchange of beneficial interests in any
Global Security, which does not involve the issuance of a definitive Security or
the transfer of interests to another Global Security, shall be effected through
the Depositary (but not the Trustee or the Custodian) in accordance with this
Indenture (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor. Neither the Trustee nor the Custodian (in
such respective capacities) will have any responsibility for the transfer and
exchange of
<PAGE> 31
20
beneficial interests in such Global Security that does not involve the issuance
of a definitive Security or the transfer of interests to another Global
Security.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and make available for
delivery in exchange therefor a new Security of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and make
available for delivery, in lieu of any such destroyed, lost or stolen Security,
a new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, subject to the preceding paragraph, pay such Security instead of issuing a
new Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
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Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and if so listed, upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee. Subject to the
foregoing provisions of this Section , each Security delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Security shall carry the rights to interest accrued and unpaid, and to
accrue which, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
shall treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Section 307) interest on such Security and
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for all other purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities cancelled as provided in this
Section , except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a Company
Order, provided, however, that the Trustee may but shall not be required to
destroy such Securities.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months. The amount of interest payable for any
period shorter than a full semi-annual period for which interest is computed
will be computed on the basis of actual number of days elapsed in such 180 day
semi-annual period.
SECTION 311. Right of Set-off.
Notwithstanding anything to the contrary in the Indenture, the
Company shall have the right to set-off any payment it is otherwise required to
make thereunder to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a related payment under the
Guarantee.
SECTION 312. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company shall promptly notify
the Trustee of any change in the "CUSIP" numbers.
SECTION 313. Global Securities.
If the Securities are distributed to the holders of Capital
Securities, such Securities distributed in respect of Capital Securities that
are held in global form by a
<PAGE> 34
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Depositary will initially be issued as a Global Security, unless such transfer
cannot be effected through book-entry settlement. If the Company shall establish
that the Securities are to be issued in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall, in accordance
with Section 303 and the Company Order, authenticate and deliver one or more
Global Securities that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of all of the Securities to be issued in
the form of Global Securities and not yet cancelled, (ii) shall be registered in
the name of the Depositary for such Global Security or Securities or the nominee
of such Depositary, and (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions. Global Securities
shall bear a legend substantially to the following effect:
"This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. Notwithstanding the provisions of Section 305,
unless and until it is exchanged in whole or in part for Securities in
definitive registered form, a Global Security representing all or a part of the
Securities may not be transferred in the manner provided in Section 305 except
as a whole by the Depositary to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary. Every Security delivered upon registration or
transfer of, or in exchange for, or in lieu of, this Global Security shall be a
Global Security subject to the foregoing, except in the limited circumstances
described above. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is to be made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein."
Definitive Securities issued in exchange for all or a part of
a Global Security pursuant to this Section 313 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such
definitive Securities to the persons in whose names such definitive Securities
are so registered.
At such time as all interests in Global Securities have been
redeemed, repurchased or canceled, such Global Securities shall be, upon receipt
thereof, canceled by the Trustee in accordance with standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in Global Securities is exchanged
for definitive Securities, redeemed, canceled or transferred to a transferee who
receives definitive Securities therefor or any definitive Security is exchanged
or transferred for part of Global Securities, the principal amount of such
Global Securities shall, in accordance with the standing procedures and
instructions existing between the
<PAGE> 35
24
Depositary and the Custodian, be reduced or increased, as the case may be, and
an endorsement shall be made on such Global Securities by the Trustee or the
Custodian, at the direction of the Trustee, to reflect such reduction or
increase.
The Company and the Trustee may for all purposes, including
the making of payments due on the Securities, deal with the Depositary as the
authorized representative of the Holders for the purposes of exercising the
rights of Holders hereunder. The rights of the owner of any beneficial interest
in a Global Security shall be limited to those established by law and agreements
between such owners and depository participants or Euroclear and Cedel;
provided, that no such agreement shall give any rights to any person against the
Company or the Trustee without the written consent of the parties so affected.
Multiple requests and directions from and votes of the Depositary as holder of
Securities in global form with respect to any particular matter shall not be
deemed inconsistent to the extent they do not represent an amount of Securities
in excess of those held in the name of the Depositary or its nominee.
If at any time the Depositary for any Securities represented
by one or more Global Securities notifies the Company that it is unwilling or
unable to continue as Depositary for such Securities or if at any time the
Depositary for such Securities shall no longer be eligible under this Section
313, the Company shall appoint a successor Depositary with respect to such
Securities. If a successor Depositary for such Securities is not appointed by
the Company within 90 days after the Company receives such notice or becomes
aware of such ineligibility, the Company's election that such Securities be
represented by one or more Global Securities shall no longer be effective and
the Company shall execute, and the Trustee, upon receipt of a Company Order for
the authentication and delivery of definitive Securities, will authenticate and
make available for delivery Securities in definitive registered form, in any
authorized denominations, in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such
Securities in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion
determine that the Securities issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or Securities. In
such event the Company shall execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of definitive Securities, shall
authenticate and make available for delivery, Securities in definitive
registered form, in any authorized denominations, in an aggregate principal
amount equal to the principal amount of the Global Security or Securities
representing such Securities, in exchange for such Global Security or
Securities.
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in Section 314(a)), Global Securities may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
Interests of beneficial owners in Global Security may be
transferred or exchanged for definitive Securities and definitive Securities may
be transferred or exchange
<PAGE> 36
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for Global Securities in accordance with rules of the Depositary and the
provisions of Section 315.
Any Security in global form may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Indenture as may be required by the
Custodian, the Depositary or by the National Association of Securities Dealers,
Inc. in order for the Securities to be tradeable on the PORTAL Market or as may
be required for the Securities to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with Regulation S or with the
rules and regulations of any securities exchange upon which the Securities may
be listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Securities are subject.
SECTION 314. Restrictive Legend.
(a) Each Global Security and definitive Security that
constitutes a Restricted Security shall bear the following legend (the "Private
Placement Legend") on the face thereof until three years after the later of the
date of original issue and the last date on which the Company or any Affiliate
of the Company was the owner of such Capital Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date"), unless otherwise agreed by
the Company and the Holder thereof:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS
SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED"
SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II)
IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO
THE LATER OF THE DATE WHICH IS THREE YEARS AFTER THE DATE OF ORIGINAL
ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE
OF THE COMPANY WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY
PREDECESSOR) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS
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DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (D) OUTSIDE THE UNITED STATES IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE, ANY
OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSES
(II)(D) AND (E) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY
AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE
TO THEM IN FORM AND SUBSTANCE."
Any Security (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms may, upon satisfaction of the requirements of
Section 314(b) and surrender of such Security for exchange to the Security
Registrar in accordance with the provisions of this Section 314, be exchanged
for a new Security or Securities, of like tenor and aggregate principal amount,
which shall not bear the restrictive legend required by this Section 314(a).
(b) Upon any sale or transfer of any Restricted Security
(including any interest in a Global Security) (i) that is effected pursuant to
an effective registration statement under the Securities Act or (ii) in
connection with which the Trustee receives certificates and other information
(including an opinion of counsel, if requested) reasonably acceptable to the
Company and the Trustee to the effect that such security will no longer be
subject to the resale restrictions under federal and state securities laws, then
(A) in the case of a Restricted Security in definitive form, the Security
Registrar or co-Registrar shall permit the holder thereof to exchange such
Restricted Security for a Security that does not bear the legend set forth in
Section 314(a), and shall rescind any such restrictions on transfer and (B) in
the case of Restricted Securities represented by a Global Security, such
Security shall no longer be subject to the restrictions contained in the legend
set forth in Section 314(a) (but still subject to the other provisions hereof).
In addition, any Security (or Security issued in exchange or substitution
therefor) as to which the restrictions on transfer described in the legend set
forth in Section 314(a) have expired by their terms, may, upon surrender thereof
(in accordance with the terms of this Indenture) together with such
certifications and other information (including an Opinion of Counsel having
substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company and the Trustee
and in a form acceptable to the Company, to the effect that the transfer of such
Restricted Security has been made in compliance with Rule 144 or such successor
provision) acceptable to the Company and the Trustee as either of them may
reasonably require, be exchanged for a new Security or Securities of like tenor
and aggregate principal amount, which shall not bear the restrictive legends set
forth in Section 314(a).
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SECTION 315. Special Transfer Provisions.
At any time at the request of the beneficial holder of an
interest in a Security in global form, such beneficial holder shall be entitled
to obtain a definitive Security upon written request to the Trustee in
accordance with the standing instructions and procedures existing between the
Depositary and the Trustee for the issuance thereof. Upon receipt of any such
request, the Trustee will cause the aggregate principal amount of the Security
in global form to be reduced and, following such reduction, the Company will
execute and the Trustee will authenticate and deliver to such beneficial holder
(or its nominee) a Security or Securities in the appropriate aggregate principal
amount in the name of such beneficial holder (or its nominee) and bearing such
restrictive legends as may be required by this Indenture.
Any transfer of a beneficial interest in a Security in global form which cannot
be effected through book-entry settlement must be effected by the delivery to
the transferee (or its nominee) of a definitive Security or Securities
registered in the name of the transferee (or its nominee) on the books
maintained by the Trustee. With respect to any such transfer, the Trustee will
cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Trustee, the aggregate principal amount of the
Security in global form to be reduced and, following such reduction, the Company
will execute and the Trustee will authenticate and deliver to the transferee (or
such transferee's nominee, as the case may be), a Security or Securities in the
appropriate aggregate principal amount in the name of such transferee (or its
nominee) and bearing such restrictive legends as may be required by this
Indenture. In connection with any such transfer, the Trustee may request such
representations and agreements relating to the restrictions on transfer of such
Security or Securities from such transferee (or such transferee's nominee) as
the Trustee may reasonably require.
So long as the Securities are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Security to a QIB in accordance with Rule 144A, unless otherwise
requested by the transferor, and upon receipt of the definitive Security or
Securities being so transferred, together with a certification from the
transferor that the transferor reasonably believes that the transferee is a QIB
(or other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Restricted Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Restricted
Global Security, the Trustee shall cancel such definitive Security or Securities
and cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Trustee, the aggregate principal amount of
Securities represented by the Restricted Global Security to be increased
accordingly.
So long as the Securities are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Security in accordance with Regulation S, if requested by the
transferor, and upon receipt of the definitive Security or Securities being so
transferred, together with a certification from the transferor that the transfer
was made in accordance with Rule 903 or 904 of Regulation S or Rule 144 under
the Securities Act (or other evidence satisfactory to the Trustee), the Trustee
shall make or direct the Custodian to make, an endorsement on the Regulation S
Global Security to reflect an
<PAGE> 39
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increase in the aggregate principal amount of the Securities represented by the
Regulation S Global Security, the Trustee shall cancel such definitive Security
or Securities and cause, or direct the Custodian to cause, in accordance with
the standing instructions and procedures existing between the Depositary and the
Custodian, the aggregate principal amount of Securities represented by the
Regulation S Global Security to be increased accordingly.
If a holder of a beneficial interest in the Restricted Global
Security wishes at any time to exchange its interest in the Restricted Global
Security for an interest in the Regulation S Global Security, or to transfer its
interest in the Restricted Global Security to a person who wishes to take
delivery thereof in the form of an interest in the Regulation S Global Security,
such holder may, subject to the rules and procedures of the Depositary and to
the requirements set forth in the following sentence, exchange or cause the
exchange or transfer or cause the transfer of such interest for an equivalent
beneficial interest in the Regulation S Global Security. Upon receipt by First
Security Bank, N.A., as transfer agent of (1) instructions given in accordance
with the Depositary's procedures from or on behalf of a holder of a beneficial
interest in the Restricted Global Security, directing First Security Bank, N.A.
(via DWAC), as transfer agent, to credit or cause to be credited a beneficial
interest in the Regulation S Global Security in an amount equal to the
beneficial interest in the Restricted Global Security to be exchanged or
transferred, (2) a written order given in accordance with the Depositary's
procedures containing information regarding the Euroclear or Cedel account to be
credited with such increase and the name of such account, and (3) a certificate
given by the holder of such beneficial interest stating that the exchange or
transfer of such interest has been made pursuant to and in accordance with Rule
903 or Rule 904 of Regulation S or Rule 144 under the Securities Act (or other
evidence satisfactory to the Trustee), First Security Bank, N.A., as transfer
agent, shall promptly deliver appropriate instructions to the Depositary (via
DWAC), its nominee, or the custodian for the Depositary, as the case may be, to
reduce or reflect on its records a reduction of the Restricted Global Security
by the aggregate principal amount of the beneficial interest in such Restricted
Global Security to be so exchanged or transferred from the relevant participant,
and First Security Bank, N.A., as transfer agent, shall promptly deliver
appropriate instructions (via DWAC) to the Depositary, its nominee, or the
custodian for the Depositary, as the case may be, concurrently with such
reduction, to increase or reflect on its records an increase of the principal
amount of such Regulation S Global Security by the aggregate principal amount of
the beneficial interest in such Restricted Global Security to be so exchanged or
transferred, and to credit or cause to be credited to the account of the person
specified in such instructions (who may be Morgan Guaranty Trust Company of New
York, Brussels office, as operator of Euroclear or Cedel or another agent member
of Euroclear or Cedel, or both, as the case may be, acting for and on behalf of
them) a beneficial interest in such Regulation S Global Security equal to the
reduction in the principal amount of such Restricted Global Security.
If a holder of a beneficial interest in the Regulation S
Global Security wishes at any time to exchange its interest in the Regulation S
Global Security for an interest in the Restricted Global Security, or to
transfer its interest in the Regulation S Global Security to a person who wishes
to take delivery thereof in the form of an interest in the Restricted Global
Security, such holder may, subject to the rules and procedures of Euroclear or
Cedel and the Depositary, as the case may be, and to the requirements set forth
in the following sentence,
<PAGE> 40
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exchange or cause the exchange or transfer or cause the transfer of such
interest for an equivalent beneficial interest in such Restricted Global
Security. Upon receipt by First Security Bank, N.A., as transfer agent of (l)
instructions given in accordance with the procedures of Euroclear or Cedel and
the Depositary, as the case may be, from or on behalf of a beneficial owner of
an interest in the Regulation S Global Security directing First Security Bank,
N.A., as transfer agent, to credit or cause to be credited a beneficial interest
in the Restricted Global Security in an amount equal to the beneficial interest
in the Regulation S Global Security to be exchanged or transferred, (2) a
written order given in accordance with the procedures of Euroclear or Cedel and
the Depositary, as the case may be, containing information regarding the account
with the Depositary to be credited with such increase and the name of such
account, and (3) prior to the expiration of the Restricted Period, a certificate
given by the holder of such beneficial interest and stating that the person
transferring such interest in such Regulation S Global Security reasonably
believes that the person acquiring such interest in the Restricted Global
Security is a QIB and is obtaining such beneficial interest in a transaction
meeting the requirements of Rule 144A and any applicable securities laws of any
state of the United States or any other jurisdiction (or other evidence
satisfactory to the Trustee), First Security Bank, N.A., as transfer agent,
shall promptly deliver (via DWAC) appropriate instructions to the Depositary,
its nominee, or the custodian for the Depositary, as the case may be, to reduce
or reflect on its records a reduction of the Regulation S Global Security by the
aggregate principal amount of the beneficial interest in such Regulation S
Global Security to be exchanged or transferred, and First Security Bank, N.A.,
as transfer agent, shall promptly deliver (via DWAC) appropriate instructions to
the Depositary, its nominee, or the custodian for the Depositary, as the case
may be, concurrently with such reduction, to increase or reflect on its records
an increase of the principal amount of the Restricted Global Security by the
aggregate principal amount of the beneficial interest in the Regulation S Global
Security to be so exchanged or transferred, and to credit or cause to be
credited to the account of the person specified in such instructions a
beneficial interest in the Restricted Global Security equal to the reduction in
the principal amount of the Regulation S Global Security. After the expiration
of the Restricted Period (as defined below), the certification requirement set
forth in clause (3) of the second sentence of the above paragraph will no longer
apply to such exchanges and transfers.
If a holder of a definitive Security wishes at any time to
exchange its Security for a beneficial interest in any Global Security (or vice
versa), or to transfer its definitive Security to a person who wishes to take
delivery thereof in the form of a beneficial interest in a Global Security (or
vice versa), such Securities and beneficial interests may be exchanged or
transferred for one another only in accordance with such procedures as are
substantially consistent with the provisions of the two preceding paragraphs
(including the certification requirements intended to ensure that such exchanges
or transfers comply with Rule 144, Rule 144A or Regulation S, as the case may
be) and as may be from time to time adopted by the Company and the Trustee.
Any beneficial interest in one of the Global Securities that
is transferred to a person who takes delivery in the form of an interest in the
other Global Security will, upon transfer, cease to be an interest in such
Global Security and become an interest in the other Global Security and,
accordingly, will thereafter be subject to all transfer restrictions and
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other procedures applicable to beneficial interests in such other Global
Security for as long as it remains such an interest.
Prior to or on the 40th day after the later of the
commencement of the offering of the Capital Securities and the Closing Date (the
"Restricted Period"), beneficial interests in a Regulation S Global Security may
only be held through Morgan Guaranty Trust Company of New York, Brussels Office,
as operator of Euroclear or Cedel or another agent member of Euroclear and Cedel
acting for and on behalf of them, unless delivery is made through the Restricted
Global Security in accordance with the certification requirements hereof. During
the Restricted Period, interests in the Regulation S Global Security, if any,
may be exchanged for interests in the Restricted Global Security or for
definitive Securities only in accordance with the certification requirements
described above.
ARTICLE FOUR
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, on written demand of and at the
expense of the Company, shall execute instruments supplied by the Company
acknowledging satisfaction and discharge of this Indenture, when (1) either (A)
all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been delivered to the Trustee for
cancellation; or (B) all such Securities not theretofore delivered to the
Trustee for cancellation (i) have become due and payable, or (ii) will become
due and payable at their Maturity within one year, or (iii) if redeemable at the
option of the Company, are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and of the expense, of the Company and the Company,
in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited
with the Trustee as funds in trust for the purpose on amount sufficient to pay
and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and interest to the
date of such deposit (in the case of Securities which have become due and
payable) or to the Maturity or Redemption Date, as the case may be; (2) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and (3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee under
Section 607 and, if money shall have been deposited with the
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Trustee pursuant to subclause (B) of clause (1) of this Section , the
obligations of the Trustee under Section 402 and the last paragraph of Section
1003 shall survive.
SECTION 402. Legal Defeasance.
In addition to discharge of this Indenture pursuant to Section
401, in the case of any Securities with respect to which the exact amount
described in subparagraph (a) of Section 404 can be determined at the time of
making the deposit referred to in such subparagraph (a), the Company shall be
deemed to have paid and discharged the entire indebtedness on all the Securities
as provided in this Section on and after the date the conditions set forth in
Section 404 are satisfied, and the provisions of this Indenture with respect to
the Securities shall no longer be in effect (except as to (i) rights of
registration of transfer and exchange of Securities, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen Securities, (iii) maintenance of a
Paying Agent, (iv) rights of Holders of Securities to receive, solely from the
trust fund described in subparagraph (a) of Section 404, payments of principal
thereof and interest, if any, thereon upon the original stated due dates
therefor (but not upon acceleration), (v) the rights, obligations, duties and
immunities of the Trustee hereunder, (vi) this Section 402 and (vii) the rights
of the Holders of Securities as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them)
(hereinafter called "Legal Defeasance"), and the Trustee, at the cost and
expense of the Company, shall execute proper instruments acknowledging the same.
SECTION 403. Covenant Defeasance.
In the case of any Securities with respect to which the exact
amount described in subparagraph (a) of Section 404 can be determined at the
time of making the deposit referred to in such subparagraph (a), (x) the Company
shall be released from its obligations under any covenants specified in or
pursuant to this Indenture (except as to (i) rights of registration of transfer
and exchange of Securities, (ii) substitution of mutilated, defaced, destroyed,
lost or stolen Securities, (iii) maintenance of a Paying Agent, (iv) rights of
Holders of Securities to receive, from the Company pursuant to Section 1001,
payments of principal thereof and interest, if any, thereon upon the original
stated due dates therefor (but not upon acceleration), (v) the rights,
obligations, duties and immunities of the Trustee hereunder and (vi) the rights
of the Holders of Securities as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them), and (y)
the occurrence of any event specified in Section 501(3) (with respect to any of
the covenants specified in or pursuant to this Indenture) shall be deemed not to
be or result in an Event of Default, in each case with respect to the
Outstanding Securities as provided in this Section on and after the date the
conditions set forth in Section 404 are satisfied (hereinafter called "Covenant
Defeasance"), and the Trustee, at the cost and expense of the Company, shall
execute proper instruments acknowledging the same. For this purpose, such
Covenant Defeasance means that the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant (to the extent so specified in the case of Section 501(3)),
whether directly or indirectly by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision
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herein or in any other document, but the remainder of this Indenture and the
Securities shall be unaffected thereby.
SECTION 404. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 402 or 403 to the Outstanding Securities:
(a) with reference to Section 402 or 403, the Company has
irrevocably deposited or caused to be irrevocably deposited with the Trustee as
funds in trust, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of Securities (i) cash in an amount, (ii) direct
obligations of the United States of America, backed by its full faith and credit
("U.S. Government Obligations"), maturing as to principal and interest, if any,
at such times and in such amounts as will ensure the availability of cash, (iii)
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, or (iv) a combination thereof, in each case sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge the principal of and interest, if any, on all Securities on each
date that such principal or interest, if any, is due and payable;
(b) in the case of Legal Defeasance under Section 402, the
Company has delivered to the Trustee an Opinion of Counsel based on the fact
that (x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (y), since the date hereof, there has been
a change in the applicable United States federal income tax law, in either case
to the effect that, and such opinion shall confirm that, the Holders of the
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and Legal Defeasance and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit and Legal Defeasance
had not occurred;
(c) in the case of Covenant Defeasance under Section 403, the
Company has delivered to the Trustee an Opinion of Counsel to the effect that,
and such opinion shall confirm that, the Holders of the Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and Covenant Defeasance and will be subject to federal income tax
on the same amount in the same manner and at the same times as would have been
the case if such deposit and Covenant Defeasance had not occurred;
(d) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under, any agreement
or instrument to which the Company is a party or by which it is bound; and
(e) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent contemplated by this provision have been complied with.
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SECTION 405. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations deposited with the Trustee
pursuant to Section 401 shall be held in trust and such money and all money from
such U.S. Government Obligations shall be applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money and U.S. Government
Obligations has been deposited with the Trustee.
SECTION 406. Indemnity for U.S. Government Obligations.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 404 or the principal or interest
received in respect of such obligations other than any such tax, fee or other
charge that by law is for the account of the Holders of Outstanding Securities.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default" wherever used herein, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article Eleven or be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) failure for 30 days to pay any interest on the Securities
when due (subject to the deferral of any due date in the case of an Extension
Period); or
(2) failure to pay any principal on the Securities when due,
whether at Maturity, upon redemption, by declaration of acceleration or
otherwise;
(3) failure to observe or perform in any material respect any
other covenant herein that continues 90 days after written notice to the Company
from the Trustee or the holders of at least 25% in aggregate principal amount of
the Outstanding Securities; or
(4) entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly
<PAGE> 45
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filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable Federal or State law, at
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of substantially all of the property of
the Company, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 90 consecutive days; or
(5) (A) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or (B) the consent by the Company or to the
entry of a decree or order for relief in respect of itself in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company, or (C) the filing by the
Company of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or (D) the consent by the Company to
the filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of all or substantially all of the property
of the Company, or (E) the making by the Company of an assignment for the
benefit of creditors.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities shall have the right to declare
the principal of and the interest on all the Securities and any other amounts
payable hereunder to be due and payable immediately, provided, however, that if
upon an Event of Default, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities fail to declare the
payment of all amounts on the Securities to be immediately due and payable, the
holders of at least 25% in aggregate liquidation amount of Capital Securities
then outstanding shall have such right, by a notice in writing to the Company
(and to the Trustee if given by Holders or the holders of Capital Securities)
and upon any such declaration such principal and all accrued interest shall
become immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this Article, the Holders of
a majority in aggregate principal amount of the Outstanding Securities, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if (1) the Company has paid or deposited with
the Trustee a sum sufficient to pay (A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities which have become
due otherwise than by such declaration of acceleration and interest thereon at
the rate borne by the Securities, (C) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate borne by the
Securities, and (D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and
<PAGE> 46
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counsel; and (2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513. Should the
Holders of such Securities fail to annul such declaration and waive such
default, the holders of a majority in aggregate liquidation amount of the
Capital Securities then outstanding shall have such right. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of any
Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest, and, to the extent that payment thereof
shall be legally enforceable, interest on any overdue principal and on any
overdue interest, at the rate borne by the Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee may File Proofs of Claim.
In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Company (or any other obligor upon
the Securities), its property or its creditors, the Trustee shall be entitled
and empowered, by intervention in such proceeding or otherwise, to take any and
all actions authorized under the Trust Indenture Act in order to have claims of
the Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and
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advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607. No provision of this Indenture shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee may Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trust without the possession of
any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of any express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Eleven, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal, upon presentation of the Securities and the notation
thereon of the payment, if only partially paid, and upon surrender thereof, if
fully paid;
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable as such
Securities for principal and interest, respectively.
THIRD: To the Company, if any balance shall remain.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
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(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities; it being understood and
intended that no one or more Holders shall have any right in any manner whatever
by virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders, or to obtain or to seek to
obtain priority or preference over any other Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal and
Interest; Capital Security Holders' Rights.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and (subject to Section
307) interest on such Security on the Stated Maturity expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
If an Event of Default constituting the failure to pay
interest or principal on the Securities on the date such interest or principal
is otherwise payable has occurred and is continuing, then a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder directly of the principal of or interest on the Securities having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities as such holder on or after the respective due date specified in the
Securities. The Company may not amend this Section without the prior written
consent of the holders of all of the Capital Securities. Notwithstanding any
payment made to such holder of Capital Securities by the Company in connection
with such a Direct Action, the Company shall remain obligated to pay the
principal of or interest on the Securities held by the Trust or the Property
Trustee and the Company shall be subrogated to the rights of the holder of such
Capital Securities with respect to payments on the Capital Securities to the
extent of any payments made by the Company to such holder in any Direct Action.
A holder of Capital Securities will not be able to exercise directly any other
remedy available to the Holders of the Securities.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for
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any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
Subject to Sections 902 and 1008 hereof, the Holders of not
less than a majority in principal amount of the Outstanding Securities may on
behalf of the Holders of all the Securities waive any past default hereunder and
its consequences, except a default
<PAGE> 50
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(1) in the payment of the principal of or interest on any
Security (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected;
provided, however, that such waiver or modification to such waiver shall not be
effective until the holders of a majority in liquidation preference of Capital
Securities shall have consented to such waiver or modification to such waiver;
provided further, that if the consent of the Holder of each of the Outstanding
Securities is required, such waiver shall not be effective until each holder of
the Capital Securities shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist,
effective as of the date specified in such waiver (and effective retroactively
to the date of default, if so specified) and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, a court may require any party litigant in
such suit to file an undertaking to pay the costs of such suit, and any assess
costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company
or the Trustee or in any suit for the enforcement of the right to receive the
principal of and interest on any Security.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
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ARTICLE SIX
TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act; provided,
however, that except in the case of a default in the payment of the principal of
or interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Holders of Securities; provided, further, that in the case of any default of the
character specified in Section 501(3), no such notice to Holders shall be given
until at least 30 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default. For purposes of this Section,
the Trustee shall not be deemed to have knowledge of a default unless the
Trustee has actual knowledge of such default or has received written notice of
such default in the manner contemplated by Section 105.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
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(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(h) any application by the Trustee for written instructions
from the Company may, at the option of the Trustee, set forth in writing any
action proposed to be taken or omitted by the Trustee under this Indenture and
the date on and/or after which such action shall be taken or such omission shall
be effective. The Trustee shall not be liable to the Company for any action
taken by, or omission of, the Trustee in accordance with a proposal included in
such application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations
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as to the validity or sufficiency of this Indenture or of the Securities, the
Trustee shall not be accountable for the use or application by the Company of
Securities or the proceeds thereof.
SECTION 605. Trustee and Other Agents may Hold Securities.
The Trustee, any Paying Agent, any Security Registrar, or any
other agent of the Company, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, or such other agent. Money held
by the Trustee in trust hereunder shall not be invested by the Trustee pending
distribution thereof to the holders of the Securities.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 607. Compensation; Reimbursement; and Indemnity.
The Company, as issuer of the Securities, agrees
(1) to pay to the Trustee from time to time such compensation
as the Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless against, any and all loss, damage, claim,
liability or expense, including taxes (other than taxes based on the income,
revenues or gross receipts of the Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust or the trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. As security for the performance of
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such obligations of the Company, the Trustee shall have a lien prior to the
Securities upon all property and lands held or collected by the Trustee as such,
except funds held in trust for the payment of principal of (and premiums, if
any, on) or interest on particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(4) or Section
501(5), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and has its Corporate
Trust Office in New York, New York. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section , the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section , it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee under
Section 611.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company. If an instrument of acceptance by a
successor Trustee shall not have been
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delivered to the Trustee within 30 days after the giving of such notice of
removal, the removed Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608
after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (i) the Company by a Board
Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the Retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; provided that, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not made available for delivery, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and make available for
delivery the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or becomes a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee (a) semi-annually, not later than June 30 and December 31 in each year,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders to the extent the Company has knowledge thereof as of a
date not more than 15 days prior to the delivery thereof, and (b) at such other
times as the Trustee may request in writing, within 30 days after the receipt by
the Company of any such, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished, excluding from any
such list names and addresses received by the Trustee in its capacity as
Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701, and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders as of May 15 of each year
such reports concerning the Trustee and its actions under this Indenture as may
be required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when the Securities are listed on any stock exchange.
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SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934
shall be filed with the Trustee within 15 days after the same is so required to
be filed with the Commission. Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, unless:
(1) the Person formed by such consolidation or into which the
Company is merged or the Person that acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust, shall be organized and
existing under the laws of the United States of America or any State or the
District of Columbia, and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if any)
and interest (including any additional interest) on all the Securities and the
performance of every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have happened and be continuing;
(3) for so long as Securities registered on the Securities
Register in the name of the Trust (or the Property Trustee) are outstanding,
such consolidation, merger, conveyance, transfer or lease is permitted under the
Declaration and the Guarantee and does not give rise to any breach or violation
of the Declaration or the Guarantee;
(4) any such lease shall provide that it will remain in effect
so long as any Securities are Outstanding; and
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(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance, transfer or lease and any such supplemental indenture
complies with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with; and the Trustee, subject
to Section 601, may rely upon such Officers' Certificate and Opinion of Counsel
as conclusive evidence that such transaction complies with this Section 801.
SECTION 802. Successor Person Substituted.
Upon any consolidation or merger by the Company with or into
any other Person, or any conveyance, transfer or lease by the Company of its
properties and assets substantially as an entirety to any Person in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and, in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.
Such successor Person may cause to be signed, and may issue
either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee; and, upon the order of such successor
Person instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall make available for delivery any Securities which previously shall have
been signed and delivered by the officers of the Company to the Trustee for
authentication pursuant to such provisions and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee on its behalf for the purpose pursuant to such provisions. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities had
been issued at the date of the execution hereof.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
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(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to cure any ambiguity or defect, to correct or supplement
any provision herein which may be inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions of this
Indenture, provided that such action pursuant to this clause (3) shall not
adversely affect the interests of the Holders of the Securities or, so long as
any of the Capital Securities shall remain outstanding, the holders of the
Capital Securities; or
(4) to comply with any requirement of the Commission in order
to effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of, the principal of, or any
installment of interest on, any Security, or reduce the principal amount thereof
or the rate of interest thereon or extend the time of payment of interest
thereon (except such extension as is contemplated hereby), or change the place
of payment where, or the coin or currency in which, any Security or interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or modify the provisions of this
Indenture with respect to the subordination of the Securities in a manner
adverse to the Holders,
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section , Section 513
or Section 1008, except to increase any such percentage or to provide that
certain other provisions of this
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Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; provided, that, so long as any of the
Capital Securities remains outstanding, no such amendment shall be made that
adversely affects the holders of the Capital Securities, and no termination of
this Indenture shall occur, and no waiver of any Event of Default or compliance
with any covenant under this Indenture shall be effective, without the prior
consent of the holders of at least a majority of the aggregate liquidation
preference of the outstanding Capital Securities unless and until the principal
of and any premium on the Securities and all accrued and unpaid interest thereon
have been paid in full.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trust created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into such supplemental indenture which affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. Conformity With Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and made available for delivery by the Trustee in
exchange for Outstanding Securities.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and
interest on the Securities in accordance with the terms of the Securities and
this Indenture and comply with all other terms and conditions and agreements
contained herein.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in The City of New York an office or
agency where Securities may be presented or surrendered for registration of
transfer or exchange, where Securities may be surrendered for conversion and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more
other offices or agencies in the United States where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the United States for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
SECTION 1003. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent,
it will, on, or at the option of the Company, or before each due date of the
principal of or interest on any of the Securities, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum sufficient to pay the
principal or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act. In such case the Company shall not
invest the amount so segregated and held in trust pending the distribution
thereof.
Whenever the Company shall have one or more Paying Agents, it
will, on or prior to each due date of the principal of or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will promptly
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notify the Trustee of its action or failure so to act; provided, however, that
any such deposit on a due date shall be initiated prior to 12:00 noon (New York
time) in same-day funds.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section ,
that such Paying Agent will (i) comply with the provisions of the Trust
Indenture Act applicable to it as a Paying Agent and (ii) during the continuance
of any default by the Company (or any other obligor upon the Securities) in the
making of any payment in respect of the Securities, upon the written request of
the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
the trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Payment Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal or interest
that has become due and payable shall be paid to the Company on Company Request,
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
SECTION 1004. Statements by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the material terms, provisions and conditions of this Indenture (without
regard to any period of grace or requirement of notice provided hereunder) and,
if the Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders and, while
any Capital Securities are outstanding, the holders of the Capital Securities.
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SECTION 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1007. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary that
comprise more than 10% of the assets of the Company and its Subsidiaries, taken
as a whole; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.
SECTION 1008. Waiver of Certain Covenants.
Except as otherwise specified or as contemplated by Section
301 for Securities, the Company may, with respect to the Securities, omit in any
particular instance to comply with any term, provision or condition set forth in
any covenant provided pursuant to Section 901(2) for the benefit of the Holders
if before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
SECTION 1009. Payment of the Trust's Costs and Expenses.
Since the Trust is being formed solely to facilitate an
investment in the Securities, the Company, as borrower, hereby covenants to pay
all debts and obligations (other than with respect to the Capital Securities and
Common Securities) and all costs and expenses of the Trust (including, but not
limited to, all costs and expenses relating to the organization of the Trust,
the fees and expenses of the Trustees and all costs and expenses relating to the
operation of the Trust) and to pay any and all taxes, duties, assessments or
<PAGE> 65
54
governmental charges of whatever nature (other than withholding taxes) imposed
on the Trust by the United States, or any other taxing authority, so that the
net amounts received and retained by the Trust and the Property Trustee after
paying such expenses will be equal to the amounts the Trust and the Property
Trustee would have received had no such costs or expenses been incurred by or
imposed on the Trust. The foregoing obligations of the Company are for the
benefit of, and shall be enforceable by, any person to whom any such debts,
obligations, costs, expenses and taxes are owed (each, a "Creditor") whether or
not such Creditor has received notice thereof. Any such Creditor may enforce
such obligations of the Company directly against the Company, and the Company
irrevocably waives any right or remedy to require that any such Creditor take
any action against the Trust or any other person before proceeding against the
Company. The Company shall execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
SECTION 1010. Restrictions on Payments and Distributions.
The Company will not, and will not permit any Subsidiary to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Company that
rank pari passu with or junior in interest to the Securities or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiary if such guarantee ranks pari passu with or junior
in interest to the Securities (other than (a) dividends or distributions in
common stock of the Company, (b) payments under the Guarantee, (c) any
declaration of a dividend in connection with the implementation of a
shareholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, and
(d) purchases of common stock related to the issuance of common stock or rights
under any of the Company's benefit plans) if at such time (x) there shall have
occurred any event of which the Company has actual knowledge that (I) with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default and (II) in respect of which the Company shall not have taken reasonable
steps to cure, (y) the Company shall be in default with respect to its payment
of any obligations under the Guarantee or (z) the Company shall have given
notice of its election of an Extension Period as provided herein and shall not
have rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing.
<PAGE> 66
55
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES
SECTION 1101. Securities Subordinate to Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article (subject to
Article Four), the payment of the principal of and interest on each and all of
the Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full in cash of all Indebtedness.
This Article Eleven shall constitute a continuing offer to all
persons who become holders of, or continue to hold, Indebtedness, and such
provisions are made for the benefit of the holders of Indebtedness and such
holders are made obligees hereunder and any one or more of them may enforce such
provisions. Holders of Indebtedness need not prove reliance on the subordination
provisions hereof.
SECTION 1102. Default on Indebtedness.
In the event and during the continuation of any default in the
payment of principal, premium, interest or any other payment due on any
Indebtedness, or in the event that any event of default with respect to any
Indebtedness shall have occurred and be continuing and shall have resulted in
such Indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable (unless and until such
event of default shall have been cured or waived or shall have ceased to exist
and such acceleration shall have been rescinded or annulled) or in the event any
judicial proceeding shall be pending with respect to any such default in payment
or such event of default, then no payment shall be made by the Company with
respect to the principal (including redemption payments) of, or interest on, the
Securities.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by the preceding paragraph of this Section 1102, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that
the holders of the Indebtedness (or their representative or representatives or a
trustee) notify the Trustee within 90 days of such payment of the amounts then
due and owing on the Indebtedness and only the amounts specified in such notice
to the Trustee shall be paid to the holders of Indebtedness.
SECTION 1103. Prior Payment of Indebtedness Upon Acceleration of Securities.
In the event that the Securities are declared due and payable
before their Stated Maturity, then and in such event the holders of the
Indebtedness outstanding at the time such
<PAGE> 67
56
Securities so become due and payable shall be entitled to receive payment in
full of all amounts then due on or in respect of such Indebtedness (including
any amounts due upon acceleration), or provision shall be made for such payment
in cash or cash equivalents or otherwise in a manner satisfactory to the holders
of Indebtedness, before the Holders of the Securities are entitled to receive
any payment or distribution of any kind or character, whether in cash,
properties or securities, by the Company on account of the principal of or
interest on the Securities or on account of the purchase or other acquisition of
Securities by the Company or any Subsidiary; provided, however, that holders of
Indebtedness shall not be entitled to receive payment of any such amounts to the
extent that such holders would be required by the subordination provisions of
such Indebtedness to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Company's
business.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by the preceding paragraph of this Section 1103, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that
the holders of the Indebtedness (or their representative or representatives or a
trustee) notify the Trustee within 90 days of such payment of the amounts then
due and owing on the Indebtedness and only the amounts specified in such notice
to the Trustee shall be paid to the holders of Indebtedness.
SECTION 1104. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company, or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, and premium, if any, and
interest due or to become due upon all Indebtedness (including interest after
the commencement of any bankruptcy, insolvency, receivership or other
proceedings at the rate specified in the applicable Indebtedness, whether or not
such interest is an allowable claim in any such proceeding) shall first be paid
in full, or payment thereof provided for in money in accordance with its terms,
before any payment is made on account of the principal or interest on the
Securities; and upon any such dissolution or winding-up or liquidation or
reorganization any payment by the Company, or distribution of substantially all
of the assets of the Company of any kind or character, whether in cash, property
or securities, to which the Holders of the Securities or the Trustee would be
entitled, except for the provisions of this Article Eleven, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Holders of the
Securities or by the Trustee under this Indenture if received by them or it,
directly to the holders of Indebtedness (pro rata to such holders on the basis
of the respective amounts of Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Indebtedness may have been issued, as
<PAGE> 68
57
their respective interests may appear, to the extent necessary to pay all
Indebtedness in full (including interest after the commencement of any
bankruptcy, insolvency, receivership or other proceedings at the rate specified
in the applicable Indebtedness, whether or not such interest is in an allowable
claim in any such proceeding) or to provide for such payment in money in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Indebtedness, before any payment or
distribution is made to the Holders of Securities or to the Trustee or the
Property Trustee on behalf of the Holders of Capital Securities; provided,
however, that such holders of Indebtedness shall not be entitled to receive
payment of any such amounts to the extent that such holders would be required by
the subordination provisions of such Indebtedness to pay such amounts over to
the obligees on trade accounts payable or other liabilities arising in the
ordinary course of the Company's business.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee or the Holders of the Securities before all Indebtedness is paid in
full (including interest after commencement of any bankruptcy, insolvency,
receivership or other proceedings at the rate specified in the applicable
Indebtedness, whether or not such interest is an allowable claim in any such
proceeding), or provision is made for such payment in money in accordance with
its terms, such payment or distribution shall be held in trust for the benefit
of and shall be paid over or delivered to the holders of Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Indebtedness may have
been issued, as their respective interests may appear, as calculated by the
Company, for application to the payment of all Indebtedness remaining unpaid to
the extent necessary to pay all Indebtedness in full in money in accordance with
its terms, after giving effect to any concurrent payment or distribution to or
for the holders of such Indebtedness.
Any holder of Indebtedness may file any proof of claim or
similar instrument on behalf of the Trustee and the Holders if such instrument
has not been filed by the date which is 30 days prior to the date specified for
filing thereof.
For purposes of this Article Eleven, the words "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Eleven with
respect to the Securities to the payment of all Indebtedness that may at the
time be outstanding, provided, however, that (i) the Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Indebtedness are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or merger of the Company
into, another corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article Eight hereof shall not be deemed a
dissolution, winding-up, liquidation
<PAGE> 69
58
or reorganization for the purposes of this Section 1104 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Eight hereof. Nothing in
Section 1103 or in this Section 1104 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 607.
SECTION 1105. Subrogation.
Subject to the payment in full of all Indebtedness to the
extent provided in Sections 1103 and 1104, the rights of the Holders of the
Securities shall be subrogated to the rights of the holders of Indebtedness to
receive payments or distributions of cash, property or securities of the Company
applicable to the Indebtedness until the principal of (and premium, if any) and
interest on the Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Indebtedness of
any cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article Eleven,
shall, as between the Company, its creditors other than holders of Indebtedness,
and the Holders of the Securities, be deemed to be a payment by the Company to
or on account of the Indebtedness. It is understood that the provisions of this
Article Eleven are and are intended solely for the purposes of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of the Indebtedness on the other hand.
Nothing contained in this Article Eleven or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Indebtedness, and the Holders
of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and creditors
of the Company other than the holders of the Indebtedness, nor shall anything
herein or therein prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Eleven of the
holders of Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Eleven, the Trustee, subject to the provisions of
Section 601, and the Holders of the Securities, shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purposes of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Eleven.
<PAGE> 70
59
SECTION 1106. Trustee to Effectuate Subordination.
Each Holder of a Security by acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Eleven and appoints the Trustee such Holder's attorney-in-fact for any
and all such purposes.
SECTION 1107. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Eleven. Notwithstanding
the provisions of this Article Eleven or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article Eleven,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or a holder or holders of Indebtedness or from any trustee therefor; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
the notice provided for in this Section 1107 at least three Business Days prior
to the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest on any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within three Business Days prior to such date.
The Trustee, subject to the provisions of Section 601, shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Indebtedness (or a trustee on behalf of
such holder) to establish that such notice has been given by a holder of
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Indebtedness to participate in
any payment or distribution pursuant to this Article Eleven, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article
Eleven, and if such evidence is not furnished the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person to
receive such payment.
<PAGE> 71
60
SECTION 1108. Rights of the Trustee; Holders of Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article Eleven in respect of any Indebtedness
at any time held by it, to the same extent as any other holder of Indebtedness,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
With respect to the holders of Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Eleven, and no implied covenants
or obligations with respect to the holders of Indebtedness shall be read into
this Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Indebtedness and, subject to the provisions of
Section 601, the Trustee shall not be liable to any holder of Indebtedness if it
shall pay over or deliver to holders of Securities, the Company or any other
Person money or assets to which any holder of Indebtedness shall be entitled by
virtue of this Article Eleven or otherwise.
SECTION 1109. Subordination May Not Be Impaired.
No right of any present or future holder of any Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter,
Indebtedness or otherwise amend or supplement in any manner Indebtedness or any
instrument evidencing the same or any agreement under which Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Indebtedness; (iii) release any Person
liable in any manner for the collection of Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
<PAGE> 72
61
ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 1201. Optional Redemption; Conditions to Optional Redemption.
At any time on or after December 15, 2006, the Company shall
have the right, subject to the last paragraph of this Section 1201 and to the
receipt of any necessary prior approval of the Federal Reserve, to redeem the
Securities, in whole or in part, from time to time, at the Redemption Prices
(expressed as a percentage of the principal amount of such Securities) set forth
below, plus any accrued but unpaid interest to the Redemption Date, if redeemed
during the twelve-month period beginning on December 15 of the years indicated
below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2006 104.2050%
2007 103.7845%
2008 103.3640%
2009 102.9435%
2010 102.5230%
2011 102.1025%
2012 101.6820%
2013 101.2615%
2014 100.8410%
2015 100.4205%
</TABLE>
On or after December 15, 2016, the Redemption Price will be
100%, plus accrued and unpaid interest, if any, to the Redemption Date.
Prior to December 15, 2006, if a Special Event shall occur and
be continuing, the Company shall have the right, subject to the last paragraph
of this Section 1201 and to the receipt of any necessary prior approval of the
Federal Reserve, to redeem, upon not less than 30 days nor more than 60 days
notice, the Securities in whole, but not in part, at a Redemption Price equal to
the greater of (i) 100% of the principal amount of Securities then outstanding
and (ii) as determined by a Quotation Agent, the sum of the present values of
the principal amount and premium payable with respect to an optional redemption
on such Securities on December 15, 2006, together with scheduled payments of
interest from the Redemption Date to December 15, 2006 (the "Remaining Life")
discounted to the Redemption Date on a semi-annual basis (assuming a 360-day
year consisting of 30-day months) at the Adjusted Treasury Rate, plus, in each
case, accrued interest thereon to the Redemption Date.
For so long as the Trust is the Holder of all Securities
Outstanding, the proceeds of any redemption described in this Section 1201 shall
be used by the Trust to redeem Common Securities and Capital Securities in
accordance with their terms. The Company shall not redeem the Securities in part
unless all accrued and unpaid interest has
<PAGE> 73
62
been paid in full on all Securities outstanding for all semi-annual interest
periods terminating on or prior to the Redemption Date.
SECTION 1202. Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted by Section 1201, shall be made in accordance with such provision and
this Article.
SECTION 1203. Election to Redeem; Notice to Trustee.
The election of the Company to redeem Securities pursuant to
Section 1201 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company, the Company shall, at least 45 days and no more
than 60 days prior to the Redemption Date fixed by the Company, notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed and provide a copy of the notice of redemption given to Holders of
Securities to be redeemed pursuant to Section 1205.
SECTION 1204. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities are to be redeemed (unless
such redemption affects only a single Security), the particular Securities to be
redeemed shall be selected by lot (or such other method of selection as the
Trustee may customarily employ) not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities not previously called for
redemption.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption as aforesaid and, in case of any
Securities selected for partial redemption as aforesaid, the principal amount
thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply
with respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
SECTION 1205. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 (provided that the Trustee shall itself
have received notice not less than 45 days prior to the Redemption Date) nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to
be redeemed, at his address appearing in the Security Register.
<PAGE> 74
63
All notices of redemption shall identify the Securities to be
redeemed (including CUSIP number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date, and
(4) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
SECTION 1206. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date; provided, however, that any
such deposit on a Redemption Date shall be initiated prior to 12:00 noon (New
York time) in same-day funds.
SECTION 1207. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
<PAGE> 75
64
SECTION 1208. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at a place of payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
therefor or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE> 76
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
FIRST SECURITY CORPORATION
By: /s/ Scott C. Ulbrich
------------------------------
Name: Scott C. Ulbrich
Title:
THE BANK OF NEW YORK, as Trustee
By: /s/ Robert E. Patterson, III
-------------------------------
Name:Robert E. Patterson, III
Title: Assistant Vice President
<PAGE> 77
EXHIBIT A
FIRST SECURITY CORPORATION
Junior Subordinated Debenture due 2026
$154,640,000
No. 1
CUSIP No. 33620V AC 6
FIRST SECURITY CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to The Bank of New
York, as Property Trustee, or registered assigns, the principal sum of ONE
HUNDRED AND FIFTY-FOUR MILLION, SIX HUNDRED AND FORTY THOUSAND DOLLARS
($154,640,000) on December 15, 2026, and to pay interest on said principal sum
from June 15, 1997 or from the most recent interest payment date (each such
date, an "Interest Payment Date") to which interest has been paid or duly
provided for, semi-annually (subject to deferral as set forth herein) in arrears
on June 15 and December 15 of each year, commencing June 15, 1997, at the rate
of 8.41% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum. The amount of interest
payable for any period will be computed on the basis of twelve 30-day months and
a 360-day year. The amount of interest payable for any period shorter than a
full semi-annual period for which interest is computed, will be computed on the
basis of actual number of days elapsed in such 180-day period. In the event that
any date on which interest is payable on this Security is not a Business Day,
then a payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on the date the payment was originally payable. A "Business Day" shall mean any
day other than a Saturday or a Sunday or a day on which banking institutions in
the City of New York are authorized or required by law or executive order to
remain closed or a day on which the Corporate Trust Office of the Trustee, or
the principal office of the Property Trustee under the Declaration, is closed
for business. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name the Securities (or one or more Predecessor
Securities, as defined in the Indenture) is registered at the close of business
on the Regular Record Date for such interest installment, which shall be the 1st
day of the month of such Interest Payment Date. Any such interest installment
not so punctually paid or duly provided for shall forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name the Securities for one or more Predecessor Securities is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
<PAGE> 78
The Company shall have the right at any time during the term
of this Security, from time to time, to defer payment of interest on such
Security for up to 10 semi-annual periods, (an "Extension Period"), provided
that no Extension Period may extend past the Maturity of this Security. There
may be multiple Extension Periods of varying lengths during the term of this
Security. At the end of each Extension Period, if any, the Company shall pay all
interest then accrued and unpaid, together with interest thereon, compounded
semi-annually at the rate specified on this Security to the extent permitted by
applicable law. During any such Extension Period, the Company may not, and may
not permit any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Securities or make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu or junior in interest to the Securities (other than
(a) dividends or distributions in common stock of the Company, (b) payments
under the Guarantee, (c) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto and (d) purchases of common stock related to the issuance of
common stock or rights under any of the Company's benefit plans). Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Securities. Upon the termination of any such Extension Period and the payment of
all amounts then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Company shall give the Property Trustee, the Regular Trustees and the
Trustee notice of its election of such Extension Period at least one Business
Day prior to the record date for the related interest payment.
Payment of the principal of and interest on this Security will
be made at the office or agency of the Paying Agent maintained for that purpose
in the United States, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company, payment of interest
may be made (i) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Person entitled thereto as specified in the Security Register.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Indebtedness, whether now
-2-
<PAGE> 79
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
Reference is hereby made to the further provisions of the
Indenture summarized on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
-3-
<PAGE> 80
IN WITNESS WHEREOF, First Security Corporation has caused this
instrument to be duly executed.
Dated: December 23, 1996
FIRST SECURITY CORPORATION
By:
----------------------------------
Name:
Title:
-4-
<PAGE> 81
[Form of Reverse of Security]
This Security is one of a duly authorized issue of Securities
of First Security Corporation (the "Company"), designated as its 8.41% Junior
Subordinated Debentures due 2026 (herein called the "Securities"), limited in
aggregate principal amount to $154,640,000 issued under an Indenture, dated as
of December 23, 1996 (herein called the "Indenture"), between the Company and
The Bank of New York, a New York banking corporation, as Trustee (herein called
the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
At any time on or after December 15, 2006, the Company shall
have the right, subject to the terms and conditions of Article Twelve of the
Indenture, to redeem this Security at the option of the Company, in whole or in
part, at the Redemption Price (expressed as a percentage of the principal amount
of such securities) set forth below, plus accrued but unpaid interest to the
Redemption Date, if redeemed during the twelve-month period beginning on
December 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2006 104.2050%
2007 103.7845%
2008 103.3640%
2009 102.9435%
2010 102.5230%
2011 102.1025%
2012 101.6820%
2013 101.2615%
2014 100.8410%
2015 100.4205%
</TABLE>
On or after December 15, 2016, the Redemption Price will be
100%, plus accrued and unpaid interest, if any, to the Redemption Date.
Prior to December 15, 2006, if a Special Event as defined in
Article Twelve of the Indenture shall occur and be continuing, the Company shall
have the right, subject to the terms and conditions of Article Twelve of the
Indenture, to redeem this Security at the option of the Company, without premium
or penalty, in whole but not in part, at a Redemption Price equal to the greater
of (i) 100% of the principal amount thereof and (ii) as determined by a
Quotation Agent, the sum of the present values of the principal amount and
premium payable with respect to an optional redemption on such Securities on
December 15, 2006, together with scheduled payments of interest from the
Redemption Date to December 15, 2006 (the
-5-
<PAGE> 82
"Remaining Life") discounted to the Redemption Date on a semi-annual basis
(assuming a 360-day year consisting of 30-day months) at the Adjusted Treasury
Rate, plus, in each case, accrued interest thereon to the Redemption Date. Any
redemption pursuant to this paragraph will be made upon not less than 30 nor
more than 60 days notice, at the Redemption Price. If the Securities are only
partially redeemed by the Company, the Securities will be redeemed by lot (or
such other method of selection as the Trustee may customarily employ). In the
event of redemption of this Security in part only, a new Security or Securities
for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.
If an Event of Default with respect to the Securities shall
occur and be continuing, the principal of the Securities may be declared due and
payable in the manner, with the effect and subject to the conditions provided in
the Indenture.
The Indenture contains provisions for satisfaction and
discharge or legal defeasance of the entire indebtedness of this Security and
for the defeasance of certain covenants under the Indenture at any time upon
compliance by the Company with certain conditions set forth in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of Holders of not less than a majority in
principal amount of the Outstanding Securities affected by such modification, to
modify the Indenture in a manner affecting the rights of the Holders of the
Securities; provided that so such modification may, without the consent of the
Holder of each Outstanding Security affected thereby, (i) except to the extent
permitted and subject to the conditions set forth in the Indenture with respect
to the extension of the Maturity of the Security, change the maturity of, the
principal of, or any installment of interest on, the Security or reduce the
principal amount thereof, or the rate of payment of interest thereon, or change
the place of payment where, or the coin or currency in which, this Security or
interest thereon is payable, or impair the right to institute suit for the
enforcement of such payment on or after the Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or modify the provisions of the
Indenture with respect to the subordination of the Securities in a manner
adverse to the Holders, (ii) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for such
supplemental Indenture or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of the Indenture or certain
defaults hereunder and their consequences) provided for in the Indenture, or
(iii) modify any of the provisions of Section 513, Section 902 or Section 1008
of the Indenture, except to increase any such percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby,
provided that, so long as any of the Preferred Securities remains outstanding,
no such amendment shall be made that adversely affects the holders of the
Preferred Securities, and no termination of the Indenture shall occur, and no
waiver of an Event of Default or compliance with any covenant under this
Indenture shall be effective, without the prior consent of the holders of at
least a majority of the aggregate liquidation preference of the outstanding
Preferred Securities unless and until the principal of and any premium on the
Securities and all accrued and unpaid interest thereon have been paid in full.
-6-
<PAGE> 83
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in New York, New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the Holder surrendering
the same.
THE SECURITIES AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
This is one of the Securities referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------
Authorized Signatory
Dated: December 23, 1996
-7-
<PAGE> 84
In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act covering resales of this Security (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) three years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Capital Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date"), the
undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer:
[CHECK ONE]
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
as amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of
1933, as amended; or
(5) ___ pursuant to the exemption from registration provided by Rule
144 under the Securities Act of 1933, as amended; or
(6) ___ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3), (4), (5)
or (7) is checked, the Company or the Trustee may require, prior to registering
any such transfer of the Securities, in its sole discretion, such written legal
opinions, certifications (including an investment letter in the case of box (3)
or (4)) and other information as the Trustee or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
-8-
<PAGE> 85
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 315 of the Indenture shall have
been satisfied.
Dated: Signed:
---------------------------- -----------------------------------
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:
----------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
-------------------- --------------------------------
NOTICE: To be executed by an
executive officer
-9-
<PAGE> 1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
<PAGE> 2
Exhibit 4.2
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of December 23, 1996
Among
FIRST SECURITY CAPITAL I,
FIRST SECURITY CORPORATION
and
LEHMAN BROTHERS INC.
and
J.P. MORGAN SECURITIES INC.
as Initial Purchasers
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions............................................................................................ 1
2. Securities Subject to This Agreement................................................................... 3
3. Registered Exchange Offer.............................................................................. 3
4. Shelf Registration..................................................................................... 5
5. Liquidated Damages..................................................................................... 6
6. Registration Procedures................................................................................ 7
7. Registration Expenses.................................................................................. 14
8. Indemnification and Contribution....................................................................... 15
9. Rule 144A.............................................................................................. 17
10. Participation in Underwritten Registrations............................................................ 17
11. Selection of Underwriters.............................................................................. 17
12. Miscellaneous.......................................................................................... 18
</TABLE>
<PAGE> 4
This Registration Rights Agreement (this "Agreement") is made
and entered into as of December 23, 1996 by and among First Security Capital I,
a Delaware statutory business trust (the "Trust"), First Security Corporation, a
Delaware corporation ("the Company") and Lehman Brothers Inc. and J.P. Morgan
Securities Inc. (together, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of December 23, 1996, among the Company, the Trust and the
Initial Purchasers (the "Purchase Agreement"), which provides for the sale by
the Trust to the Initial Purchasers of $150,000,000 aggregate principal amount
of the Trust's 8.41% Subordinated Capital Income Securities, liquidation amount
$1,000 per security (the "Capital Securities"). The Company will be the owner of
all of the beneficial ownership interest represented by the common securities
(the "Common Securities") of the Trust. The Capital Securities and the Common
Securities will be guaranteed by a guarantee (the "Guarantee") by the Company,
to the extent of funds held by the Trust. Concurrently with the issuance of the
Capital Securities, the Guarantee and the Common Securities, the Trust will
invest the proceeds of each thereof in the Company's 8.41% Junior Subordinated
Debentures (the "Junior Subordinated Debentures" and, together with the Capital
Securities and the Guarantee, the "Securities"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Trust and the Company have
agreed to provide the registration rights set forth in this Agreement for the
benefit of the Initial Purchasers and their direct and indirect transferees and
assigns. The execution and delivery of this Agreement is a condition to the
Initial Purchasers' obligations to purchase the Capital Securities under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Broker-Dealer: Any broker or dealer registered under
the Exchange Act.
Closing Date: The date on which the Securities were
sold.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be
deemed "Consummated" for purposes of this Agreement upon the occurrence
of (i) the filing and effectiveness under the Securities Act of the
Exchange Offer Registration Statement relating to the New Securities to
be issued in the Exchange Offer, (ii) the maintenance of such
Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Company and the Trust of the New Securities in the same aggregate
principal amount as the aggregate principal amount of Transfer
Restricted Securities that were tendered by Holders thereof pursuant to
the Exchange Offer.
Damages Payment Date: With respect to the Securities,
each Distribution Date until the earlier of (i) the date on which
Liquidated Damages no longer are payable or (ii) maturity of the
Securities.
Declaration: The Amended and Restated Declaration of
Trust, dated as of December 23, 1996, among The Bank of New York, as
Property Trustee, The Bank of New York (Delaware), as Delaware Trustee
and the other trustees named therein, pursuant to which the Capital
Securities are being issued, as amended or supplemented from time to
time in accordance with the terms thereof.
<PAGE> 5
2
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Exchange Offer: The registration by the Company and
the Trust under the Securities Act of the New Securities pursuant to a
Registration Statement pursuant to which the Company and the Trust
offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for New Securities in an aggregate
amount equal to the aggregate amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The
Registration Statement relating to the Exchange Offer, including the
Prospectus which forms a part thereof.
Exempt Resales: The transactions in which the Initial
Purchasers propose to sell the Securities to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the
Securities Act, to certain institutional "accredited investors," as
such term is defined in Rule 501(a)(1), (2), (3) and (7) of Regulation
D under the Securities Act ("Accredited Institutions") and to certain
non-U.S. persons.
Guarantee Agreement: The Guarantee Agreement, dated
as of December 23, 1996, between the Company and The Bank of New York,
as Guarantee Trustee, pursuant to which the Guarantee is being issued,
as amended or supplemented from time to time in accordance with the
terms thereof.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a)
hereof.
Indenture: The Indenture, dated as of December 23,
1996, between the Company and The Bank of New York, as trustee (the
"Trustee"), pursuant to which the Junior Subordinated Debentures are to
be issued, as such Indenture is amended or supplemented from time to
time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble
hereto.
Distribution: As defined in the Declaration.
NASD: National Association of Securities Dealers,
Inc.
New Junior Subordinated Debentures: The Company's
Junior Subordinated Debentures to be issued pursuant to the Indenture
in the Exchange Offer.
New Securities: The Securities to be issued pursuant
to the Indenture, the Declaration and the Guarantee Agreement in the
Exchange Offer.
Person: An individual, partnership, corporation,
limited liability company, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
<PAGE> 6
3
Prospectus: The prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and
by all other amendments thereto, including post-effective amendments,
and all material incorporated by reference into such Prospectus.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of
the Company and the Trust relating to (a) an offering of New Securities
pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration
Statement, which is filed pursuant to the provisions of this Agreement,
in either case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference
therein.
Securities Act: The Securities Act of 1933, as
amended.
Shelf Filing Deadline: As defined in Section 4
hereof.
Shelf Registration Statement: As defined in Section 4
hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb), as amended.
Transfer Restricted Securities: Each Security, until
the earliest to occur of (a) the date on which such Security has been
exchanged by a person other than a Broker-Dealer for New Securities in
the Exchange Offer, (b) following the exchange by a Broker-Dealer in
the Exchange Offer of such Securities for one or more New Securities,
the date on which such New Securities are sold to a purchaser who
receives from such Broker-Dealer on or prior to the date of such sale a
copy of the prospectus contained in the Exchange Offer Registration
Statement, (c) the date on which such Securities has been effectively
registered under the Securities Act and disposed of in accordance with
the Shelf Registration Statement or (d) the date on which such
Securities is distributed to the public pursuant to Rule 144 under the
Securities Act;
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company and the Trust are sold
to an underwriter for reoffering to the public.
2. Securities Subject to This Agreement.
(a) Transfer Restricted Securities. The securities
entitled to the benefits of this Agreement are the Transfer Restricted
Securities.
(b) Holders of Transfer Restricted Securities. A
Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted
Securities.
3. Registered Exchange Offer.
(a) Unless the Exchange Offer shall not be
permissible under applicable law or Commission policy (after the
procedures set forth in Section 6(a) below have been complied with),
the Company and the Trust shall (i) cause to be filed with the
Commission as soon as
<PAGE> 7
4
practicable after the Closing Date, but in no event later than 150 days
after the Closing Date, a Registration Statement under the Securities
Act relating to the New Securities and the Exchange Offer, (ii) use
their respective best efforts to cause such Registration Statement to
become effective at the earliest possible time, but in no event later
than 180 days after the Closing Date, (iii) in connection with the
foregoing, file (A) all pre-effective amendments to such Registration
Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective
amendment to such Registration Statement pursuant to Rule 430A under
the Securities Act and (C) cause all necessary filings in connection
with the registration and qualification of the New Securities to be
made under the Blue Sky laws of such jurisdictions as are necessary to
permit Consummation of the Exchange Offer, and (iv) unless the Exchange
Offer would not be permitted by applicable law or Commission policy,
the Company will commence the Exchange Offer and use its best efforts
to issue on or prior to 30 business days after the date on which such
Registration Statement was declared effective by the Commission, New
Securities in exchange for all Securities tendered prior thereto in the
Exchange Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the New Securities to be offered in exchange
for the Transfer Restricted Securities and to permit resales of New
Securities held by Broker-Dealers as contemplated by Section 3(c)
below.
(b) the Company and the Trust shall cause the
Exchange Offer Registration Statement to be effective continuously and
shall keep the Exchange Offer open for a period of not less than the
minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days. The Company and
the Trust shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the New
Securities shall be included in the Exchange Offer Registration
Statement. The Company and the Trust shall use its best efforts to
cause the Exchange Offer to be Consummated on the earliest practicable
date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days thereafter.
(c) the Company and the Trust shall indicate in a
"Plan of Distribution" section contained in the Prospectus contained in
the Exchange Offer Registration Statement that any Broker-Dealer who
holds Securities that are Transfer Restricted Securities and that were
acquired for its own account as a result of market-making activities or
other trading activities (other than Transfer Restricted Securities
acquired directly from the Company and the Trust), may exchange such
Securities pursuant to the Exchange Offer; however, such Broker-Dealer
may be deemed to be an "underwriter" within the meaning of the
Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of
the New Securities received by such Broker-Dealer in the Exchange
Offer, which prospectus delivery requirement may be satisfied by the
delivery by such Broker-Dealer of the Prospectus contained in the
Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such
resales by Broker-Dealers that the Commission may require in order to
permit such resales pursuant thereto, but such "Plan of Distribution"
shall not name any such Broker-Dealer or disclose the amount of New
Securities held by any such Broker-Dealer except to the extent required
by the Commission as a result of a change in policy announced after the
date of this Agreement.
The Company and the Trust shall use their respective best
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for resales of
New
<PAGE> 8
5
Securities acquired by Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities, and to ensure that it
conforms with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of 180 days from the date on which the Exchange Offer
Registration Statement is declared effective.
The Company and the Trust shall provide sufficient copies of
the latest version of such Prospectus to Broker-Dealers promptly upon request at
any time during such 180-day period in order to facilitate such resales.
4. Shelf Registration.
(a) Shelf Registration. If (i) the Company and the
Trust are not required to file an Exchange Offer Registration Statement
or to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures
set forth in Section 6(a) below have been complied with), (ii) the
Company has received an opinion of counsel, rendered by a law firm
having a nationally recognized tax practice, to the effect that, as a
result of the consummation of the Exchange Offer there is more than an
insubstantial risk that (x) the Trust would be subject to United States
federal income tax with respect to income received or accrued on the
Junior Subordinated Debentures or New Junior Subordinated Debentures,
(y) interest payable by the Company on such Junior Subordinated
Debentures or New Junior Subordinated Debentures would not be
deductible by the Company, in whole or in part, for United States
federal income tax purposes, or (z) the Trust would be subject to more
than a de minimis amount of other taxes, duties or other governmental
charges or (iii) if any Holder of Transfer Restricted Securities that
is a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) or an "accredited investor" (as defined in Rule
501(A)(1), (2), (3) or (7) under the Securities Act) shall notify the
Company at least 20 business days prior to the Consummation of the
Exchange Offer (A) that such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) that
such Holder may not resell the New Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and that
the Prospectus contained in the Exchange Offer Registration Statement
is not appropriate or available for such resales by such Holder, or (C)
that such Holder is a Broker-Dealer and holds Securities acquired
directly from the Trust and the Company or one of its affiliates, then
the Trust and the Company shall use their respective best efforts to:
(x) cause to be filed a shelf registration
statement pursuant to Rule 415 under the Securities Act, which
may be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration
Statement"), on or prior to the earliest to occur of (1) the
150th day after the date on which the Trust and the Company
determines that they are not required to file the Exchange
Offer Registration Statement or (2) the 150th day after the
date on which the Trust and the Company receive notice from a
Holder of Transfer Restricted Securities as contemplated by
clause (iii) above (such earliest date being the "Shelf Filing
Deadline"), which Shelf Registration Statement shall provide
for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant
to Section 4(b) hereof; and
<PAGE> 9
6
(y) cause such Shelf Registration Statement
to be declared effective by the Commission on or before the
180th day after the Shelf Filing Deadline.
The Trust and the Company shall use their respective best efforts to
keep such Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of Sections 6(b)
and (c) hereof to the extent necessary to ensure that it is available
for resales of Securities by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure
that it conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period ending on the
third anniversary of the Closing Date.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of Transfer
Restricted Securities may include any of its Transfer Restricted
Securities in any Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Trust and the
Company in writing, within 20 business days after receipt of a request
therefor, such information as the Trust and the Company may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of
Transfer Restricted Securities shall be entitled to Liquidated Damages
pursuant to Section 5 hereof unless and until such Holder shall have
used its best efforts to provide all such reasonably requested
information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Trust and the
Company all information required to be disclosed in order to make the
information previously furnished to the Trust and the Company by such
Holder not materially misleading.
5. Liquidated Damages.
(a) If (a) any of the Registration Statements required by this
Agreement is not filed with the Commission on or prior to the date specified for
such filing in this Agreement, (b) any of such Registration Statements has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within two business days
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (a) through (d), a "Registration Default"), the Trust and
the Company will pay liquidated damages ("Liquidated Damages") to each Holder of
Capital Securities (in its capacity as such and not in its capacity as an
indirect holder of a pro rata share of the Junior Subordinated Debentures) with
respect to the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $.25 per week per $1,000 liquidation
amount of Capital Securities held by such Holder for each week or portion
thereof that the Registration Default continues. The amount of the Liquidated
Damages payable to any Holder of Capital Securities shall increase by an
additional $.05 per week per $1,000 in principal amount of Capital Securities
held by such Holder with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages of $.50 per week per $1,000 principal amount of Capital Securities. All
accrued Liquidated Damages shall be paid to Holders by the Trust and the Company
by wire transfer of immediately available funds or by federal funds check on the
last day of each such 90-day period.
<PAGE> 10
7
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of Liquidated Damages with respect
to such Transfer Restricted Securities will cease.
All obligations of the Trust and the Company set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Transfer Restricted Security shall have been satisfied in full.
(b) The Trust and the Company shall notify the Property
Trustee within one business day after each and every date on which an event
occurs in respect of which Liquidated Damages are required to be paid (an "Event
Date"). Liquidated Damages shall be paid by depositing with the Property
Trustee, in trust, for the benefit of the Holders thereof, on or before the
applicable Interest Payment Date (whether or not any payment other than
Liquidated Damages is payable on the Capital Securities), immediately available
funds in sums sufficient to pay the Liquidated Damages then due to Holders of
Transfer Restricted Securities with respect to which the Property Trustee
serves. Each obligation to pay Liquidated Damages shall be deemed to accrue from
the applicable date of the occurrence of the Registration Default.
6. Registration Procedures.
(a) Exchange Offer Registration Statement. In
connection with the Exchange Offer, the Trust and the Company shall
comply with all of the provisions of Section 6(c) below, shall use
their best efforts to effect such exchange to permit the sale of
Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and shall comply
with all of the following provisions:
(i) If in the reasonable opinion of counsel
to the Trust and the Company there is a question as to whether
the Exchange Offer is permitted by applicable law, the Trust
and the Company hereby agrees to seek a no-action letter or
other favorable decision from the Commission allowing the
Trust and the Company to Consummate an Exchange Offer for such
Securities. The Trust and the Company hereby agree to pursue
the issuance of such a decision to the Commission staff level
but shall not be required to take commercially unreasonable
action to effect a change of Commission policy. The Trust and
the Company hereby agree, however, to (A) participate in
telephonic conferences with the Commission, (B) deliver to the
Commission staff an analysis prepared by counsel to the Trust
and the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursue a resolution
(which need not be favorable) by the Commission staff of such
submission.
(ii) As a condition to its participation in
the Exchange Offer pursuant to the terms of this Agreement,
each Holder of Transfer Restricted Securities shall furnish,
upon the request of the Trust or the Company, prior to the
Consummation thereof, a written representation to the Trust or
the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an affiliate of
the Trust or the Company, (B) it is not engaged in, and does
not intend to engage in, and has no arrangement or
understanding with any person to participate in, a
distribution of the New Securities to be issued in the
Exchange Offer and (C) it is acquiring the New Securities in
its ordinary course of business. In addition, all such Holders
of Transfer Restricted Securities shall otherwise cooperate in
the
<PAGE> 11
8
Company's and the Trust's preparations for the Exchange Offer.
Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired
in the Exchange Offer (1) could not under Commission policy as
in effect on the date of this Agreement rely on the position
of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993,
and similar no-action letters (including any no-action letter
obtained pursuant to clause (i) above), and (2) must comply
with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale
transaction and that such a secondary resale transaction
should be covered by an effective registration statement
containing the selling security holder information required by
Item 507 or 508, as applicable, of Regulation S-K if the
resales are of New Securities obtained by such Holder in
exchange for Securities acquired by such Holder directly from
the Trust or the Company.
(iii) Prior to effectiveness of the Exchange
Offer Registration Statement, the Company and the Trust shall
provide a supplemental letter to the Commission (A) stating
that the Company and the Trust are registering the Exchange
Offer in reliance on the position of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13,
1988), Morgan Stanley and Co., Inc. (available June 5, 1991)
and, if applicable, any no-action letter obtained pursuant to
clause (i) above and (B) including a representation that the
Company and the Trust have not entered into any arrangement or
understanding with any Person to distribute the New Securities
to be received in the Exchange Offer and that, to the best of
the Company's and the Trust's information and belief, each
Holder participating in the Exchange Offer is acquiring the
New Securities in its ordinary course of business and has no
arrangement or understanding with any Person to participate in
the distribution of the New Securities received in the
Exchange Offer.
(b) Shelf Registration Statement. In connection with
the Shelf Registration Statement, the Company and the Trust shall
comply with all the provisions of Section 6(c) below and shall use
their best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and pursuant
thereto the Company and the Trust will as expeditiously as possible
prepare and file with the Commission a Registration Statement relating
to the registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Transfer Restricted
Securities in accordance with the intended method or methods of
distribution thereof.
(c) General Provisions. In connection with any
Registration Statement and any Prospectus required by this Agreement to
permit the sale or resale of Transfer Restricted Securities (including,
without limitation, any Registration Statement and the related
Prospectus required to permit resales of Securities by Broker-Dealers),
the Company and the Trust shall:
(i) use their best efforts to keep such
Registration Statement continuously effective and provide all
requisite financial statements for the period specified in
Section 3 or 4 of this Agreement, as applicable; upon the
occurrence of any event that would cause any such Registration
Statement or the Prospectus contained
<PAGE> 12
9
therein (A) to contain a material misstatement or omission or
(B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this
Agreement, the Company and the Trust shall file promptly an
appropriate amendment to such Registration Statement, in the
case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use
their best efforts to cause such amendment to be declared
effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as
soon as practicable thereafter;
(ii) prepare and file with the Commission
such amendments and post-effective amendments to the
Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter
period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been
sold; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, and to comply
fully with the applicable provisions of Rules 424 and 430A
under the Securities Act in a timely manner; and comply with
the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) advise the underwriter(s), if any, and
selling Holders promptly and, if requested by such Persons, to
confirm such advice in writing, (A) when the Prospectus or any
Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments
to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto,
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
under the Securities Act or of the suspension by any state
securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of
the preceding purposes, (D) of the existence of any fact or
the happening of any event that makes any statement of a
material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Trust and the Company
shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to each of the selling or
exchanging Holders and each of the underwriter(s), if any,
before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference
after the initial filing of such Registration Statement),
which documents will be
<PAGE> 13
10
subject to the review of such Holders and underwriter(s), if
any, for a period of at least five business days, and the
Trust and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such
documents incorporated by reference) to which a selling Holder
of Transfer Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall reasonably
object within five business days after the receipt thereof. A
selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement or
omission;
(v) promptly prior to the filing of any
document that is to be incorporated by reference into a
Registration Statement or Prospectus, provide copies of such
document to the selling Holders and to the underwriter(s), if
any, make the Trust's and the Company's representatives
available for discussion of such document and other customary
due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders
or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for
inspection by the selling Holders, any underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial
and other records, pertinent corporate documents and
properties of the Trust and the Company and cause the Trust's
and the Company's officers, directors, managers and employees
to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with
such Registration Statement subsequent to the filing thereof
and prior to its effectiveness;
(vii) if requested by any selling Holders or
the underwriter(s), if any, promptly incorporate in any
Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment if necessary, such information as
such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including,
without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer
Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the
offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after the Trust and the Company are notified of
the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(viii) cause the Transfer Restricted
Securities covered by the Registration Statement to be rated
with the appropriate rating agencies, if so requested by the
Holders of a majority in aggregate principal amount of
Securities covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each
of the underwriter(s), if any, without charge, at least one
copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits
(including exhibits incorporated therein by reference);
<PAGE> 14
11
(x) deliver to each selling Holder and each
of the underwriter(s), if any, without charge, as many copies
of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably
may request; the Trust and the Company hereby consent to the
use of the Prospectus and any amendment or supplement thereto
by each of the selling Holders and each of the underwriter(s),
if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;
(xi) enter into such agreements (including
an underwriting agreement), and make such representations and
warranties, and take all such other actions in connection
therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to
such extent as may be requested by any Purchaser or by any
Holder of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement; and in
connection with an Underwritten Registration, the Trust and
the Company shall:
(A) upon request, furnish to each
selling Holder and each underwriter, if any, in such
substance and scope as they may request and as are
customarily made by issuers to underwriters in
primary underwritten offerings, upon the date of the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated
the date of the effectiveness of the Shelf
Registration Statement, signed by (y) the
Chairman of the Board its President or a
Vice President and (z) the Chief Financial
Officer of the Company, confirming, as of
the date thereof, such matters as such
parties may reasonably request;
(2) an opinion, dated the
date of the effectiveness of the Shelf
Registration Statement, of counsel for the
Company and the Trust, covering such matters
as such parties may reasonably request, and
in any event including a statement to the
effect that such counsel has participated in
conferences with officers and other
representatives of the Company and the
Trust, representatives of the independent
public accountants for the Company, the
Initial Purchasers' representatives and the
Initial Purchasers' counsel in connection
with the preparation of such Registration
Statement and the related Prospectus and
have considered the matters required to be
stated therein and the statements contained
therein, although such counsel has not
independently verified the accuracy,
completeness or fairness of such statements;
and that such counsel advises that, on the
basis of the foregoing (relying as to
materiality to a large extent upon facts
provided to such counsel by officers and
other representatives of the Company and the
Trust and without independent check or
verification), no facts came to such
counsel's attention that caused such counsel
to believe that the applicable Registration
Statement, at the time such Registration
Statement or any post-effective amendment
thereto became effective, contained an
untrue statement of a material fact or
omitted to state a material fact required to
be stated therein or necessary to make the
statements therein not misleading, or that
the
<PAGE> 15
12
Prospectus contained in such Registration
Statement as of its date, contained an
untrue statement of a material fact or
omitted to state a material fact necessary
in order to make the statements therein, in
light of the circumstances under which they
were made, not misleading. Without limiting
the foregoing, such counsel may state
further that such counsel assumes no
responsibility for, and has not
independently verified, the accuracy,
completeness or fairness of the financial
statements, notes and schedules and other
financial data included in any Registration
Statement contemplated by this Agreement or
the related Prospectus; and
(3) a customary comfort
letter, dated the date of the effectiveness
of the Shelf Registration Statement, from
the Company's independent accountants, in
the customary form and covering matters of
the type customarily covered in comfort
letters by underwriters in connection with
primary underwritten offerings.
(B) set forth in full or incorporate
by reference in the underwriting agreement, if any,
the indemnification provisions and procedures of
Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section ; and
(C) deliver such other documents and
certificates as may be reasonably requested by such
parties to evidence compliance with clause (A) above
and with any customary conditions contained in the
underwriting agreement or other agreement entered
into by the Company and the Trust pursuant to this
clause (xi), if any.
If at any time the representations and
warranties of the Company contemplated in clause (A)(1) above
cease to be true and correct, the Company shall so advise the
Initial Purchasers and the underwriter(s), if any, and each
selling Holder promptly and, if requested by such Persons,
shall confirm such advice in writing;
(xii) prior to any public offering of
Transfer Restricted Securities, cooperate with the selling
Holders, the underwriter(s), if any, and their respective
counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s) may reasonably request and do any and all other
acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement;
provided, however, that neither the Company nor the Trust
shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any
action that would subject it to the service of process in
suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) shall issue, upon the request of any
Holder of Securities covered by the Shelf Registration
Statement, New Securities in the same amount as the Securities
surrendered to the Company and the Trust by such Holder in
exchange therefor or being sold by such Holder; such New
Securities to be registered in the name of such Holder or in
the name of the purchaser(s) of such Securities, as the case
may be; in return, the
<PAGE> 16
13
Securities held by such Holder shall be surrendered to the
Company and the Trust for cancellation;
(xiv) cooperate with the selling Holders and
the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted
Securities to be in such denominations and registered in such
names as the Holders or the underwriter(s), if any, may
request at least two business days prior to any sale of
Transfer Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause the
Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause (xii)
above;
(xvi) if any fact or event contemplated by
clause (c)(iii)(D) above shall exist or have occurred, prepare
a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading;
(xvii) provide CUSIP numbers for all
Transfer Restricted Securities not later than the effective
date of the Registration Statement and provide certificates
for the Transfer Restricted Securities;
(xviii) cooperate and assist in any filings
required to be made with the NASD and in the performance of
any due diligence investigation by any underwriter (including
any "qualified independent underwriter") that is required to
be retained in accordance with the rules and regulations of
the NASD, and use its best efforts to cause such Registration
Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to
consummate the disposition of such Transfer Restricted
Securities;
(xix) otherwise use its best efforts to
comply with all applicable rules and regulations of the
Commission, and make generally available to its security
holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not
be audited) for the twelve-month period (A) commencing at the
end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective
date of the Registration Statement;
(xx) cause the Indenture and the Declaration
to be qualified under the TIA not later than the effective
date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate with the
Trustee and the Holders of Securities to effect such changes
to the Indenture and the Declaration as may be required
<PAGE> 17
14
for such Indenture and the Declaration to be so qualified in
accordance with the terms of the TIA; and execute and use
their best efforts to cause the Indenture Trustee, Guarantee
Trustee and the Property Trustee to execute, all documents
that may be required to effect such changes and all other
forms and documents required to be filed with the Commission
to enable such Indenture to be so qualified in a timely
manner; and
(xxi) provide promptly to each Holder upon
request each document filed with the Commission pursuant to
the requirements of Section 13 and Section 15 of the Exchange
Act.
Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the Company
or the Trust of the existence of any fact of the kind described in
Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue
disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xvi) hereof, or until it is advised in writing (the
"Advice") by the Company or the Trust that the use of the Prospectus
may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company or the Trust, each Holder
will deliver to the Company or the Trust (at the Company's and the
Trust's expense) all copies, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such
notice. In the event the Company or the Trust shall give any such
notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as
applicable, shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xvi) hereof or shall have received the Advice.
7. Registration Expenses.
All expenses incident to the Company's and the
Trust's performance of or compliance with this Agreement will be borne
by the Company and the Trust, regardless of whether a Registration
Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by
any Purchaser or Holder with the NASD (and, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel
that may be required by the rules and regulations of the NASD)); (ii)
all fees and expenses of compliance with federal securities and state
Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the New Securities to be issued in the
Exchange Offer and printing of Prospectuses), and associated messenger
and delivery services and telephone; (iv) all fees and disbursements of
counsel for the Company and the Trust; (v) all application and filing
fees in connection with listing Securities on a national securities
exchange or automated quotation system pursuant to the requirements
hereof; and (vi) all fees and disbursements of independent certified
public accountants of the Company and the Trust (including the expenses
of any special audit and comfort letters required by or incident to
such performance).
The Company and the Trust will, in any event, bear
their internal expenses (including, without limitation, all salaries
and expenses of their officers and employees performing
<PAGE> 18
15
legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by
the Company or the Trust.
8. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement or in
connection with any delivery of a Prospectus contained in an Exchange Offer
Registration Statement by any participating Broker-Dealer or Initial Purchaser,
as applicable, who seeks to sell New Securities, the Company and the Trust shall
indemnify and hold harmless each Holder of Transfer Restricted Securities
included within any such Shelf Registration Statement and each participating
Broker-Dealer or Initial Purchaser selling New Securities, and each person, if
any, who controls any such person within the meaning of Section 15 of the
Securities Act (each, a "Participant") from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Securities) to which such Participant or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
each Participant promptly upon demand for any legal or other expenses reasonably
incurred by such Participant in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that (i) the Company and the
Trust shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any such Registration Statement or any prospectus forming part thereof or in any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company and the Trust by or on behalf of any
Participant specifically for inclusion therein; and provided further that as to
any preliminary Prospectus, the indemnity agreement contained in this Section
8(a) shall not inure to the benefit of any such Participant or any controlling
person of such Participant on account of any loss, claim, damage, liability or
action arising from the sale of the New Securities to any person by that
Participant if (i) that Participant failed to send or give a copy of the
Prospectus, as the same may be amended or supplemented, to that person within
the time required by the Securities Act and (ii) the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact in such preliminary Prospectus was corrected in the Prospectus,
unless, in each case, such failure resulted from non-compliance by the Company
and the Trust with Section 6(c). The foregoing indemnity agreement is in
addition to any liability which the Company and the Trust may otherwise have to
any Participant or to any controlling person of that Participant.
(b) Each Participant, severally and not jointly, shall
indemnify and hold harmless the Company and the Trust, each of its directors,
officers, employees or agents and each person, if any, who controls the Company
and the Trust within the meaning of Section 15 of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company and the Trust or any such director,
officer, employees or agents or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary Prospectus,
Registration Statement or Prospectus or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in
<PAGE> 19
16
reliance upon and in conformity with written information furnished to the
Company and the Trust by or on behalf of that Participant specifically for
inclusion herein, and shall reimburse the Company and the Trust and any such
director, officer, employees or agents or controlling person for any legal or
other expenses reasonably incurred by the Company and the Trust or any such
director, officer, employees or agents or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Participant may
otherwise have to the Company and the Trust or any such director, officer or
controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall have notified the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Initial Purchasers shall have the right to employ counsel to represent
jointly the Initial Purchasers and those other Participants and their respective
officers, employees and controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Participants against the Company and the Trust under this Section 8 if, in the
reasonable judgment of the Initial Purchasers it is advisable for the Initial
Purchasers and those Participants, officers, employees and controlling persons
to be jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Trust and the Company.
Each indemnified party, as a condition of the indemnity agreements contained in
Section 8, shall use its best efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss of liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in
<PAGE> 20
17
respect thereof, in such proportion as shall be appropriate to reflect the
relative fault of the Trust and the Company on the one hand and the Participants
on the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Trust and the Company or the Participants, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Trust and the Participants agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Participant shall be required to contribute
any amount in excess of the amount by which proceeds received by such
Participant from an offering of the Notes exceeds the amount of any damages
which such Participant has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Participants'
obligations to contribute as provided in this Section 8(d) are several and not
joint.
9. Rule 144A.
The Company and the Trust hereby agrees with each Holder, for
so long as any Transfer Restricted Securities remain outstanding, to make
available to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.
10. Participation in Underwritten Registrations.
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lockup letters and other documents
required under the terms of such underwriting arrangements.
11. Selection of Underwriters.
The Holders of Transfer Restricted Securities covered by the
Shelf Registration Statement who desire to do so may sell such Transfer
Restricted Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
<PAGE> 21
18
12. Miscellaneous.
(a) Remedies. The Company and the Trust agree that
monetary damages (including the Liquidated Damages contemplated hereby)
would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agree to
waive the defense in any action for specific performance that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. The Company and the
Trust will not on or after the date of this Agreement enter into any
agreement with respect to their securities that is inconsistent with
the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. The Company and the Trust have
not previously entered into any agreement granting any registration
rights with respect to their securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the
Trust's and the Company's securities under any agreement in effect on
the date hereof.
(c) Adjustments Affecting the Notes. The Company and
the Trust will not take any action, or permit any change to occur, with
respect to Securities that would materially and adversely affect the
ability of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or
consents to or departures from the provisions hereof may not be given
unless the Company and the Trust have obtained the written consent of
Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates
exclusively to the rights of Holders whose securities are being
tendered pursuant to the Exchange Offer and that does not affect
directly or indirectly the rights of other Holders whose securities are
not being tendered pursuant to such Exchange Offer may be given by the
Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier guaranteeing
overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Declaration; and
(ii) if to the Company and the Trust:
Scott C. Ulbrich
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
<PAGE> 22
19
With a copy to:
Robert Thorup
Ray, Quinney & Nebeker
Suite 700
79 South Main Street
Salt Lake City, Utah 84111
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person giving the
same to the Trustee at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns
of each of the parties, including without limitation and without the
need for an express assignment, subsequent Holders of Transfer
Restricted Securities; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be
affected or impaired thereby.
(k) Entire Agreement. This Agreement together with
the other transaction documents is intended by the parties as a final
expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein with respect to the registration rights
granted by the Company and the Trust with respect to the Transfer
Restricted Securities. This
<PAGE> 23
20
Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
(l) Required Consents. Whenever the consent or
approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held
by the Company or its affiliates (as such term is defined in Rule 405
under the Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such required
percentage.
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
FIRST SECURITY CORPORATION
By:/s/ Morgan J. Evans
-----------------------------
Name: Morgan J. Evans
Title: President and Chief
Operating Officer
FIRST SECURITY CAPITAL I
By: /s/ Brad D. Hardy
----------------------------
Name: Brad D. Hardy
Title: Regular Trustee
Accepted as of the date thereof
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
Acting severally on behalf of
themselves and the several
Purchasers named herein
By LEHMAN BROTHERS INC.
By: /s/ ???
-------------------------------
Name:
Title:
<PAGE> 1
Exhibit 4.5
- -------------------------------------------------------------------------------
GUARANTEE AGREEMENT
FIRST SECURITY CAPITAL I
DATED AS OF DECEMBER 23, 1996
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
INTERPRETATION AND DEFINITIONS........................................ 1
SECTION 1.1 Interpretation and Definitions............................................................ 1
ARTICLE 2
TRUST INDENTURE ACT............................................. 4
SECTION 2.1 Trust Indenture Act; Application.......................................................... 4
SECTION 2.2 Lists of Holders of Securities............................................................ 5
SECTION 2.3 Reports by Guarantee Trustee.............................................................. 5
SECTION 2.4 Periodic Reports to Guarantee Trustee..................................................... 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......................................... 5
SECTION 2.6 Guarantee Event of Default; Waiver........................................................ 5
SECTION 2.7 Guarantee Event of Default; Notice........................................................ 6
SECTION 2.8 Conflicting Interests..................................................................... 6
SECTION 2.9 Disclosure of Information................................................................. 6
SECTION 2.10 Guarantee Trustee May File Proofs of Claim............................................... 6
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE.............................................. 7
SECTION 3.1 Powers and Duties of Guarantee Trustee.................................................... 7
SECTION 3.2 Certain Rights of Guarantee Trustee....................................................... 8
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee..................................... 10
ARTICLE 4
GUARANTEE TRUSTEE.............................................. 10
SECTION 4.1 Guarantee Trustee; Eligibility............................................................ 10
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee................................. 11
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 5
GUARANTEE.................................................. 12
SECTION 5.1 Guarantee................................................................................. 12
SECTION 5.2 Waiver of Notice and Demand............................................................... 12
SECTION 5.3 Obligations Not Affected.................................................................. 12
SECTION 5.4 Rights of Holders......................................................................... 13
SECTION 5.5 Guarantee of Payment...................................................................... 14
SECTION 5.6 Subrogation............................................................................... 14
SECTION 5.7 Independent Obligations................................................................... 14
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION.................................. 15
SECTION 6.1 Limitation of Transactions................................................................ 15
SECTION 6.2 Ranking................................................................................... 15
ARTICLE 7
TERMINATION................................................. 15
SECTION 7.1 Termination............................................................................... 15
ARTICLE 8
INDEMNIFICATION............................................... 16
SECTION 8.1 Exculpation............................................................................... 16
SECTION 8.2 Indemnification........................................................................... 16
ARTICLE 9
MISCELLANEOUS................................................ 16
SECTION 9.1 Successors and Assigns.................................................................... 16
SECTION 9.2 Amendments................................................................................ 17
SECTION 9.3 Notices................................................................................... 17
SECTION 9.4 Benefit................................................................................... 18
SECTION 9.5 Governing Law............................................................................. 18
</TABLE>
-ii-
<PAGE> 4
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust
Indenture Act of Section of
1939, as amended Agreement
<S> <C>
310(a)................................................................................................ 4.1(a)
310(b)................................................................................................ 4.1(c)
310(c)................................................................................................ Inapplicable
311(a)................................................................................................ 2.2(b)
311(b)................................................................................................ 2.2(b)
311(c)................................................................................................ Inapplicable
312(a)................................................................................................ 2.2(a)
312(b)................................................................................................ 2.2(b)
312(c)................................................................................................ 2.9
313(a)................................................................................................ 2.3
313(b)................................................................................................ 2.3
313(c)................................................................................................ 2.3
313(d)................................................................................................ 2.3
314(a)................................................................................................ 2.4
314(b)................................................................................................ Inapplicable
314(c)................................................................................................ 2.5
314(d)................................................................................................ Inapplicable
314(e)................................................................................................ 2.5
314(f)................................................................................................ Inapplicable
315(a)............................................................................................... 3.1(d); 3.2(a)
315(b)................................................................................................ 2.7(a)
315(c)................................................................................................ 3.1(c)
315(d)................................................................................................ 3.1(d)
316(a)................................................................................................ 2.6; 5.4(a)
317(a)................................................................................................ 2.10; 5.4
318(a)................................................................................................ 2.1(b)
</TABLE>
- --------
* This Cross-Reference Table does not constitute part of the Agreement
and shall not have any bearing upon the interpretation of any of its
terms or provisions.
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of
December 23, 1996, is executed and delivered by First Security Corporation, a
Delaware corporation (the "Guarantor"), and The Bank of New York, a New York
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) of the Securities (as defined herein) of First
Security Capital I, a Delaware statutory business trust (the "Trust").
W I T N E S S E T H :
WHEREAS, pursuant to the Declaration (as defined herein), the
Trust is issuing on the date hereof $150,000,000 aggregate principal amount of
capital securities, having a liquidation amount of $1,000 per capital security,
designated the 8.41% Subordinated Capital Income Securities (the "Capital
Securities") and 4,640 common securities, having a liquidation amount of $1,000
per common security, designated the 8.41% Common Securities (the "Common
Securities"; together with the Capital Securities, the "Securities");
WHEREAS, as incentive for the Holders to purchase the
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of the Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein; and that if a Trust Enforcement Event
has occurred and is continuing, the rights of holders of the Common Securities
to receive payments under the Common Securities Guarantee are subordinated to
the rights of Holders of Capital Securities to receive Guarantee Payments under
this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions. In this Guarantee,
unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined
in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Guarantee has the same
meaning throughout;
<PAGE> 6
2
(c) all references to "the Guarantee" or "this Guarantee" are
to this Guarantee as modified, supplemented or amended from time to
time;
(d) all references in this Guarantee to Articles and Sections
are to Articles and Sections of this Guarantee, unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee, unless otherwise defined in this
Guarantee or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa and a reference to the masculine includes, as applicable, the
feminine.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" has the meaning given to such term in the
Indenture.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall at
any particular time, be principally administered, which office at the date of
execution of this Guarantee is located at The Bank of New York, 101 Barclay
Street, Floor 21 West, New York, New York 10286, Attention: Corporate Trust
Administrator.
"Covered Person" means any Holder or beneficial owner of
Securities.
"Debentures" means the series of subordinated deferrable
interest debentures to be issued by the Guarantor, designated the 8.41% Junior
Subordinated Debentures due 2026 held by the Property Trustee (as defined in the
Declaration) of the Trust.
"Declaration" means the Amended and Restated Declaration of
Trust, dated as of December 23, 1996, as amended, modified or supplemented from
time to time, among the trustees of the Trust named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided beneficial ownership
interests in the assets of the Trust.
"Guarantee Event of Default" means a default by the Guarantor
on any of its payment or other obligations under this Guarantee.
"Guarantee Trustee" means The Bank of New York, until a
successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Securities, to the
extent not paid or made by the Trust: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Securities to the extent the Trust shall have sufficient funds available
therefor at
<PAGE> 7
3
the time, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption with respect to any Securities called
for redemption by the Trust, to the extent the Trust shall have sufficient funds
available therefor at the time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Debentures to the Holders in exchange for Securities as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Securities to the date of
payment, and (b) the amount of assets of the Trust remaining available for
distribution to Holders in liquidation of the Trust (in either case, the
"Liquidation Distribution"). If a Trust Enforcement Event (as defined in the
Declaration) has occurred and is continuing, the rights of holders of the Common
Securities to receive Guarantee Payments under this Guarantee are subordinated
to the rights of Holders of the Capital Securities to receive payments
hereunder.
"Holder" shall mean any holder of Securities, as registered on
the books and records of the Trust; provided, however, that, in determining
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor or any other obligor on the Capital
Securities; and provided further, that in determining whether the Holders of the
requisite liquidation amount of Capital Securities have voted on any matter
provided for in this Guarantee, then for the purpose of such determination only
(and not for any other purpose hereunder), if the Capital Securities remain in
the form of one or more Global Certificates (as defined in the Declaration), the
term "Holders" shall mean the holder of the Global Certificate acting at the
direction of the Preferred Security Beneficial Owners (as defined in the
Declaration).
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, and any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Guarantee Trustee.
"Indenture" means the Indenture, dated as of December 23,
1996, among the Guarantor (the "Company") and The Bank of New York, as trustee,
and any indenture supplemental thereto pursuant to which the Debentures are to
be issued to the Property Trustee (as defined in the Declaration) of the Trust.
"Majority in Liquidation Amount of the Securities" means,
except as provided in the terms of the Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities, voting separately as a class, who are the
record holders of more than 50% of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities. In determining
whether the Holders of the requisite amount of Securities have voted, Securities
which are owned by the Guarantor or any Affiliate of the Guarantor shall be
disregarded for the purpose of any such determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Authorized Officers (as
defined in the Declaration) of such
<PAGE> 8
4
Person. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer on behalf of
such Person in rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer on behalf of such Person to express an
informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
officer acting on behalf of such Person, such condition or covenant has
been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee,
including any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. (a) This
Guarantee is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee and shall, to the extent applicable, be
governed by such provisions.
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(b) If and to the extent that any provision of this Guarantee
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities. (a) The Guarantor
shall provide the Guarantee Trustee with a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders"), (i) semi-annually, not later than June 15 and
December 15 of each year and current as of such date, and (ii) at such other
times as the Guarantee Trustee may request in writing, within 30 days of receipt
by the Guarantor of a written request from the Guarantee Trustee for a List of
Holders as of a date no more than 15 days before such List of Holders is given
to the Guarantee Trustee; excluding from any such list names and addresses
received by the Guarantee Trustee in its capacity as Security Registrar (as
defined in the Indenture). The Guarantee Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it, provided that it may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by Guarantee Trustee. Within 60 days after
May 15 of each year (commencing with the year of the first anniversary of the
issuance of the Securities), the Guarantee Trustee shall provide to the Holders
of the Securities such reports as are required by Section 313 of the Trust
Indenture Act (if any) in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) of the Trust Indenture Act and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Guarantee Event of Default; Waiver. The Holders of
a Majority in Liquidation Amount of the Securities may, by vote or written
consent, on behalf of the Holders of all of the Securities, waive any past
Guarantee Event of default and its consequences. Upon such waiver, any such
Guarantee Event of Default shall cease to exist, and any Guarantee Event of
Default arising therefrom shall be deemed to have been cured,
<PAGE> 10
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for every purpose of this Guarantee, but no such waiver shall extend to any
subsequent or other default or Guarantee Event of Default or impair any right
consequent thereon.
SECTION 2.7 Guarantee Event of Default; Notice. (a) The
Guarantee Trustee shall, within 90 days after the occurrence of a Guarantee
Event of Default, transmit by mail, first class postage prepaid, to the Holders
of the Securities, notices of all Guarantee Events of Default actually known to
a Responsible Officer of the Guarantee Trustee, unless such defaults have been
cured before the giving of such notice; provided, that the Guarantee Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Guarantee Event of Default unless the Guarantee Trustee shall
have received written notice thereof or a Responsible Officer of the Guarantee
Trustee charged with the administration of the Declaration shall have obtained
actual knowledge thereof.
SECTION 2.8 Conflicting Interests. The Declaration shall be
deemed to be specifically described in this Guarantee for the purposes of clause
(i) of the first provision contained in Section 310(b) of the Trust Indenture
Act.
SECTION 2.9 Disclosure of Information. The disclosure of
information as to the names and addresses of the Holders of the Securities in
accordance with Section 312 of the Trust Indenture Act, regardless of the source
from which such information was derived, shall not be deemed to be a violation
of any existing law, or any law hereafter enacted which does not specifically
refer to Section 312 of the Trust Indenture Act, nor shall the Guarantee Trustee
be held accountable by reason of mailing any material pursuant to a request made
under Section 312(b) of the Trust Indenture Act.
SECTION 2.10 Guarantee Trustee May File Proofs of Claim. Upon
the occurrence of a Guarantee Event of Default, the Guarantee Trustee is hereby
authorized to (a) recover judgment, in its own name and as trustee of an express
trust, against the Guarantor for the whole amount of any Guarantee Payments
remaining unpaid and (b) file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have its claims and those of the
Holders of the Securities allowed in any judicial proceedings relative to the
Guarantor, its creditors or its property.
<PAGE> 11
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ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee on
behalf of the Trust for the benefit of the Holders of the Securities, and the
Guarantee Trustee shall not transfer this Guarantee to any Person except a
Holder of Securities exercising his or her rights pursuant to Section 5.4(b) or
to a Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee in and to this
Guarantee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and succession of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a
Responsible Officer of the Guarantee Trustee has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders of
the Securities.
(c) The Guarantee Trustee, before the occurrence of any
Guarantee Event of Default and after the curing of all Guarantee Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Guarantee, and no implied covenants shall be
read into this Guarantee against the Guarantee Trustee. In case a Guarantee
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) and is actually known to a Responsible Officer of the Guarantee
Trustee, the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Guarantee
Event of Default and after the curing or waiving of all such
Guarantee Events of Default that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee, and the
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Guarantee, and no
implied covenants or obligations shall be read into
this Guarantee against the Guarantee Trustee; and
<PAGE> 12
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(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished
to the Guarantee Trustee and conforming to the
requirements of this Guarantee; but in the case of
any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless it shall be proved
that the Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the Holders
of not less than a Majority in Liquidation Amount of the
Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall
require the Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee or indemnify, reasonably satisfactory
to the Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2 Certain Rights of Guarantee Trustee. (a) Subject
to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining
from acting upon, any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) Any direction or act of the Guarantor
contemplated by this Guarantee shall be sufficiently evidenced
by an Officers' Certificate;
<PAGE> 13
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(iii) Whenever, in the administration of
this Guarantee, the Guarantee Trustee shall deem it desirable
that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Guarantee
Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly
delivered by the Guarantor;
(iv) The Guarantee Trustee shall have no
duty to see to any recording, filing or registration or any
instrument (or any rerecording, refiling or registration
thereof);
(v) The Guarantee Trustee may consult with
counsel, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Guarantee from any court of competent
jurisdiction;
(vi) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the
Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the
expenses of the Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee
Trustee; provided, that nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Guarantee Trustee,
upon the occurrence of a Guarantee Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee;
(vii) The Guarantee Trustee shall not be
bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(viii) The Guarantee Trustee may execute any
of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
<PAGE> 14
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(ix) Any action taken by the Guarantee
Trustee or its agents hereunder shall bind the Holders of the
Securities, and the signature of the Guarantee Trustee or its
agents alone shall be sufficient and effective to perform any
such action. No third party shall be required to inquire as to
the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this
Guarantee, both of which shall be conclusively evidenced by
the Guarantee Trustee's or its agent's taking such action; and
(x) Whenever in the administration of this
Guarantee the Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Guarantee
Trustee (i) may request instructions from the Holders of a
Majority in Liquidation Amount of the Securities, (ii) may
refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii)
shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Guarantee shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of
Guarantee. The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.
(a) There shall be at all times a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor;
and
(ii) be a corporation organized and doing
business under the laws of the United States of America or any
State or Territory thereof or of the District of Columbia, or
a corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers,
<PAGE> 15
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having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustee.
(a) Subject to Section 4.1(b), the Guarantee Trustee may be
appointed or removed with or without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Guarantee Trustee has been appointed and
has accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold such
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed by
such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery to the Guarantor of an instrument of removal or resignation,
the removed or resigning Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
<PAGE> 16
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(f) Upon termination of this Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 4.2, the Guarantor
shall pay to the Guarantee Trustee all amounts owing for fees and reimbursement
of expenses which have accrued to the date of such termination, removal or
resignation.
(g) The Guarantor shall promptly notify the Holders of the
resignation, removal or appointment of the Guarantor.
ARTICLE 5
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Trust or
any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands. Notwithstanding anything to the contrary herein, the Guarantor retains
all of its rights under the Indenture to (i) extend the interest payment period
on the Debentures and the Guarantor shall not be obligated hereunder to make any
Guarantee Payments during any Extended Interest Payment Period (as defined in
the Indenture) with respect to the Distributions (as defined in the Declaration)
on the Securities, and (ii) change the maturity date of the Debentures to the
extent permitted by the Indenture.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall be absolute and unconditional and shall
remain in full force and effect until the entire liquidation amount of all
outstanding Securities shall have been paid and such obligation shall in no way
be affected or impaired by reason of the happening from time to time of any
event, including without limitation, the following, whether or not with notice
to, or the consent of, the Guarantor:
(a) The release or waiver, by operation of law or otherwise,
of the performance or observance by the Trust of any express or implied
agreement,
<PAGE> 17
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covenant, term or condition relating to the Securities to be performed
or observed by the Trust;
(b) The extension of time for the payment by the Trust of all
or any portion of the Distributions, Redemption Price (as defined in
the Indenture), Liquidation Distribution or any other sums payable
under the terms of the Securities or the extension of time for the
performance of any other obligation under, arising out of, or in
connection with the Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that results from the extension of any interest
payment period on the Debentures or any change to the maturity date of
the Debentures permitted by the Indenture);
(c) Any failure, omission, delay or lack of diligence on the
part of the Property Trustee or the Holders to enforce, assert or
exercise any right, privilege, power or remedy conferred on the
Property Trustee or the Holders pursuant to the terms of the
Securities, or any action on the part of the Trust granting indulgence
or extension of any kind;
(d) The voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Trust or any of the assets of the Trust;
(e) Any invalidity of, or defect or deficiency in, the
Securities;
(f) The settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) Any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Guarantee Trustee or the
Holders to give notice to, or obtain consent of the Guarantor or any other
Person with respect to the happening of any of the foregoing.
No setoff, counterclaim, reduction or diminution of any
obligation, or any defense of any kind or nature that the Guarantor has or may
have against any Holder shall be available hereunder to the Guarantor against
such Holder to reduce the payments to it under this Guarantee.
SECTION 5.4 Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy
<PAGE> 18
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available to the Guarantee Trustee in respect of this Guarantee or exercising
any trust or power conferred upon the Guarantee Trustee under this Guarantee.
(b) If the Guarantee Trustee fails to enforce this Guarantee,
then any Holder of Securities may, subject to the subordination provisions of
Section 6.2, institute a legal proceeding directly against the Guarantor to
enforce the Guarantee Trustee's rights under this Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity. Notwithstanding the foregoing, if the Guarantor has
failed to make a Guarantee Payment, a Holder of Securities may, subject to the
subordination provisions of Section 6.2, directly institute a proceeding against
the Guarantor for enforcement of the Guarantee for such payment to the Holder of
the Securities of the principal of or interest on the Debentures on or after the
respective due dates specified in the Debentures, and the amount of the payment
will be based on the Holder's pro rata share of the amount due and owing on all
of the Securities. The Guarantor hereby waives any right or remedy to require
that any action on this Guarantee be brought first against the Trust or any
other person or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Securities against the Trust in respect of any amounts paid to
such Holders by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation of any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if at the time of any such payment,
any amounts are due and unpaid under this Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Guarantee Trustee for the benefit of the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections 5.3(a) through 5.3(g),
inclusive, hereof.
<PAGE> 19
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ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Securities remain outstanding, if there shall
have occurred a Guarantee Event of Default or a Trust Enforcement Event, then
the Guarantor shall not, and shall not permit any subsidiary of the Guarantor,
to (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, the Guarantor's capital
stock or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities that rank pari passu with or
junior to the Debentures or make any guarantee payments with respect to any
guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor if such guarantee ranks pari passu with or junior to the Debentures
(other than (a) dividends or distributions in common stock of the Guarantor, (b)
payments under this Guarantee and (c) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans).
SECTION 6.2 Ranking.
This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all other
liabilities of the Guarantor, except those liabilities of the Guarantor made
pari passu or subordinate by their terms.
If a Trust Enforcement Event has occurred and is continuing
under the Declaration, the rights of the holders of the Common Securities to
receive Guarantee Payments hereunder shall be subordinated to the rights of the
holders of the Securities to receive payment of all amounts due and owing
hereunder.
ARTICLE 7
TERMINATION
SECTION 7.1 Termination.
This Guarantee shall terminate upon (i) full payment of the
Redemption Price of all Securities, (ii) upon the distribution of the Debentures
to the Holders of all the Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust.
Notwithstanding the foregoing, this Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder of Securities
must restore payment of any sums paid under the Securities or under this
Guarantee.
<PAGE> 20
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ARTICLE 8
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matter the Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 8.2 Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Guarantee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Securities
then outstanding.
<PAGE> 21
17
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee may only be amended with the prior approval of the
Holders of at least a Majority in Liquidation Amount of the Securities. The
provisions of Section 12.2 of the Declaration with respect to meetings of, and
action by written consent of the Holders of the Securities apply to the giving
of such approval.
SECTION 9.3 Notices.
All notices provided for in this Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Guarantor and the Holders
of the Securities):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Fax: (212) 815-5595
(b) If given to the Guarantor, at the Guarantor's mailing
addresses set forth below (or such other address as the Guarantor may
give notice of to the Guarantee Trustee and the Holders of the
Securities):
First Security Corporation
79 South Main Street, Salt Lake City, Utah 84111
Attn: Scott C. Ulbrich
Fax: (801) 246-6928
(c) If given to any Holder of Securities, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
<PAGE> 22
18
SECTION 9.4 Benefit.
This Guarantee is solely for the benefit of the Holders of the
Securities and, subject to Section 3.1(a), is not separately transferable from
the Securities.
SECTION 9.5 Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 23
IN WITNESS WHEREOF, this Guarantee is executed as of the day
and year first above written.
FIRST SECURITY CORPORATION,
as Guarantor
By: /s/ Morgan J. Evans
----------------------------
Name: Morgan J. Evans
Title: President and Chief Operating
Officer
The Bank of New York
as Guarantee Trustee
By: /s/ Robert E. Patterson, III
-----------------------------
Name: Robert E. Patterson III
Title: Assistant Vice President
<PAGE> 1
EXHIBIT 5.1
OPINION OF RICHARDS LAYTON & FINGER.
<PAGE> 2
Exhibit 5.1
[RICHARDS, LAYTON & FINGER LETTERHEAD]
February 11, 1997
First Security Capital 1
c/o First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
Re: First Security Capital 1
Ladies and Gentlemen:
We have acted as special Delaware counsel for First Security Corporation,
a Delaware corporation ("First Security"), and First Security Capital 1, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated as of December 13, 1996
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on December 13, 1996;
(b) The Declaration of Trust of the Trust, dated as of December 13, 1996,
by and between First Security and the trustees of the Trust named therein;
<PAGE> 3
First Security Capital I
February 11, 1997
Page 2
(c) The Amended and Restated Declaration of Trust of the Trust, dated
as of December 23, 1996 (including Exhibits A and B thereto) (the
"Declaration"), among First Security, as depositor, the trustees of the Trust
named therein and the holders, from time to time, of undivided beneficial
interests in the assets of the Trust;
(d) The Registration Statement on Form S-4, including a preliminary
prospectus ("Prospectus"), relating to the New 8.41% Subordinated Capital Income
Securities of the Trust representing preferred undivided beneficial interests
in the assets of the Trust (each, a "New Capital Security" and collectively,
the "New Capital Securities"), as proposed to be filed by First Security and
the Trust with the Securities and Exchange Commission on or about February __,
1997; and
(e) A Certificate of Good Standing for the Trust, dated February __,
1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (e) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
and the Certificate are in full force and effect and have not been amended,
(ii) except to the extent provided in paragraph 1 below, the due creation or
due organization or due formation, as the case may be, and valid existence in
good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, organization or formation, (iii) the
legal capacity of natural persons who are parties to the documents examined by
us, (iv) that each of the parties to the documents examined by us has the power
and authority to execute and deliver, and to perform its obligations under,
such documents, (v) the due authorization, execution and delivery by all
parties thereto of all documents examined by us, (vi) the receipt by each
Person to whom a New Capital Security is to be issued by the Trust
(collectively, the "New Capital Security Holders") of a New Capital Securities
Certificate for such New Capital Security and the payment for the New Capital
Security acquired by it, in accordance with the Declaration and the
Registration Statement, and (vii)
<PAGE> 4
First Security Capital I
February 11, 1997
Page 3
that the New Capital Securities are issued and sold to the New Capital Security
Holders in accordance with the Declaration and the Registration Statement. We
have not participated in the preparation of the Registration Statement and
assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered only
with respect to Delaware laws and rules, regulations and orders thereunder that
are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The New Capital Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The New Capital Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the New Capital Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Validity of the New
Capital Securities" in the Prospectus. In giving the foregoing consents, we do
not thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Except as stated above, without our prior written consent, this opinion may not
be furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
CDK
<PAGE> 1
EXHIBIT 5.2
OPINION OF RAY, QUINNEY & NEBEKER.
<PAGE> 2
[LETTERHEAD]
The Board of Directors
First Security Corporation
Suite 200
79 South Main Street
Salt Lake City, Utah 84111
Re: Registration Statement on Form S-4
Number 333-
Ladies and Gentlemen:
We have acted as counsel to First Security Corporation, a Delaware
corporation (the "Company") and Depositor of First Security Capital I, a
Delaware business trust (the "Trust"), in connection with a Registration
Statement on Form S-4 (the "Registration Statement") relating to (i) the
proposed issuance by the Trust of $150,000,000 aggregate Liquidation Amount of
the Trust's 8.41% Capital Securities due December, 15, 2026 (the "New Capital
Securities") registered under the Securities Act of 1933, as amended (the
"Securities Act"), in exchange for up to $150,000,000 aggregate Liquidation
Amount of the Trust's outstanding 8.41% Capital Securities due December 15, 2026
(the "Old Capital Securities"); (ii) the proposed issuance by the Company to the
Trust of $154,640,000 aggregate principal amount of the Company's 8.41% Junior
Subordinated Debentures (the "New Junior Subordinated Debentures") registered
under the Securities Act, in exchange for up to $154,604,000 aggregate principal
of the Company's outstanding 8.09% Junior Subordinated Debentures (the "Old
Junior Subordinated Debentures"); and (iii) the Company's guarantee (the "New
Guarantee"), which guarantees the payment of Distributions and payments on
liquidation or redemption of the New Capital Securities, registered under the
Securities Act, in exchange for the guarantee (the "Old Guarantee") which
guarantees the payment of Distributions and payments on liquidation or
redemption of the Old Capital Securities. The New Capital Securities are
issuable under an Amended and Restated Declaration of Trust dated as of December
23, 1996 (the "Trust Agreement") between the Company, as Depositor, The Bank of
New York, as Delaware Trustee and Property Trustee, and the Administrative
Agents named therein; the New Junior Subordinated Debentures are issuable under
an Indenture dated as of December 23, 1996 (the "Indenture") between the Company
and The Bank of New York, as Debenture Trustee; and the New Guarantee is
issuable under the Guarantee Agreement dated as of December 23, 1996 (the
"Guarantee Agreement") between the Company and The Bank of New York, as
Guarantee Trustee.
We have examined such documents, including resolutions adopted by the Board
of Directors of the Company on , 1996 (the "Resolutions"), and have
reviewed such questions of law as we have considered necessary and appropriate
for the purposes of our opinions set forth below. We have also assumed the legal
capacity for all purposes relevant hereto of all natural persons and, with
respect to all parties to agreements or instruments relevant hereto other than
the Company and the Trust, that such parties had the requisite power and
authority (corporate or otherwise) to execute, deliver and perform such
agreements or instruments, that such agreements or instruments have been duly
authorized by all requisite action (corporate or otherwise), executed and
delivered by such parties and that such agreements or instruments are the valid,
binding and enforceable obligations of such parties. As to questions of fact
material to our opinions, we have relied upon certificates of officers of the
Company and the Trust and of public officials. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to them in the
Declaration of Trust, the Indenture and the Guarantee Agreement, as applicable.
Based on the foregoing, we are of the opinion that:
(1) The New Junior Subordinated Debentures have been duly authorized
by all requisite corporate action and, when executed and authenticated as
specified in the Indenture and delivered against surrender and cancellation
of a like amount of Old Junior Subordinated Debentures in the manner
described in the Registration Statement, the New Junior Subordinated
Debentures will constitute valid and binding obligations of the Company,
enforceable in accordance with their terms. In rendering our
<PAGE> 3
First Security Corporation
Page 2
opinions, we have assumed the authenticity of all documents submitted to us
as originals, the genuineness of all signatures and the conformity to
authentic originals of all documents submitted to us as copies.
(2) The New Guarantee has been duly authorized by all requisite
corporate action and, when executed as specified in the Guarantee Agreement
and delivered against surrender and cancellation of the Old Guarantee in
the manner described in the Registration Statement, the New Guarantee will
constitute the valid and binding obligation of the Company, enforceable in
accordance with its terms.
(3) Based on the description of the New Securities contained in the
Prospectus and based on the laws and regulations now in effect, it is our
opinion that the description of material federal income tax consequences of
the Exchange Offer contained in the Prospectus is a fair and correct
summary of the issue.
The opinions set forth above are subject to the following qualifications
and exceptions:
(a) Our opinions in paragraphs (1) and (2) above are subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar law of general application affecting creditors' rights.
(b) Our opinions in paragraphs (1) and (2) above are subject to the
effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing, and
other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
Our opinions expressed above are limited to the laws of the States of Utah
and Delaware and the federal laws of the United States of America.
We hereby consent to your filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the caption
"Validity of the New Securities" contained in the Prospectus included therein.
Dated: February , 1997
Very truly yours,
RAY, QUINNEY & NEBEKER
--------------------------------------
By: A. Robert Thorup,
a Shareholder and Director of the Firm
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and Spencer F. Eccles (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of Chairman and Chief Executive Officer of First Security
Corporation. Subject to the provisions of paragraphs 6 and 7 of this Agreement,
the Employer may change the title, powers and duties of the Employee in its sole
discretion, and the Employee agrees to perform such duties upon the terms and
subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
1
<PAGE> 2
3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate employment
at any time. The Employer shall have the right to terminate the Employee's
employment at any time with or without cause. Any such termination of employment
under this Agreement shall be subject to the provisions of paragraphs 6 and 7
below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $530,014, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October 16,
1996, and shall continue for a period of three (3) years (the "Term").
2
<PAGE> 3
5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal
thereof shall automatically be renewed for successive periods of three (3) years
each, unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as
defined in paragraph 7.1 below) shall occur during the Term or any renewal
thereof, the Term shall automatically be extended for a period of five years
from the date on which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
(i) the Employee intentionally, recklessly or as the
result of gross negligence substantially violates his duties under this
Agreement or as otherwise assigned to him from time to time by the Employer; or
(ii) the Employee commits any act or acts which constitute
dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine
to terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on
3
<PAGE> 4
or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. In addition, the
following provisions shall apply:
(i) The Employer shall notify the Employee in writing
that the Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall
commence on the date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease
on the earlier of:
(A) the one year anniversary of the date the
Employee received written notice of termination, or
(B) the first date as of which the Employee
is not willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or scope of the Employee's
authorities or duties. In addition, the Employer shall not require the Employee
to change location from the particular location at which the Employee normally
performed services as of the date the Employee received written notice of
termination to a location outside a 30-mile radius of such prior location or
require the Employee to undertake new and excessive business travel. Also for
purposes of determining the Guaranteed Compensation Period, the terms "willing"
or "available" shall mean that the Employee, with reasonable notice from the
Employer, reports to the Employer and performs the agreed upon services. During
the
4
<PAGE> 5
Guaranteed Compensation Period, the Employee shall continue to receive regular
base salary (hereinafter sometimes referred to as "regular compensation" or
"regular base salary"), with payments being made semi-monthly, and shall
continue to be eligible to participate in the Management Annual Cash Incentive
Bonus Program ("MACIBP") in accordance with paragraph 6.1(b)(iv) below. During
the Guaranteed Compensation Period, the Employee shall cease to actively
participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that ends
during an Employee's Guaranteed Compensation Period, the Employee shall be
entitled to receive payments for such Plan Year as if all performance goals for
such Plan Year were met at the "target" level. In addition, the Employee shall
be entitled to receive proportionate payment for any partial Plan Year under the
MACIBP that falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(c) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a Change of Control, in addition to the payments provided in
paragraph 6.1(b), the Employer shall be obligated to make the following
payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early
Retirement Date as defined in Section 4.01(b) of the First Security Supplemental
Executive Retirement Plan ("SERP"), the Employer shall pay a benefit equal to
the benefit that would have been paid under the SERP as if the Employee had
attained an Early Retirement Date
5
<PAGE> 6
and as if consent had been granted. For purposes of the calculation of this
benefit, Early Retirement Percentages (as defined in Section 5.02 of the SERP)
will continue to increase at a rate of 3% per year for each year prior to age
50. No amount shall be paid under this paragraph 6.1(c)(ii) to the extent that
such benefit is payable under the SERP.
(iii) On or before the effective date of the Employee's
termination of employment, the Employer shall pay "severance pay" in a single
lump sum amount, determined as follows:
(A) the Employee's "regular monthly compensation"
shall be determined by dividing by twelve (12) the greater of (1) the Employee's
annual regular compensation as in effect as of the last day of the full calendar
month immediately prior to the month in which the Change of Control occurred,
and (2) the Employee's annual regular compensation as in effect as of the last
day of the full calendar month immediately prior to the month in which the
termination occurs;
(B) the Employee's "average monthly bonus" shall be
determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee has worked less than three (3)
full calendar years, the average monthly bonus shall be determined by adding
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(C) the Employee's "gross severance pay" shall be
determined by adding together the Employee's regular monthly compensation and
average monthly bonus, and multiplying the sum by thirty-six. If the Employee
has worked less than three (3) full calendar years, the "gross severance pay"
shall be determined by adding
6
<PAGE> 7
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(D) the net amount of severance pay which the
Employer shall pay to the Employee shall be determined by subtracting from the
Employee's gross severance pay any amounts actually paid to the Employee under
the First Security Severance Pay Plan or any successor severance plan or program
sponsored by the Employer, the Corporation or its Affiliate; provided that such
amount may be further reduced as provided in paragraph 17, below, and shall be
subject to the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in which event the Employer shall be obligated to pay to the Employee,
on or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof. In addition if the
Employee elects to terminate his employment with the Employer due to or as a
result of any "Change in Duties or Compensation" (as defined below) from the
duties and compensation that existed immediately before such Change of Control
occurred, then the Employer shall be obligated to pay to the
7
<PAGE> 8
Employee, on or before the thirtieth (30th) day following the date upon which
the Employee gives notice of his intent to terminate his employment, the amount
specified in paragraph 6.1(c) above.
The foregoing provisions shall not affect Employee's entitlement under
any plan sponsored by the Corporation or the Employer as set forth in
paragraph 11 hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall not
be required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any of the following events:
(a) either (i) receipt by the Corporation of a report on
Schedule 13D, or an amendment to such a report, filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934 (the "1934 Act") disclosing that any person (as such term is used in
Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding stock of the
Corporation or (ii) actual knowledge by the Corporation of facts, on the basis
of which any Person is required to file such a report on Schedule 13D, or to
make an amendment to such a report, with the SEC (or would be required to
8
<PAGE> 9
file such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or
a wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in one
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transaction or series of related transactions) of all or substantially all
the assets of the Corporation; or
(d) a change in the majority of the members of the
Corporation's Board of Directors within a 24-month period unless the election or
nomination for election by the Corporation's stockholders of each new director
was approved by the vote of at least two-thirds of the directors then still in
office who were in office at the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board
of Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the
Employee's authorities or duties from those authorities or duties of the
Employee immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from
that provided to him immediately prior to the date upon which a Change of
Control occurs;
(c) if the Employee shall be subjected to a material decrease
in compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location
from the particular location at which Employee was located immediately before
such Change of Control to a location outside a 30-mile radius of such prior
location, or requires the Employee to undertake new and excessive business
travel without the Employee's prior consent; or
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(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously and
to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that the
Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have access to and become familiar with certain proprietary and
confidential information of the Employer, the Corporation and its Affiliates,
including without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee
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further hereby agrees not to publish orally or in writing any derogatory
information tending to defame or malign or in fact defaming or maligning the
Employer, the Corporation or its Affiliates, or present or former employees or
directors of the Employer, the Corporation or its Affiliates. The Employee also
hereby agrees and warrants that under no circumstances shall the Employee remove
from the Employer's premises any books, records, documents, customer lists,
financial data, or any other documents. The provisions of this paragraph 9 shall
survive any termination of this Agreement or of the Employee's employment with
the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of the
Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal,
state and local taxes as required by relevant law and regulation then in effect,
including without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may
withhold from or offset against such payments any liabilities or debts of the
Employee to the Employer, the Corporation and its Affiliates, and may suspend or
defer such payments during the pendency of resolution of any claims of the
Employer, the Corporation and its Affiliates against the Employee of whatsoever
nature.
11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under
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the SERP, the First Security Incentive Savings Plan, the First Security
Retirement Plan, the First Security ERISA Excess Plan, the First Security
Corporation Comprehensive Management Incentive Plan, the First Security Deferred
Compensation Plan, the First Security Severance Pay Plan, or any other plan now
or hereafter established by the Employer, the Corporation or its Affiliates for
a group of its eligible employees shall be paid, if required by such plan, in
addition to the payments hereunder, in accordance with and limited by the terms
of the respective plans then in effect; provided that:
(a) the severance payments under this Agreement shall not
cause an increase under any pension, welfare or other plan sponsored by the
Employer, the Corporation or any Affiliate; there shall be no accrual of
retirement, vacation, or any pension and/or welfare benefits of any nature as a
result of such severance payments; and the Employee shall not be deemed employed
or on a paid leave for any purpose or for any period of time as a result of such
severance payments.
(b) The calculation of the amount of severance pay to be paid
under this Agreement shall be reduced by any severance payments that may be due
under the First Security Severance Pay Plan or any successor severance plan or
program then sponsored by the Employer, the Corporation or an Affiliate, that
are actually paid to the Employee. The Employer's right to cancel or reduce any
plan or program now or hereafter in effect shall not be reduced or affected by
the Agreement.
12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents and
acknowledges that:
(a) no promises of any special treatment or provision have
been made by any person to the Employee;
(b) nothing in this Agreement shall be construed to limit or
prevent the Employer, the Corporation or any Affiliate from reducing,
discontinuing, terminating or amending any benefit plans or programs in any
manner permitted by law.
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(c) the Employee's legal counsel has reviewed this Agreement,
and the Employee has had an opportunity to consult with an attorney or other
person or advisor of his choice in connection with the execution of this
Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between (a) the
Employer, the Corporation or any of its Affiliates, and (b) the Employee or any
other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person to
the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of the
Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's employment shall not be deemed to
have terminated in any such event for purposes of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to purchase
or maintain any contract, policy, arrangement or other asset to provide the
benefits under this Agreement. Further, any contract, policy, arrangement, or
other asset which the Employer may utilize to assure itself of the funds to
provide the benefits
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required hereunder shall not serve in any way as security to the Employee for
the Employer's performance under this Agreement. The rights accruing to the
Employee hereunder shall be solely those of an unsecured creditor of the
Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the
contrary notwithstanding, in the event that the independent auditors most
recently selected by the Corporation's or the Employer's Board of Directors (the
"Auditors") determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount), and shall
advise the Employer in writing of his election within 10 days of receipt of such
notice. If no such election is made by the Employee within such 10-day period,
then the Employer may elect which and how
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much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount)
and shall promptly notify the Employee of such election. For purposes of this
paragraph 17, present value shall be determined in accordance with section
280G(d)(4) of the Code. All determinations made by the Auditors under this
paragraph 15 shall be binding upon the Employer and the Employee and shall be
made within sixty (60) days of the date a payment becomes payable or
transferable.
17.3 PAYMENT. As promptly as practicable following such determination
and the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Employee which he shall repay to the Employer,
together with interest at the applicable federal rate provided in section
7872(b)(2) of the Code; provided, however, that no amount shall be payable by
the Employee to the Employer if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has
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occurred, such Underpayment shall promptly be paid or transferred by the
Employer to or for the benefit of the Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only,
the term "Employer" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
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 addressed to such
address. 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
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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 third 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. If
given by telegram, such notice shall be deemed to be given upon the earlier to
occur of the date actually received by the addressee or the business day
following the date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
Spencer F. Eccles
4075 Oakview Drive
Salt Lake City, Utah 84124
20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. Subject to the foregoing
limitation upon assignment and
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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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
24. CAPTIONS. The captions used herein are for ease of reference only and shall
not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
prior agreements between the
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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 of
the party to this Agreement. No promises of any nature have been made in
connection with the employment or continued employment of the Employee other
than as set forth in this Agreement, and provided further that it is expressly
agreed that the Employee shall be entitled to only such benefits as are
expressly provided by the various plans of the Corporation and the Employer for
eligible employees to the extent the Employee qualifies for such benefits
strictly in accordance with the terms and provisions of such plans as now in
effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day of
____________________, 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:_______________________________ ________________________________________
Title: Member of the Board Spencer F. Eccles
of the Employer, and
President of First
Security Corporation
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Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and Morgan J. Evans (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of President and Chief Operating Officer of First Security
Corporation. Subject to the provisions of paragraphs 6 and 7 of this Agreement,
the Employer may change the title, powers and duties of the Employee in its sole
discretion, and the Employee agrees to perform such duties upon the terms and
subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
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3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate employment
at any time. The Employer shall have the right to terminate the Employee's
employment at any time with or without cause. Any such termination of employment
under this Agreement shall be subject to the provisions of paragraphs 6 and 7
below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $410,000, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October 16,
1996, and shall continue for a period of three (3) years (the "Term").
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5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal
thereof shall automatically be renewed for successive periods of three (3) years
each, unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as
defined in paragraph 7.1 below) shall occur during the Term or any renewal
thereof, the Term shall automatically be extended for a period of five years
from the date on which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
(i) the Employee intentionally, recklessly or as the
result of gross negligence substantially violates his duties under this
Agreement or as otherwise assigned to him from time to time by the Employer; or
(i) the Employee commits any act or acts which constitute
dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine
to terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on
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or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. In addition, the
following provisions shall apply:
(i) The Employer shall notify the Employee in writing
that the Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall
commence on the date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease
on the earlier of:
(A) the one year anniversary of the date the
Employee received written notice of termination, or
(B) the first date as of which the Employee
is not willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or scope of the Employee's
authorities or duties. In addition, the Employer shall not require the Employee
to change location from the particular location at which the Employee normally
performed services as of the date the Employee received written notice of
termination to a location outside a 30-mile radius of such prior location or
require the Employee to undertake new and excessive business travel. Also for
purposes of determining the Guaranteed Compensation Period, the terms "willing"
or "available" shall mean that the Employee, with reasonable notice from the
Employer, reports to the Employer and performs the agreed upon services. During
the
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Guaranteed Compensation Period, the Employee shall continue to receive regular
base salary (hereinafter sometimes referred to as "regular compensation" or
"regular base salary"), with payments being made semi-monthly, and shall
continue to be eligible to participate in the Management Annual Cash Incentive
Bonus Program ("MACIBP") in accordance with paragraph 6.1(b)(iv) below. During
the Guaranteed Compensation Period, the Employee shall cease to actively
participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that ends
during an Employee's Guaranteed Compensation Period, the Employee shall be
entitled to receive payments for such Plan Year as if all performance goals for
such Plan Year were met at the "target" level. In addition, the Employee shall
be entitled to receive proportionate payment for any partial Plan Year under the
MACIBP that falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(c) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a Change of Control, in addition to the payments provided in
paragraph 6.1(b), the Employer shall be obligated to make the following
payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early
Retirement Date as defined in Section 4.01(b) of the First Security Supplemental
Executive Retirement Plan ("SERP"), the Employer shall pay a benefit equal to
the benefit that would have been paid under the SERP as if the Employee had
attained an Early Retirement Date
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and as if consent had been granted. For purposes of the calculation of this
benefit, Early Retirement Percentages (as defined in Section 5.02 of the SERP)
will continue to increase at a rate of 3% per year for each year prior to age
50. No amount shall be paid under this paragraph 6.1(c)(ii) to the extent that
such benefit is payable under the SERP.
(iii) On or before the effective date of the Employee's
termination of employment, the Employer shall pay "severance pay" in a single
lump sum amount, determined as follows:
(A) the Employee's "regular monthly compensation"
shall be determined by dividing by twelve (12) the greater of (1) the Employee's
annual regular compensation as in effect as of the last day of the full calendar
month immediately prior to the month in which the Change of Control occurred,
and (2) the Employee's annual regular compensation as in effect as of the last
day of the full calendar month immediately prior to the month in which the
termination occurs;
(B) the Employee's "average monthly bonus" shall be
determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee has worked less than three (3)
full calendar years, the average monthly bonus shall be determined by adding
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(C) the Employee's "gross severance pay" shall be
determined by adding together the Employee's regular monthly compensation and
average monthly bonus, and multiplying the sum by thirty-six. If the Employee
has worked less than three (3) full calendar years, the "gross severance pay"
shall be determined by adding
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together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(D) the net amount of severance pay which the
Employer shall pay to the Employee shall be determined by subtracting from the
Employee's gross severance pay any amounts actually paid to the Employee under
the First Security Severance Pay Plan or any successor severance plan or program
sponsored by the Employer, the Corporation or its Affiliate; provided that such
amount may be further reduced as provided in paragraph 17, below, and shall be
subject to the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in which event the Employer shall be obligated to pay to the Employee,
on or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof. In addition if the
Employee elects to terminate his employment with the Employer due to or as a
result of any "Change in Duties or Compensation" (as defined below) from the
duties and compensation that existed immediately before such Change of Control
occurred, then the Employer shall be obligated to pay to the
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Employee, on or before the thirtieth (30th) day following the date upon which
the Employee gives notice of his intent to terminate his employment, the amount
specified in paragraph 6.1(c) above. The foregoing provisions shall not affect
Employee's entitlement under any plan sponsored by the Corporation or the
Employer as set forth in paragraph 11 hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall not
be required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any of the following events:
(a) either (i) receipt by the Corporation of a report on
Schedule 13D, or an amendment to such a report, filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934 (the "1934 Act") disclosing that any person (as such term is used in
Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding stock of the
Corporation or (ii) actual knowledge by the Corporation of facts, on the basis
of which any Person is required to file such a report on Schedule 13D, or to
make an amendment to such a report, with the SEC (or would be required to
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file such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or
a wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in one
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transaction or series of related transactions) of all or substantially all
the assets of the Corporation; or
(d) a change in the majority of the members of the
Corporation's Board of Directors within a 24-month period unless the election or
nomination for election by the Corporation's stockholders of each new director
was approved by the vote of at least two-thirds of the directors then still in
office who were in office at the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board
of Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the
Employee's authorities or duties from those authorities or duties of the
Employee immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from
that provided to him immediately prior to the date upon which a Change of
Control occurs;
(c) if the Employee shall be subjected to a material decrease
in compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location
from the particular location at which Employee was located immediately before
such Change of Control to a location outside a 30-mile radius of such prior
location, or requires the Employee to undertake new and excessive business
travel without the Employee's prior consent; or
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(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously and
to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that the
Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have access to and become familiar with certain proprietary and
confidential information of the Employer, the Corporation and its Affiliates,
including without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee
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further hereby agrees not to publish orally or in writing any derogatory
information tending to defame or malign or in fact defaming or maligning the
Employer, the Corporation or its Affiliates, or present or former employees or
directors of the Employer, the Corporation or its Affiliates. The Employee also
hereby agrees and warrants that under no circumstances shall the Employee remove
from the Employer's premises any books, records, documents, customer lists,
financial data, or any other documents. The provisions of this paragraph 9 shall
survive any termination of this Agreement or of the Employee's employment with
the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of the
Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal,
state and local taxes as required by relevant law and regulation then in effect,
including without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may
withhold from or offset against such payments any liabilities or debts of the
Employee to the Employer, the Corporation and its Affiliates, and may suspend or
defer such payments during the pendency of resolution of any claims of the
Employer, the Corporation and its Affiliates against the Employee of whatsoever
nature.
11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under
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the SERP, the First Security Incentive Savings Plan, the First Security
Retirement Plan, the First Security ERISA Excess Plan, the First Security
Corporation Comprehensive Management Incentive Plan, the First Security Deferred
Compensation Plan, the First Security Severance Pay Plan, or any other plan now
or hereafter established by the Employer, the Corporation or its Affiliates for
a group of its eligible employees shall be paid, if required by such plan, in
addition to the payments hereunder, in accordance with and limited by the terms
of the respective plans then in effect; provided that:
(a) the severance payments under this Agreement shall not
cause an increase under any pension, welfare or other plan sponsored by the
Employer, the Corporation or any Affiliate; there shall be no accrual of
retirement, vacation, or any pension and/or welfare benefits of any nature as a
result of such severance payments; and the Employee shall not be deemed employed
or on a paid leave for any purpose or for any period of time as a result of such
severance payments.
(b) The calculation of the amount of severance pay to be paid
under this Agreement shall be reduced by any severance payments that may be due
under the First Security Severance Pay Plan or any successor severance plan or
program then sponsored by the Employer, the Corporation or an Affiliate, that
are actually paid to the Employee. The Employer's right to cancel or reduce any
plan or program now or hereafter in effect shall not be reduced or affected by
the Agreement.
12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents and
acknowledges that:
(a) no promises of any special treatment or provision have
been made by any person to the Employee;
(b) nothing in this Agreement shall be construed to limit or
prevent the Employer, the Corporation or any Affiliate from reducing,
discontinuing, terminating or amending any benefit plans or programs in any
manner permitted by law.
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(c) the Employee's legal counsel has reviewed this Agreement,
and the Employee has had an opportunity to consult with an attorney or other
person or advisor of his choice in connection with the execution of this
Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between (a) the
Employer, the Corporation or any of its Affiliates, and (b) the Employee or any
other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person to
the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of the
Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's employment shall not be deemed to
have terminated in any such event for purposes of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to purchase
or maintain any contract, policy, arrangement or other asset to provide the
benefits under this Agreement. Further, any contract, policy, arrangement, or
other asset which the Employer may utilize to assure itself of the funds to
provide the benefits
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required hereunder shall not serve in any way as security to the Employee for
the Employer's performance under this Agreement. The rights accruing to the
Employee hereunder shall be solely those of an unsecured creditor of the
Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the
contrary notwithstanding, in the event that the independent auditors most
recently selected by the Corporation's or the Employer's Board of Directors (the
"Auditors') determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
'Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount), and shall
advise the Employer in writing of his election within 10 days of receipt of such
notice. If no such election is made by the Employee within such 10-day period,
then the Employer may elect which and how
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much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount)
and shall promptly notify the Employee of such election. For purposes of this
paragraph 17, present value shall be determined in accordance with section
280G(d)(4) of the Code. All determinations made by the Auditors under this
paragraph 15 shall be binding upon the Employer and the Employee and shall be
made within sixty (60) days of the date a payment becomes payable or
transferable.
17.3 PAYMENT. As promptly as practicable following such determination
and the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Employee which he shall repay to the Employer,
together with interest at the applicable federal rate provided in section
7872(b)(2) of the Code; provided, however, that no amount shall be payable by
the Employee to the Employer if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has
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occurred, such Underpayment shall promptly be paid or transferred by the
Employer to or for the benefit of the Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only,
the term "Employer" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
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 addressed to such
address. 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
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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 third 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. If
given by telegram, such notice shall be deemed to be given upon the earlier to
occur of the date actually received by the addressee or the business day
following the date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
Morgan J. Evans
8994 Cobble Canyon Lane
Sandy, Utah 84093
20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. Subject to the foregoing
limitation upon assignment and
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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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
24. CAPTIONS. The captions used herein are for ease of reference only and shall
not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
prior agreements between the
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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 of
the party to this Agreement. No promises of any nature have been made in
connection with the employment or continued employment of the Employee other
than as set forth in this Agreement, and provided further that it is expressly
agreed that the Employee shall be entitled to only such benefits as are
expressly provided by the various plans of the Corporation and the Employer for
eligible employees to the extent the Employee qualifies for such benefits
strictly in accordance with the terms and provisions of such plans as now in
effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day of
__________________, 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:_______________________________ ________________________________________
Title: Member of the Board Morgan J. Evans
of the Employer, and
President of First
Security Corporation
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Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and L. Scott Nelson (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of Executive Vice President, Retail Lending Services of
First Security Corporation. Subject to the provisions of paragraphs 6 and 7 of
this Agreement, the Employer may change the title, powers and duties of the
Employee in its sole discretion, and the Employee agrees to perform such duties
upon the terms and subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
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3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate employment
at any time. The Employer shall have the right to terminate the Employee's
employment at any time with or without cause. Any such termination of employment
under this Agreement shall be subject to the provisions of paragraphs 6 and 7
below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $307,006, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October 16,
1996, and shall continue for a period of three (3) years (the "Term").
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5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal
thereof shall automatically be renewed for successive periods of three (3) years
each, unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as
defined in paragraph 7.1 below) shall occur during the Term or any renewal
thereof, the Term shall automatically be extended for a period of five years
from the date on which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
(i) the Employee intentionally, recklessly or as the
result of gross negligence substantially violates his duties under this
Agreement or as otherwise assigned to him from time to time by the Employer; or
(ii) the Employee commits any act or acts which constitute
dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine
to terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on
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or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. In addition, the
following provisions shall apply:
(i) The Employer shall notify the Employee in writing
that the Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall
commence on the date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease
on the earlier of:
(A) the one year anniversary of the date the
Employee received written notice of termination, or
(B) the first date as of which the Employee
is not willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or scope of the Employee's
authorities or duties. In addition, the Employer shall not require the Employee
to change location from the particular location at which the Employee normally
performed services as of the date the Employee received written notice of
termination to a location outside a 30-mile radius of such prior location or
require the Employee to undertake new and excessive business travel. Also for
purposes of determining the Guaranteed Compensation Period, the terms "willing"
or "available" shall mean that the Employee, with reasonable notice from the
Employer, reports to the Employer and performs the agreed upon services. During
the
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Guaranteed Compensation Period, the Employee shall continue to receive regular
base salary (hereinafter sometimes referred to as "regular compensation" or
"regular base salary"), with payments being made semi-monthly, and shall
continue to be eligible to participate in the Management Annual Cash Incentive
Bonus Program ("MACIBP") in accordance with paragraph 6.1(b)(iv) below. During
the Guaranteed Compensation Period, the Employee shall cease to actively
participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that ends
during an Employee's Guaranteed Compensation Period, the Employee shall be
entitled to receive payments for such Plan Year as if all performance goals for
such Plan Year were met at the "target" level. In addition, the Employee shall
be entitled to receive proportionate payment for any partial Plan Year under the
MACIBP that falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(c) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a Change of Control, in addition to the payments provided in
paragraph 6.1(b), the Employer shall be obligated to make the following
payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early
Retirement Date as defined in Section 4.01(b) of the First Security Supplemental
Executive Retirement Plan ("SERP"), the Employer shall pay a benefit equal to
the benefit that would have been paid under the SERP as if the Employee had
attained an Early Retirement Date
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and as if consent had been granted. For purposes of the calculation of this
benefit, Early Retirement Percentages (as defined in Section 5.02 of the SERP)
will continue to increase at a rate of 3% per year for each year prior to age
50. No amount shall be paid under this paragraph 6.1(c)(ii) to the extent that
such benefit is payable under the SERP.
(iii) On or before the effective date of the Employee's
termination of employment, the Employer shall pay "severance pay" in a single
lump sum amount, determined as follows:
(A) the Employee's "regular monthly compensation"
shall be determined by dividing by twelve (12) the greater of (1) the Employee's
annual regular compensation as in effect as of the last day of the full calendar
month immediately prior to the month in which the Change of Control occurred,
and (2) the Employee's annual regular compensation as in effect as of the last
day of the full calendar month immediately prior to the month in which the
termination occurs;
(B) the Employee's "average monthly bonus" shall be
determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee has worked less than three (3)
full calendar years, the average monthly bonus shall be determined by adding
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(C) the Employee's "gross severance pay" shall be
determined by adding together the Employee's regular monthly compensation and
average monthly bonus, and multiplying the sum by thirty-six. If the Employee
has worked less than three (3) full calendar years, the "gross severance pay"
shall be determined by adding
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together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(D) the net amount of severance pay which the
Employer shall pay to the Employee shall be determined by subtracting from the
Employee's gross severance pay any amounts actually paid to the Employee under
the First Security Severance Pay Plan or any successor severance plan or program
sponsored by the Employer, the Corporation or its Affiliate; provided that such
amount may be further reduced as provided in paragraph 17, below, and shall be
subject to the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in which event the Employer shall be obligated to pay to the Employee,
on or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof. In addition if the
Employee elects to terminate his employment with the Employer due to or as a
result of any "Change in Duties or Compensation" (as defined below) from the
duties and compensation that existed immediately before such Change of Control
occurred, then the Employer shall be obligated to pay to the
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Employee, on or before the thirtieth (30th) day following the date upon which
the Employee gives notice of his intent to terminate his employment, the amount
specified in paragraph 6.1(c) above. The foregoing provisions shall not affect
Employee's entitlement under any plan sponsored by the Corporation or the
Employer as set forth in paragraph 11 hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall not
be required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any of the following events:
(a) either (i) receipt by the Corporation of a report on
Schedule 13D, or an amendment to such a report, filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934 (the "1934 Act") disclosing that any person (as such term is used in
Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding stock of the
Corporation or (ii) actual knowledge by the Corporation of facts, on the basis
of which any Person is required to file such a report on Schedule 13D, or to
make an amendment to such a report, with the SEC (or would be required to
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file such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or
a wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d- 3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in
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one transaction or series of related transactions) of all or substantially all
the assets of the Corporation; or
(d) a change in the majority of the members of the
Corporation's Board of Directors within a 24-month period unless the election or
nomination for election by the Corporation's stockholders of each new director
was approved by the vote of at least two-thirds of the directors then still in
office who were in office at the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board
of Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the
Employee's authorities or duties from those authorities or duties of the
Employee immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from
that provided to him immediately prior to the date upon which a Change of
Control occurs;
(c) if the Employee shall be subjected to a material decrease
in compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location
from the particular location at which Employee was located immediately before
such Change of Control to a location outside a 30-mile radius of such prior
location, or requires the Employee to undertake new and excessive business
travel without the Employee's prior consent; or
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(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously and
to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that the
Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have access to and become familiar with certain proprietary and
confidential information of the Employer, the Corporation and its Affiliates,
including without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee
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further hereby agrees not to publish orally or in writing any derogatory
information tending to defame or malign or in fact defaming or maligning the
Employer, the Corporation or its Affiliates, or present or former employees or
directors of the Employer, the Corporation or its Affiliates. The Employee also
hereby agrees and warrants that under no circumstances shall the Employee remove
from the Employer's premises any books, records, documents, customer lists,
financial data, or any other documents. The provisions of this paragraph 9 shall
survive any termination of this Agreement or of the Employee's employment with
the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of the
Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal,
state and local taxes as required by relevant law and regulation then in effect,
including without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may
withhold from or offset against such payments any liabilities or debts of the
Employee to the Employer, the Corporation and its Affiliates, and may suspend or
defer such payments during the pendency of resolution of any claims of the
Employer, the Corporation and its Affiliates against the Employee of whatsoever
nature.
11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under
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the SERP, the First Security Incentive Savings Plan, the First Security
Retirement Plan, the First Security ERISA Excess Plan, the First Security
Corporation Comprehensive Management Incentive Plan, the First Security Deferred
Compensation Plan, the First Security Severance Pay Plan, or any other plan now
or hereafter established by the Employer, the Corporation or its Affiliates for
a group of its eligible employees shall be paid, if required by such plan, in
addition to the payments hereunder, in accordance with and limited by the terms
of the respective plans then in effect; provided that:
(a) the severance payments under this Agreement shall not
cause an increase under any pension, welfare or other plan sponsored by the
Employer, the Corporation or any Affiliate; there shall be no accrual of
retirement, vacation, or any pension and/or welfare benefits of any nature as a
result of such severance payments; and the Employee shall not be deemed employed
or on a paid leave for any purpose or for any period of time as a result of such
severance payments.
(b) The calculation of the amount of severance pay to be paid
under this Agreement shall be reduced by any severance payments that may be due
under the First Security Severance Pay Plan or any successor severance plan or
program then sponsored by the Employer, the Corporation or an Affiliate, that
are actually paid to the Employee. The Employer's right to cancel or reduce any
plan or program now or hereafter in effect shall not be reduced or affected by
the Agreement.
12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents and
acknowledges that:
(a) no promises of any special treatment or provision have
been made by any person to the Employee;
(b) nothing in this Agreement shall be construed to limit or
prevent the Employer, the Corporation or any Affiliate from reducing,
discontinuing, terminating or amending any benefit plans or programs in any
manner permitted by law.
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(c) the Employee's legal counsel has reviewed this Agreement,
and the Employee has had an opportunity to consult with an attorney or other
person or advisor of his choice in connection with the execution of this
Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between (a) the
Employer, the Corporation or any of its Affiliates, and (b) the Employee or any
other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person to
the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of the
Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's employment shall not be deemed to
have terminated in any such event for purposes of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to purchase
or maintain any contract, policy, arrangement or other asset to provide the
benefits under this Agreement. Further, any contract, policy, arrangement, or
other asset which the Employer may utilize to assure itself of the funds to
provide the benefits
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required hereunder shall not serve in any way as security to the Employee for
the Employer's performance under this Agreement. The rights accruing to the
Employee hereunder shall be solely those of an unsecured creditor of the
Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the
contrary notwithstanding, in the event that the independent auditors most
recently selected by the Corporation's or the Employer's Board of Directors (the
"Auditors') determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount), and shall
advise the Employer in writing of his election within 10 days of receipt of such
notice. If no such election is made by the Employee within such 10-day period,
then the Employer may elect which and how
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much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount)
and shall promptly notify the Employee of such election. For purposes of this
paragraph 17, present value shall be determined in accordance with section
280G(d)(4) of the Code. All determinations made by the Auditors under this
paragraph 15 shall be binding upon the Employer and the Employee and shall be
made within sixty (60) days of the date a payment becomes payable or
transferable.
17.3 PAYMENT. As promptly as practicable following such determination
and the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Employee which he shall repay to the Employer,
together with interest at the applicable federal rate provided in section
7872(b)(2) of the Code; provided, however, that no amount shall be payable by
the Employee to the Employer if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has
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occurred, such Underpayment shall promptly be paid or transferred by the
Employer to or for the benefit of the Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only,
the term "Employer" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
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 addressed to such
address. 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
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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 third 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. If
given by telegram, such notice shall be deemed to be given upon the earlier to
occur of the date actually received by the addressee or the business day
following the date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
L. Scott Nelson
1350 East Perrys Hollow Circle
Salt Lake City, Utah 84103
20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. Subject to the foregoing
limitation upon assignment and
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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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
24. CAPTIONS. The captions used herein are for ease of reference only and shall
not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
prior agreements between the
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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 of
the party to this Agreement. No promises of any nature have been made in
connection with the employment or continued employment of the Employee other
than as set forth in this Agreement, and provided further that it is expressly
agreed that the Employee shall be entitled to only such benefits as are
expressly provided by the various plans of the Corporation and the Employer for
eligible employees to the extent the Employee qualifies for such benefits
strictly in accordance with the terms and provisions of such plans as now in
effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day of
_________________, 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:_______________________________ ________________________________________
Title: Member of the Board L. Scott Nelson
of the Employer, and
President of First
Security Corporation
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Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and J. Pat McMurray (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of Executive Vice President, Community Banking Services of
First Security Corporation. Subject to the provisions of paragraphs 6 and 7 of
this Agreement, the Employer may change the title, powers and duties of the
Employee in its sole discretion, and the Employee agrees to perform such duties
upon the terms and subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
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3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate employment
at any time. The Employer shall have the right to terminate the Employee's
employment at any time with or without cause. Any such termination of employment
under this Agreement shall be subject to the provisions of paragraphs 6 and 7
below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $267,016, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October 16,
1996, and shall continue for a period of three (3) years (the "Term").
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5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal
thereof shall automatically be renewed for successive periods of three (3) years
each, unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as
defined in paragraph 7.1 below) shall occur during the Term or any renewal
thereof, the Term shall automatically be extended for a period of five years
from the date on which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
(i) the Employee intentionally, recklessly or as the
result of gross negligence substantially violates his duties under this
Agreement or as otherwise assigned to him from time to time by the Employer; or
(ii) the Employee commits any act or acts which constitute
dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine
to terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on
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or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. In addition, the
following provisions shall apply:
(i) The Employer shall notify the Employee in writing
that the Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall
commence on the date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease
on the earlier of:
(A) the one year anniversary of the date the
Employee received written notice of termination, or
(B) the first date as of which the Employee
is not willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or scope of the Employee's
authorities or duties. In addition, the Employer shall not require the Employee
to change location from the particular location at which the Employee normally
performed services as of the date the Employee received written notice of
termination to a location outside a 30-mile radius of such prior location or
require the Employee to undertake new and excessive business travel. Also for
purposes of determining the Guaranteed Compensation Period, the terms "willing"
or "available" shall mean that the Employee, with reasonable notice from the
Employer, reports to the Employer and performs the agreed upon services. During
the
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Guaranteed Compensation Period, the Employee shall continue to receive regular
base salary (hereinafter sometimes referred to as "regular compensation" or
"regular base salary"), with payments being made semi-monthly, and shall
continue to be eligible to participate in the Management Annual Cash Incentive
Bonus Program ("MACIBP") in accordance with paragraph 6.1(b)(iv) below. During
the Guaranteed Compensation Period, the Employee shall cease to actively
participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that ends
during an Employee's Guaranteed Compensation Period, the Employee shall be
entitled to receive payments for such Plan Year as if all performance goals for
such Plan Year were met at the "target" level. In addition, the Employee shall
be entitled to receive proportionate payment for any partial Plan Year under the
MACIBP that falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(C) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a Change of Control, in addition to the payments provided in
paragraph 6.1(b), the Employer shall be obligated to make the following
payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early
Retirement Date as defined in Section 4.01(b) of the First Security Supplemental
Executive Retirement Plan ("SERP"), the Employer shall pay a benefit equal to
the benefit that would have been paid under the SERP as if the Employee had
attained an Early Retirement Date
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and as if consent had been granted. For purposes of the calculation of this
benefit, Early Retirement Percentages (as defined in Section 5.02 of the SERP)
will continue to increase at a rate of 3% per year for each year prior to age
50. No amount shall be paid under this paragraph 6.1(c)(ii) to the extent that
such benefit is payable under the SERP.
(iii) On or before the effective date of the Employee's
termination of employment, the Employer shall pay "severance pay" in a single
lump sum amount, determined as follows:
(A) the Employee's "regular monthly compensation"
shall be determined by dividing by twelve (12) the greater of (1) the Employee's
annual regular compensation as in effect as of the last day of the full calendar
month immediately prior to the month in which the Change of Control occurred,
and (2) the Employee's annual regular compensation as in effect as of the last
day of the full calendar month immediately prior to the month in which the
termination occurs;
(B) the Employee's "average monthly bonus" shall be
determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee has worked less than three (3)
full calendar years, the average monthly bonus shall be determined by adding
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(C) the Employee's "gross severance pay" shall be
determined by adding together the Employee's regular monthly compensation and
average monthly bonus, and multiplying the sum by thirty-six. If the Employee
has worked less than three (3) full calendar years, the "gross severance pay"
shall be determined by adding
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together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(D) the net amount of severance pay which the
Employer shall pay to the Employee shall be determined by subtracting from the
Employee's gross severance pay any amounts actually paid to the Employee under
the First Security Severance Pay Plan or any successor severance plan or program
sponsored by the Employer, the Corporation or its Affiliate; provided that such
amount may be further reduced as provided in paragraph 17, below, and shall be
subject to the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in which event the Employer shall be obligated to pay to the Employee,
on or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof. In addition if the
Employee elects to terminate his employment with the Employer due to or as a
result of any "Change in Duties or Compensation" (as defined below) from the
duties and compensation that existed immediately before such Change of Control
occurred, then the Employer shall be obligated to pay to the
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Employee, on or before the thirtieth (30th) day following the date upon which
the Employee gives notice of his intent to terminate his employment, the amount
specified in paragraph 6.1(c) above. The foregoing provisions shall not affect
Employee's entitlement under any plan sponsored by the Corporation or the
Employer as set forth in paragraph 11 hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall not
be required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any of the following events:
(a) either (i) receipt by the Corporation of a report on
Schedule 13D, or an amendment to such a report, filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934 (the "1934 Act") disclosing that any person (as such term is used in
Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding stock of the
Corporation or (ii) actual knowledge by the Corporation of facts, on the basis
of which any Person is required to file such a report on Schedule 13D, or to
make an amendment to such a report, with the SEC (or would be required to
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file such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or
a wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in one
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transaction or series of related transactions) of all or substantially all the
assets of the Corporation; or
(d) a change in the majority of the members of the
Corporation's Board of Directors within a 24-month period unless the election or
nomination for election by the Corporation's stockholders of each new director
was approved by the vote of at least two-thirds of the directors then still in
office who were in office at the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board
of Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the
Employee's authorities or duties from those authorities or duties of the
Employee immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from
that provided to him immediately prior to the date upon which a Change of
Control occurs;
(c) if the Employee shall be subjected to a material decrease
in compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location
from the particular location at which Employee was located immediately before
such Change of Control to a location outside a 30-mile radius of such prior
location, or requires the Employee to undertake new and excessive business
travel without the Employee's prior consent; or
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(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously and
to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that the
Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have access to and become familiar with certain proprietary and
confidential information of the Employer, the Corporation and its Affiliates,
including without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee
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further hereby agrees not to publish orally or in writing any derogatory
information tending to defame or malign or in fact defaming or maligning the
Employer, the Corporation or its Affiliates, or present or former employees or
directors of the Employer, the Corporation or its Affiliates. The Employee also
hereby agrees and warrants that under no circumstances shall the Employee remove
from the Employer's premises any books, records, documents, customer lists,
financial data, or any other documents. The provisions of this paragraph 9 shall
survive any termination of this Agreement or of the Employee's employment with
the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of the
Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal,
state and local taxes as required by relevant law and regulation then in effect,
including without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may
withhold from or offset against such payments any liabilities or debts of the
Employee to the Employer, the Corporation and its Affiliates, and may suspend or
defer such payments during the pendency of resolution of any claims of the
Employer, the Corporation and its Affiliates against the Employee of whatsoever
nature.
11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under
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the SERP, the First Security Incentive Savings Plan, the First Security
Retirement Plan, the First Security ERISA Excess Plan, the First Security
Corporation Comprehensive Management Incentive Plan, the First Security Deferred
Compensation Plan, the First Security Severance Pay Plan, or any other plan now
or hereafter established by the Employer, the Corporation or its Affiliates for
a group of its eligible employees shall be paid, if required by such plan, in
addition to the payments hereunder, in accordance with and limited by the terms
of the respective plans then in effect; provided that:
(a) the severance payments under this Agreement shall not
cause an increase under any pension, welfare or other plan sponsored by the
Employer, the Corporation or any Affiliate: there shall be no accrual of
retirement, vacation, or any pension and/or welfare benefits of any nature as a
result of such severance payments; and the Employee shall not be deemed employed
or on a paid leave for any purpose or for any period of time as a result of such
severance payments.
(b) The calculation of the amount of severance pay to be paid
under this Agreement shall be reduced by any severance payments that may be due
under the First Security Severance Pay Plan or any successor severance plan or
program then sponsored by the Employer, the Corporation or an Affiliate, that
are actually paid to the Employee. The Employer's right to cancel or reduce any
plan or program now or hereafter in effect shall not be reduced or affected by
the Agreement.
12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents and
acknowledges that:
(a) no promises of any special treatment or provision have
been made by any person to the Employee:
(b) nothing in this Agreement shall be construed to limit or
prevent the Employer, the Corporation or any Affiliate from reducing,
discontinuing, terminating or amending any benefit plans or programs in any
manner permitted by law.
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(c) the Employee's legal counsel has reviewed this Agreement,
and the Employee has had an opportunity to consult with an attorney or other
person or advisor of his choice in connection with the execution of this
Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between (a) the
Employer, the Corporation or any of its Affiliates, and (b) the Employee or any
other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person to
the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of the
Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's employment shall not be deemed to
have terminated in any such event for purposes of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to purchase
or maintain any contract, policy, arrangement or other asset to provide the
benefits under this Agreement. Further, any contract, policy, arrangement, or
other asset which the Employer may utilize to assure itself of the funds to
provide the benefits
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required hereunder shall not serve in any way as security to the Employee for
the Employer's performance under this Agreement. The rights accruing to the
Employee hereunder shall be solely those of an unsecured creditor of the
Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the
contrary notwithstanding, in the event that the independent auditors most
recently selected by the Corporation's or the Employer's Board of Directors (the
"Auditors") determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount), and shall
advise the Employer in writing of his election within 10 days of receipt of such
notice. If no such election is made by the Employee within such 10-day period,
then the Employer may elect which and how
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much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount),
and shall advise the Employer in writing of his election within 10 days of
receipt of such notice. If no such election is made by the Employee within such
10-day period, then the Employer may elect which and how much of the Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Payments equals the Reduced Amount) and shall promptly
notify the Employee of such election. For purposes of this paragraph 17, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this paragraph 15 shall be binding
upon the Employer and the Employee and shall be made within sixty (60) days of
the date a payment becomes payable or transferable.
17.3 PAYMENT. As promptly as practicable following such determination
and the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Employee which he shall repay to the Employer,
together with interest at the applicable federal rate provided in section
7872(b)(2) of the Code; provided, however, that no amount shall be payable by
the Employee to the Employer if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has
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occurred, such Underpayment shall promptly be paid or transferred by the
Employer to or for the benefit of the Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only,
the term "Employer" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
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 addressed to such
address. 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
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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 third 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. If
given by telegram, such notice shall be deemed to be given upon the earlier to
occur of the date actually received by the addressee or the business day
following the date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
J. Pat McMurray
2189 Bluestem Lane
Boise, Idaho 83706
20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. Subject to the foregoing
limitation upon assignment and
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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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
24. CAPTIONS. The captions used herein are for ease of reference only and shall
not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
prior agreements between the
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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 of
the party to this Agreement. No promises of any nature have been made in
connection with the employment or continued employment of the Employee other
than as set forth in this Agreement, and provided further that it is expressly
agreed that the Employee shall be entitled to only such benefits as are
expressly provided by the various plans of the Corporation and the Employer for
eligible employees to the extent the Employee qualifies for such benefits
strictly in accordance with the terms and provisions of such plans as now in
effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the _________
day of , 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:
--------------------------------- --------------------------------
Title: Member of the Board J. Pat McMurray
of the Employer, and
President of First
Security Corporation
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Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and Scott C. Ulbrich (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of Executive Vice President, Finance and Capital Markets of
First Security Corporation. Subject to the provisions of paragraphs 6 and 7 of
this Agreement, the Employer may change the title, powers and duties of the
Employee in its sole discretion, and the Employee agrees to perform such duties
upon the terms and subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
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3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate employment
at any time. The Employer shall have the right to terminate the Employee's
employment at any time with or without cause. Any such termination of employment
under this Agreement shall be subject to the provisions of paragraphs 6 and 7
below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $209,010, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October 16,
1996, and shall continue for a period of three (3) years (the "Term").
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5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal
thereof shall automatically be renewed for successive periods of three (3) years
each, unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as
defined in paragraph 7.1 below) shall occur during the Term or any renewal
thereof, the Term shall automatically be extended for a period of five years
from the date on which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
(i) the Employee intentionally, recklessly or as the
result of gross negligence substantially violates his duties under this
Agreement or as otherwise assigned to him from time to time by the Employer; or
(ii) the Employee commits any act or acts which
constitute dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine
to terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on
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or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of termination) through the
effective date of such termination, and the amounts, if any, required by the
terms of any applicable Plan in accordance with paragraph 11 hereof. In
addition, the following provisions shall apply:
(i) The Employer shall notify the Employee in writing
that the Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall
commence on the date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease
on the earlier of:
(A) the one year anniversary of the date the
Employee received written notice of termination, or
(B) the first date as of which the Employee
is not willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or scope of the Employee's
authorities or duties. In addition, the Employer shall not require the Employee
to change location from the particular location at which the Employee normally
performed services as of the date the Employee received written notice of
termination to a location outside a 30-mile radius of such prior location or
require the Employee to undertake new and excessive business travel. Also for
purposes of determining the Guaranteed Compensation Period, the terms "willing"
or "available" shall mean that the Employee, with reasonable notice from the
Employer, reports to the Employer and performs the agreed upon services. During
the
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Guaranteed Compensation Period, the Employee shall continue to receive regular
base salary (hereinafter sometimes referred to as "regular compensation" or
"regular base salary"), with payments being made semi-monthly, and shall
continue to be eligible to participate in the Management Annual Cash Incentive
Bonus Program ("MACIBP") in accordance with paragraph 6.1(b)(iv) below. During
the Guaranteed Compensation Period, the Employee shall cease to actively
participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that ends
during an Employee's Guaranteed Compensation Period, the Employee shall be
entitled to receive payments for such Plan Year as if all performance goals for
such Plan Year were met at the "target" level. In addition, the Employee shall
be entitled to receive proportionate payment for any partial Plan Year under the
MACIBP that falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(c) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a Change of Control, in addition to the payments provided in
paragraph 6.1(b), the Employer shall be obligated to make the following
payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early
Retirement Date as defined in Section 4.01(b) of the First Security Supplemental
Executive Retirement Plan ("SERP"), the Employer shall pay a benefit equal to
the benefit that would have been paid under the SERP as if the Employee had
attained an Early Retirement Date
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and as if consent had been granted. For purposes of the calculation of this
benefit, Early Retirement Percentages (as defined in Section 5.02 of the SERP)
will continue to increase at a rate of 3% per year for each year prior to age
50. No amount shall be paid under this paragraph 6.1(c)(ii) to the extent that
such benefit is payable under the SERP.
(iii) On or before the effective date of the Employee's
termination of employment, the Employer shall pay "severance pay" in a single
lump sum amount, determined as follows:
(A) the Employee's "regular monthly compensation"
shall be determined by dividing by twelve (12) the greater of (1) the Employee's
annual regular compensation as in effect as of the last day of the full calendar
month immediately prior to the month in which the Change of Control occurred,
and (2) the Employee's annual regular compensation as in effect as of the last
day of the full calendar month immediately prior to the month in which the
termination occurs;
(B) the Employee's "average monthly bonus" shall be
determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee has worked less than three (3)
full calendar years, the average monthly bonus shall be determined by adding
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(C) the Employee's "gross severance pay" shall be
determined by adding together the Employee's regular monthly compensation and
average monthly bonus, and multiplying the sum by thirty-six. If the Employee
has worked less than three (3) full calendar years, the "gross severance pay"
shall be determined by adding
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together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(D) the net amount of severance pay which the
Employer shall pay to the Employee shall be determined by subtracting from the
Employee's gross severance pay any amounts actually paid to the Employee under
the First Security Severance Pay Plan or any successor severance plan or program
sponsored by the Employer, the Corporation or its Affiliate; provided that such
amount may be further reduced as provided in paragraph 17, below, and shall be
subject to the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in which event the Employer shall be obligated to pay to the Employee,
on or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof. In addition if the
Employee elects to terminate his employment with the Employer due to or as a
result of any "Change in Duties or Compensation" (as defined below) from the
duties and compensation that existed immediately before such Change of Control
occurred, then the Employer shall be obligated to pay to the
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Employee, on or before the thirtieth (30th) day following the date upon which
the Employee gives notice of his intent to terminate his employment, the amount
specified in paragraph 6.1(c) above.
The foregoing provisions shall not affect Employee's entitlement under
any plan sponsored by the Corporation or the Employer as set forth in paragraph
11 hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall not
be required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any of the following events:
(a) either (i) receipt by the Corporation of a report on
Schedule 13D, or an amendment to such a report, filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934 (the "1934 Act") disclosing that any person (as such term is used in
Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding stock of the
Corporation or (ii) actual knowledge by the Corporation of facts, on the basis
of which any Person is required to file such a report on Schedule 13D, or to
make an amendment to such a report, with the SEC (or would be required to
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file such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or
a wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in one
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transaction or series of related transactions) of all or substantially all the
assets of the Corporation; or
(d) a change in the majority of the members of the
Corporation's Board of Directors within a 24-month period unless the election or
nomination for election by the Corporation's stockholders of each new director
was approved by the vote of at least two-thirds of the directors then still in
office who were in office at the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board
of Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the
Employee's authorities or duties from those authorities or duties of the
Employee immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from
that provided to him immediately prior to the date upon which a Change of
Control occurs;
(c) if the Employee shall be subjected to a material decrease
in compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location
from the particular location at which Employee was located immediately before
such Change of Control to a location outside a 30-mile radius of such prior
location, or requires the Employee to undertake new and excessive business
travel without the Employee's prior consent; or
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(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously and
to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that the
Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have access to and become familiar with certain proprietary and
confidential information of the Employer, the Corporation and its Affiliates,
including without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee
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further hereby agrees not to publish orally or in writing any derogatory
information tending to defame or malign or in fact defaming or maligning the
Employer, the Corporation or its Affiliates, or present or former employees or
directors of the Employer, the Corporation or its Affiliates. The Employee also
hereby agrees and warrants that under no circumstances shall the Employee remove
from the Employer's premises any books, records, documents, customer lists,
financial data, or any other documents. The provisions of this paragraph 9 shall
survive any termination of this Agreement or of the Employee's employment with
the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of the
Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal,
state and local taxes as required by relevant law and regulation then in effect,
including without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may
withhold from or offset against such payments any liabilities or debts of the
Employee to the Employer, the Corporation and its Affiliates, and may suspend or
defer such payments during the pendency of resolution of any claims of the
Employer, the Corporation and its Affiliates against the Employee of whatsoever
nature.
11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under
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the SERP, the First Security Incentive Savings Plan, the First Security
Retirement Plan, the First Security ERISA Excess Plan, the First Security
Corporation Comprehensive Management Incentive Plan, the First Security Deferred
Compensation Plan, the First Security Severance Pay Plan, or any other plan now
or hereafter established by the Employer, the Corporation or its Affiliates for
a group of its eligible employees shall be paid, if required by such plan, in
addition to the payments hereunder, in accordance with and limited by the terms
of the respective plans then in effect; provided that:
(a) the severance payments under this Agreement shall not
cause an increase under any pension, welfare or other plan sponsored by the
Employer, the Corporation or any Affiliate; there shall be no accrual of
retirement, vacation, or any pension and/or welfare benefits of any nature as a
result of such severance payments; and the Employee shall not be deemed employed
or on a paid leave for any purpose or for any period of time as a result of such
severance payments.
(b) The calculation of the amount of severance pay to be paid
under this Agreement shall be reduced by any severance payments that may be due
under the First Security Severance Pay Plan or any successor severance plan or
program then sponsored by the Employer, the Corporation or an Affiliate, that
are actually paid to the Employee. The Employer's right to cancel or reduce any
plan or program now or hereafter in effect shall not be reduced or affected by
the Agreement.
12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents and
acknowledges that:
(a) no promises of any special treatment or provision have
been made by any person to the Employee;
(b) nothing in this Agreement shall be construed to limit or
prevent the Employer, the Corporation or any Affiliate from reducing,
discontinuing, terminating or amending any benefit plans or programs in any
manner permitted by law.
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(c) the Employee's legal counsel has reviewed this Agreement,
and the Employee has had an opportunity to consult with an attorney or other
person or advisor of his choice in connection with the execution of this
Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between (a) the
Employer, the Corporation or any of its Affiliates, and (b) the Employee or any
other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person to
the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of the
Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's employment shall not be deemed to
have terminated in any such event for purposes of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to purchase
or maintain any contract, policy, arrangement or other asset to provide the
benefits under this Agreement. Further, any contract, policy, arrangement, or
other asset which the Employer may utilize to assure itself of the funds to
provide the benefits
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required hereunder shall not serve in any way as security to the Employee for
the Employer's performance under this Agreement. The rights accruing to the
Employee hereunder shall be solely those of an unsecured creditor of the
Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the
contrary notwithstanding, in the event that the independent auditors most
recently selected by the Corporation's or the Employer's Board of Directors (the
"Auditors') determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount), and shall
advise the Employer in writing of his election within 10 days of receipt of such
notice. If no such election is made by the Employee within such 10-day period,
then the Employer may elect which and how
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much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount)
and shall promptly notify the Employee of such election. For purposes of this
paragraph 17, present value shall be determined in accordance with section
280G(d)(4) of the Code. All determinations made by the Auditors under this
paragraph 15 shall be binding upon the Employer and the Employee and shall be
made within sixty (60) days of the date a payment becomes payable or
transferable.
17.3 PAYMENT. As promptly as practicable following such determination
and the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Employee which he shall repay to the Employer,
together with interest at the applicable federal rate provided in section
7872(b)(2) of the Code; provided, however, that no amount shall be payable by
the Employee to the Employer if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has
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occurred, such Underpayment shall promptly be paid or transferred by the
Employer to or for the benefit of the Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only,
the term "Employer" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
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 addressed to such
address. 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
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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 third 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. If
given by telegram, such notice shall be deemed to be given upon the earlier to
occur of the date actually received by the addressee or the business day
following the date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
Scott C. Ulbrich
1775 East Yalecrest Avenue
Salt Lake City, Utah 84108
20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. Subject to the foregoing
limitation upon assignment and
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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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
24. CAPTIONS. The captions used herein are for ease of reference only and shall
not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
prior agreements between the
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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 of
the party to this Agreement. No promises of any nature have been made in
connection with the employment or continued employment of the Employee other
than as set forth in this Agreement, and provided further that it is expressly
agreed that the Employee shall be entitled to only such benefits as are
expressly provided by the various plans of the Corporation and the Employer for
eligible employees to the extent the Employee qualifies for such benefits
strictly in accordance with the terms and provisions of such plans as now in
effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the __ day of
______________, 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:
-------------------------------- -------------------------------
Title: Member of the Board Scott C. Ulbrich
of the Employer, and
President of First
Security Corporation
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Exhibit 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and Brad D. Hardy (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of Executive Vice President, Corporate Services of First
Security Corporation. Subject to the provisions of paragraphs 6 and 7 of this
Agreement, the Employer may change the title, powers and duties of the Employee
in its sole discretion, and the Employee agrees to perform such duties upon the
terms and subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
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3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate employment
at any time. The Employer shall have the right to terminate the Employee's
employment at any time with or without cause. Any such termination of employment
under this Agreement shall be subject to the provisions of paragraphs 6 and 7
below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $209,000, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
4.3 SERP REDUCTIONS In the event the Employee's benefit under the SERP
is reduced, by the Compensation Committee of the Board of Directors of First
Security Corporation in accordance with Sections 2.14, 4.04 and/or 5.01 of the
SERP, by an amount equal to retirement income from sources that are not related
to the Employee's
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employment with First Security Corporation, the Employer shall
pay the amount of the reduction to the Employee pursuant to this paragraph.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October 16,
1996, and shall continue for a period of three (3) years (the "Term").
5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal
thereof shall automatically be renewed for successive periods of three (3) years
each, unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as
defined in paragraph 7.1 below) shall occur during the Term or any renewal
thereof, the Term shall automatically be extended for a period of five years
from the date on which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
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(i) the Employee intentionally, recklessly or as the
result of gross negligence substantially violates his duties under this
Agreement or as otherwise assigned to him from time to time by the Employer; or
(ii) the Employee commits any act or acts which
constitute dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine
to terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of termination) through the
effective date of such termination, and the amounts, if any, required by the
terms of any applicable Plan in accordance with paragraph 11 hereof. In
addition, the following provisions shall apply:
(i) The Employer shall notify the Employee in writing
that the Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall
commence on the date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease
on the earlier of:
(A) the one year anniversary of the date the
Employee received written notice of termination, or
(B) the first date as of which the Employee
is not willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or
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scope of the Employee's authorities or duties. In addition, the Employer shall
not require the Employee to change location from the particular location at
which the Employee normally performed services as of the date the Employee
received written notice of termination to a location outside a 30-mile radius of
such prior location or require the Employee to undertake new and excessive
business travel. Also for purposes of determining the Guaranteed Compensation
Period, the terms "willing" or "available" shall mean that the Employee, with
reasonable notice from the Employer, reports to the Employer and performs the
agreed upon services. During the Guaranteed Compensation Period, the Employee
shall continue to receive regular base salary (hereinafter sometimes referred to
as "regular compensation" or "regular base salary"), with payments being made
semi-monthly, and shall continue to be eligible to participate in the Management
Annual Cash Incentive Bonus Program ("MACIBP") in accordance with paragraph
6.1(b)(iv) below. During the Guaranteed Compensation Period, the Employee shall
cease to actively participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that
ends during an Employee's Guaranteed Compensation Period, the Employee shall be
entitled to receive payments for such Plan Year as if all performance goals for
such Plan Year were met at the "target" level. In addition, the Employee shall
be entitled to receive proportionate payment for any partial Plan Year under the
MACIBP that falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(c) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a
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Change of Control, in addition to the payments provided in paragraph 6.1(b), the
Employer shall be obligated to make the following payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early
Retirement Date as defined in Section 4.01(b) of the First Security Supplemental
Executive Retirement Plan ("SERP"), the Employer shall pay a benefit equal to
the benefit that would have been paid under the SERP as if the Employee had
attained an Early Retirement Date and as if consent had been granted. For
purposes of the calculation of this benefit, Early Retirement Percentages (as
defined in Section 5.02 of the SERP) will continue to increase at a rate of 3%
per year for each year prior to age 50. No amount shall be paid under this
paragraph 6.1(c)(ii) to the extent that such benefit is payable under the SERP.
(iii) On or before the effective date of the
Employee's termination of employment, the Employer shall pay "severance pay" in
a single lump sum amount, determined as follows:
(A) the Employee's "regular monthly
compensation" shall be determined by dividing by twelve (12) the greater of (1)
the Employee's annual regular compensation as in effect as of the last day of
the full calendar month immediately prior to the month in which the Change of
Control occurred, and (2) the Employee's annual regular compensation as in
effect as of the last day of the full calendar month immediately prior to the
month in which the termination occurs;
(B) the Employee's "average monthly bonus"
shall be determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee
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has worked less than three (3) full calendar years, the average monthly bonus
shall be determined by adding together the total amount of bonus and other cash
incentives received by the Employee during the employment period and dividing by
the number of months of employment.
(C) the Employee's "gross severance pay"
shall be determined by adding together the Employee's regular monthly
compensation and average monthly bonus, and multiplying the sum by thirty-six.
If the Employee has worked less than three (3) full calendar years, the "gross
severance pay" shall be determined by adding together the total amount of bonus
and other cash incentives received by the Employee during the employment period
and dividing by the number of months of employment.
(D) the net amount of severance pay which
the Employer shall pay to the Employee shall be determined by subtracting from
the Employee's gross severance pay any amounts actually paid to the Employee
under the First Security Severance Pay Plan or any successor severance plan or
program sponsored by the Employer, the Corporation or its Affiliate; provided
that such amount may be further reduced as provided in paragraph 17, below, and
shall be subject to the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in
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which event the Employer shall be obligated to pay to the Employee, on or before
the effective date of such termination, the Employee's regular compensation (as
in effect on the date of such termination) through the effective date of
termination, and the amounts, if any, required by the terms of any applicable
Plan in accordance with paragraph 11 hereof. In addition if the Employee elects
to terminate his employment with the Employer due to or as a result of any
"Change in Duties or Compensation" (as defined below) from the duties and
compensation that existed immediately before such Change of Control occurred,
then the Employer shall be obligated to pay to the Employee, on or before the
thirtieth (30th) day following the date upon which the Employee gives notice of
his intent to terminate his employment, the amount specified in paragraph 6.1(c)
above.
The foregoing provisions shall not affect Employee's entitlement under any plan
sponsored by the Corporation or the Employer as set forth in paragraph 11
hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall not
be required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any of the following events:
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(a) either (i) receipt by the Corporation of a report on
Schedule 13D, or an amendment to such a report, filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934 (the "1934 Act") disclosing that any person (as such term is used in
Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding stock of the
Corporation or (ii) actual knowledge by the Corporation of facts, on the basis
of which any Person is required to file such a report on Schedule 13D, or to
make an amendment to such a report, with the SEC (or would be required to file
such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or
a wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after
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the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in one transaction or series
of related transactions) of all or substantially all the assets of the
Corporation; or
(d) a change in the majority of the members of the
Corporation's Board of Directors within a 24-month period unless the election or
nomination for election by the Corporation's stockholders of each new director
was approved by the vote of at least two-thirds of the directors then still in
office who were in office at the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board
of Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the
Employee's authorities or duties from those authorities or duties of the
Employee immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from
that provided to him immediately prior to the date upon which a Change of
Control occurs;
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(c) if the Employee shall be subjected to a material decrease
in compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location
from the particular location at which Employee was located immediately before
such Change of Control to a location outside a 30-mile radius of such prior
location, or requires the Employee to undertake new and excessive business
travel without the Employee's prior consent; or
(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously and
to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that the
Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have
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access to and become familiar with certain proprietary and confidential
information of the Employer, the Corporation and its Affiliates, including
without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee further hereby agrees
not to publish orally or in writing any derogatory information tending to defame
or malign or in fact defaming or maligning the Employer, the Corporation or its
Affiliates, or present or former employees or directors of the Employer, the
Corporation or its Affiliates. The Employee also hereby agrees and warrants that
under no circumstances shall the Employee remove from the Employer's premises
any books, records, documents, customer lists, financial data, or any other
documents. The provisions of this paragraph 9 shall survive any termination of
this Agreement or of the Employee's employment with the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of the
Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal,
state and local taxes as required by relevant law and regulation then in effect,
including without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may
withhold from or offset against such payments any liabilities or debts of the
Employee to the Employer, the Corporation and its Affiliates, and may suspend or
defer such payments during the pendency of resolution of any claims of the
Employer, the Corporation and its Affiliates against the Employee of whatsoever
nature.
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11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under the SERP, the First Security Incentive
Savings Plan, the First Security Retirement Plan, the First Security ERISA
Excess Plan, the First Security Corporation Comprehensive Management Incentive
Plan, the First Security Deferred Compensation Plan, the First Security
Severance Pay Plan, or any other plan now or hereafter established by the
Employer, the Corporation or its Affiliates for a group of its eligible
employees shall be paid, if required by such plan, in addition to the payments
hereunder, in accordance with and limited by the terms of the respective plans
then in effect; provided that:
(a) the severance payments under this Agreement shall not
cause an increase under any pension, welfare or other plan sponsored by the
Employer, the Corporation or any Affiliate; there shall be no accrual of
retirement, vacation, or any pension and/or welfare benefits of any nature as a
result of such severance payments; and the Employee shall not be deemed employed
or on a paid leave for any purpose or for any period of time as a result of such
severance payments.
(b) The calculation of the amount of severance pay to be paid
under this Agreement shall be reduced by any severance payments that may be due
under the First Security Severance Pay Plan or any successor severance plan or
program then sponsored by the Employer, the Corporation or an Affiliate, that
are actually paid to the Employee. The Employer's right to cancel or reduce any
plan or program now or hereafter in effect shall not be reduced or affected by
the Agreement.
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12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents and
acknowledges that:
(a) no promises of any special treatment or provision have
been made by any person to the Employee;
(b) nothing in this Agreement shall be construed to limit or
prevent the Employer, the Corporation or any Affiliate from reducing,
discontinuing, terminating or amending any benefit plans or programs in any
manner permitted by law.
(c) the Employee's legal counsel has reviewed this Agreement,
and the Employee has had an opportunity to consult with an attorney or other
person or advisor of his choice in connection with the execution of this
Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between (a) the
Employer, the Corporation or any of its Affiliates, and (b) the Employee or any
other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person to
the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of the
Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's
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employment shall not be deemed to have terminated in any such event for purposes
of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to purchase
or maintain any contract, policy, arrangement or other asset to provide the
benefits under this Agreement. Further, any contract, policy, arrangement, or
other asset which the Employer may utilize to assure itself of the funds to
provide the benefits required hereunder shall not serve in any way as security
to the Employee for the Employer's performance under this Agreement. The rights
accruing to the Employee hereunder shall be solely those of an unsecured
creditor of the Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the
contrary notwithstanding, in the event that the independent auditors most
recently selected by the Corporation's or the Employer's Board of Directors (the
"Auditors') determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
'Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
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the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount), and shall
advise the Employer in writing of his election within 10 days of receipt of such
notice. If no such election is made by the Employee within such 10-day period,
then the Employer may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall promptly notify the
Employee of such election. For purposes of this paragraph 17, present value
shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this paragraph 15 shall be binding
upon the Employer and the Employee and shall be made within sixty (60) days of
the date a payment becomes payable or transferable.
17.3 PAYMENT. As promptly as practicable following such determination
and the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors
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believe has a high probability of success, determine that an Overpayment has
been made, such Overpayment shall be treated for all purposes as a loan to the
Employee which he shall repay to the Employer, together with interest at the
applicable federal rate provided in section 7872(b)(2) of the Code; provided,
however, that no amount shall be payable by the Employee to the Employer if and
to the extent that such payment would not reduce the amount which is subject to
taxation under section 4999 of the Code. In the event that the Auditors
determine that an Underpayment has occurred, such Underpayment shall promptly be
paid or transferred by the Employer to or for the benefit of the Employee,
together with interest at the applicable federal rate provided in section
7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only,
the term "Employer" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
Unless otherwise
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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 addressed to such address. 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 third 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. If given by
telegram, such notice shall be deemed to be given upon the earlier to occur of
the date actually received by the addressee or the business day following the
date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
Brad D. Hardy
1553 East Kensington
Salt Lake City, Utah 84105
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20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. 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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
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24. CAPTIONS. The captions used herein are for ease of reference only and shall
not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
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 of the party to this Agreement. No promises of any
nature have been made in connection with the employment or continued employment
of the Employee other than as set forth in this Agreement, and provided further
that it is expressly agreed that the Employee shall be entitled to only such
benefits as are expressly provided by the various plans of the Corporation and
the Employer for eligible employees to the extent the Employee qualifies for
such benefits strictly in accordance with the terms and provisions of such plans
as now in effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day of
________, 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:
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--------------------------------- ---------------------------------
Title: Member of the Board Brad D. Hardy
of the Employer, and
President of First
Security Corporation
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Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and Michael Caughlin (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of Executive Vice President, Technology Processing Services
of First Security Corporation. Subject to the provisions of paragraphs 6 and 7
of this Agreement, the Employer may change the title, powers and duties of the
Employee in its sole discretion, and the Employee agrees to perform such duties
upon the terms and subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
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3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate employment
at any time. The Employer shall have the right to terminate the Employee's
employment at any time with or without cause. Any such termination of employment
under this Agreement shall be subject to the provisions of paragraphs 6 and 7
below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $162,500, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October
16, 1996, and shall continue for a period of three (3) years (the "Term").
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5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal thereof
shall automatically be renewed for successive periods of three (3) years each,
unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as defined
in paragraph 7.1 below) shall occur during the Term or any renewal thereof, the
Term shall automatically be extended for a period of five years from the date on
which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
(i) the Employee intentionally, recklessly or as the result of
gross negligence substantially violates his duties under this Agreement or as
otherwise assigned to him from time to time by the Employer; or
(ii) the Employee commits any act or acts which constitute
dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine to
terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on
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<PAGE> 4
or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. In addition, the
following provisions shall apply:
(i) The Employer shall notify the Employee in writing that
the Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall commence on the
date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease on the
earlier of:
(A) the one year anniversary of the date the Employee
received written notice of termination, or
(B) the first date as of which the Employee is not
willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or scope of the Employee's
authorities or duties. In addition, the Employer shall not require the Employee
to change location from the particular location at which the Employee normally
performed services as of the date the Employee received written notice of
termination to a location outside a 30-mile radius of such prior location or
require the Employee to undertake new and excessive business travel. Also for
purposes of determining the Guaranteed Compensation Period, the terms "willing"
or "available" shall mean that the Employee, with reasonable notice from the
Employer, reports to the Employer and performs the agreed upon services. During
the
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Guaranteed Compensation Period, the Employee shall continue to receive regular
base salary (hereinafter sometimes referred to as "regular compensation" or
"regular base salary"), with payments being made semi-monthly, and shall
continue to be eligible to participate in the Management Annual Cash Incentive
Bonus Program ("MACIBP") in accordance with paragraph 6.1(b)(iv) below. During
the Guaranteed Compensation Period, the Employee shall cease to actively
participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that ends during an
Employee's Guaranteed Compensation Period, the Employee shall be entitled to
receive payments for such Plan Year as if all performance goals for such Plan
Year were met at the "target" level. In addition, the Employee shall be entitled
to receive proportionate payment for any partial Plan Year under the MACIBP that
falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(c) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a Change of Control, in addition to the payments provided in
paragraph 6.1(b), the Employer shall be obligated to make the following
payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early Retirement Date
as defined in Section 4.01(b) of the First Security Supplemental Executive
Retirement Plan ("SERP"), the Employer shall pay a benefit equal to the benefit
that would have been paid under the SERP as if the Employee had attained an
Early Retirement Date
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and as if consent had been granted. For purposes of the calculation of this
benefit, Early Retirement Percentages (as defined in Section 5.02 of the SERP)
will continue to increase at a rate of 3% per year for each year prior to age
50. No amount shall be paid under this paragraph 6.1(c)(ii) to the extent that
such benefit is payable under the SERP.
(iii) On or before the effective date of the Employee's
termination of employment, the Employer shall pay "severance pay" in a single
lump sum amount, determined as follows:
(A) the Employee's "regular monthly compensation" shall
be determined by dividing by twelve (12) the greater of (1) the Employee's
annual regular compensation as in effect as of the last day of the full calendar
month immediately prior to the month in which the Change of Control occurred,
and (2) the Employee's annual regular compensation as in effect as of the last
day of the full calendar month immediately prior to the month in which the
termination occurs;
(B) the Employee's "average monthly bonus" shall be
determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee has worked less than three (3)
full calendar years, the average monthly bonus shall be determined by adding
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(C) the Employee's "gross severance pay" shall be
determined by adding together the Employee's regular monthly compensation and
average monthly bonus, and multiplying the sum by thirty-six. If the Employee
has worked less than three (3) full calendar years, the "gross severance pay"
shall be determined by adding
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<PAGE> 7
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(D) the net amount of severance pay which the Employer
shall pay to the Employee shall be determined by subtracting from the Employee's
gross severance pay any amounts actually paid to the Employee under the First
Security Severance Pay Plan or any successor severance plan or program sponsored
by the Employer, the Corporation or its Affiliate; provided that such amount may
be further reduced as provided in paragraph 17, below, and shall be subject to
the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in which event the Employer shall be obligated to pay to the Employee,
on or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof. In addition if the
Employee elects to terminate his employment with the Employer due to or as a
result of any "Change in Duties or Compensation" (as defined below) from the
duties and compensation that existed immediately before such Change of Control
occurred, then the Employer shall be obligated to pay to the
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<PAGE> 8
Employee, on or before the thirtieth (30th) day following the date upon which
the Employee gives notice of his intent to terminate his employment, the amount
specified in paragraph 6.1(c) above.
The foregoing provisions shall not affect Employee's entitlement under any plan
sponsored by the Corporation or the Employer as set forth in paragraph 11
hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall not be
required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of Control"
shall mean the occurrence of any of the following events:
(a) either (i) receipt by the Corporation of a report on Schedule
13D, or an amendment to such a report, filed with the Securities and Exchange
Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the
"1934 Act") disclosing that any person (as such term is used in Section 13(d) of
the 1934 Act) ("Person"), is the beneficial owner, directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation or (ii)
actual knowledge by the Corporation of facts, on the basis of which any Person
is required to
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<PAGE> 9
file such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or a
wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in one
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<PAGE> 10
transaction or series of related transactions) of all or substantially all the
assets of the Corporation; or
(d) a change in the majority of the members of the Corporation's
Board of Directors within a 24-month period unless the election or nomination
for election by the Corporation's stockholders of each new director was approved
by the vote of at least two-thirds of the directors then still in office at
the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board of
Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the Employee's
authorities or duties from those authorities or duties of the Employee
immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from that
provided to him immediately prior to the date upon which a Change of Control
occurs;
(c) if the Employee shall be subjected to a material decrease in
compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location from
the particular location at which Employee was located immediately before such
Change of Control to a location outside a 30-mile radius of such prior location,
or requires the Employee to undertake new and excessive business travel without
the Employee's prior consent; or
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(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously and
to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that the
Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have access to and become familiar with certain proprietary and
confidential information of the Employer, the Corporation and its Affiliates,
including without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee
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further hereby agrees not to publish orally or in writing any derogatory
information tending to defame or malign or in fact defaming or maligning the
Employer, the Corporation or its Affiliates, or present or former employees or
directors of the Employer, the Corporation or its Affiliates. The Employee also
hereby agrees and warrants that under no circumstances shall the Employee remove
from the Employer's premises any books, records, documents, customer lists,
financial data, or any other documents. The provisions of this paragraph 9 shall
survive any termination of this Agreement or of the Employee's employment with
the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of the
Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal, state and
local taxes as required by relevant law and regulation then in effect, including
without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may withhold from
or offset against such payments any liabilities or debts of the Employee to the
Employer, the Corporation and its Affiliates, and may suspend or defer such
payments during the pendency of resolution of any claims of the Employer, the
Corporation and its Affiliates against the Employee of whatsoever nature.
11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under
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the SERP, the First Security Incentive Savings Plan, the First Security
Retirement Plan, the First Security ERISA Excess Plan, the First Security
Corporation Comprehensive Management Incentive Plan, the First Security Deferred
Compensation Plan, the First Security Severance Pay Plan, or any other plan now
or hereafter established by the Employer, the Corporation or its Affiliates for
a group of its eligible employees shall be paid, if required by such plan, in
addition to the payments hereunder, in accordance with and limited by the terms
of the respective plans then in effect; provided that:
(a) the severance payments under this Agreement shall not cause an
increase under any pension, welfare or other plan sponsored by the Employer, the
Corporation or any Affiliate; there shall be no accrual of retirement, vacation,
or any pension and/or welfare benefits of any nature as a result of such
severance payments; and the Employee shall not be deemed employed or on a paid
leave for any purpose or for any period of time as a result of such severance
payments.
(b) The calculation of the amount of severance pay to be paid under
this Agreement shall be reduced by any severance payments that may be due under
the First Security Severance Pay Plan or any successor severance plan or program
then sponsored by the Employer, the Corporation or an Affiliate, that are
actually paid to the Employee. The Employer's right to cancel or reduce any plan
or program now or hereafter in effect shall not be reduced or affected by the
Agreement.
12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents
and acknowledges that:
(a) no promises of any special treatment or provision have been
made by any person to the Employee;
(b) nothing in this Agreement shall be construed to limit or prevent
the Employer, the Corporation or any Affiliate from reducing, discontinuing,
terminating or amending any benefit plans or programs in any manner permitted by
law.
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(c) the Employee's legal counsel has reviewed this Agreement, and
the Employee has had an opportunity to consult with an attorney or other person
or advisor of his choice in connection with the execution of this Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between (a) the
Employer, the Corporation or any of its Affiliates, and (b) the Employee or any
other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person to
the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of the
Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's employment shall not be deemed to
have terminated in any such event for purposes of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to purchase
or maintain any contract, policy, arrangement or other asset to provide the
benefits under this Agreement. Further, any contract, policy, arrangement, or
other asset which the Employer may utilize to assure itself of the funds to
provide the benefits
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required hereunder shall not serve in any way as security to the Employee for
the Employer's performance under this Agreement. The rights accruing to the
Employee hereunder shall be solely those of an unsecured creditor of the
Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Corporation's or the Employer's Board of Directors (the
"Auditors') determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
'Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how
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much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount),
and shall advise the Employer in writing of his election within 10 days of
receipt of such notice. If no such election is made by the Employee within such
10-day period, then the Employer may elect which and how much of the Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Payments equals the Reduced Amount) and shall promptly
notify the Employee of such election. For purposes of this paragraph 17, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this paragraph 15 shall be binding
upon the Employer and the Employee and shall be made within sixty (60) days of
the date a payment becomes payable or transferable.
17.3 PAYMENT. As promptly as practicable following such determination and
the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Employee which he shall repay to the Employer,
together with interest at the applicable federal rate provided in section
7872(b)(2) of the Code; provided, however, that no amount shall be payable by
the Employee to the Employer if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has
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occurred, such Underpayment shall promptly be paid or transferred by the
Employer to or for the benefit of the Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only, the term
"Employer" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
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 addressed to such
address. 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
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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 third 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. If
given by telegram, such notice shall be deemed to be given upon the earlier to
occur of the date actually received by the addressee or the business day
following the date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
Michael Caughlin
9267 Glenn Abby Way
Sandy, Utah 84093
20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. Subject to the foregoing
limitation upon assignment and
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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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
24. CAPTIONS. The captions used herein are for ease of reference only and shall
not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
prior agreements between the
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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 of
the party to this Agreement. No promises of any nature have been made in
connection with the employment or continued employment of the Employee other
than as set forth in this Agreement, and provided further that it is expressly
agreed that the Employee shall be entitled to only such benefits as are
expressly provided by the various plans of the Corporation and the Employer for
eligible employees to the extent the Employee qualifies for such benefits
strictly in accordance with the terms and provisions of such plans as now in
effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day __ of
____________, 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:___________________________________ _______________________________
Title: Member of the Board Michael Caughlin
of the Employer, and
President of First
Security Corporation
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<PAGE> 1
Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into pursuant to authority of a resolution of the
Compensation Committee on the 16th day of October, 1996, effective as of the
16th day of October, 1996, between First Security Corporation (the "Employer"),
and Mark D. Howell (the "Employee").
1. EMPLOYMENT. The Employer hereby employs the Employee, and the Employee
hereby accepts such employment, upon the terms and subject to the conditions
set forth in this Agreement.
2. DUTIES.
2.1 GENERAL DUTIES. As of the date hereof, the Employee's position with
the Employer is that of Executive Vice President, Business Banking Services of
First Security Corporation. Subject to the provisions of paragraphs 6 and 7 of
this Agreement, the Employer may change the title, powers and duties of the
Employee in its sole discretion, and the Employee agrees to perform such duties
upon the terms and subject to the conditions set forth in this Agreement.
2.2 OTHER DUTIES. Employee shall also serve, without additional
compensation, in such other offices and directorships of First Security
Corporation (the "Corporation") and its subsidiaries and related corporations
("Affiliates") that he presently holds, or to which he in the future be elected
or appointed. Upon termination of employment with the Employer, the Employee
shall immediately submit a letter of resignation from all offices and
directorships with the Employer, the Corporation and its Affiliates.
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3. TERM OF EMPLOYMENT. The Employee shall have the right to terminate
employment at any time. The Employer shall have the right to terminate the
Employee's employment at any time with or without cause. Any such termination of
employment under this Agreement shall be subject to the provisions of paragraphs
6 and 7 below.
4. COMPENSATION.
4.1 BASE COMPENSATION. As regular or base compensation for services
rendered to the Corporation and its Affiliates in whatever capacity rendered,
the Employer shall pay to the Employee a regular compensation. The parties
acknowledge that, as of the date of this Agreement, the Employer is paying to
the Employee an annual regular base salary of $195,002, payable semi-monthly.
Such amount may be increased or decreased from time to time in the sole and
absolute discretion of the Employer, without need to amend or, subject only to
the provisions of paragraphs 6 and 7 below.
4.2 ADDITIONAL COMPENSATION. The Employer, in its sole and absolute
discretion, may from time to time offer equity-based incentives or other
incentives or benefits to the Employee, which shall be in addition to such
regular compensation. The Employer may modify or terminate such incentives in
its discretion, and the Employee acknowledges that he shall have no vested
rights in any such incentives, except as expressly provided under the terms
thereof, and subject to the provisions of paragraphs 6 and 7 below.
5. TERM.
5.1 INITIAL TERM. The term of this Agreement shall begin on October 16,
1996, and shall continue for a period of three (3) years (the "Term").
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5.2 AUTOMATIC RENEWAL. The Term of this Agreement and each renewal thereof
shall automatically be renewed for successive periods of three (3) years each,
unless either the Employee or the Employer shall give notice of his or its
intention not to renew not less than six (6) months before the end of the
then-current Term.
5.3 EXTENSION UPON CHANGE OF CONTROL. If a Change of Control (as defined
in paragraph 7.1 below) shall occur during the Term or any renewal thereof, the
Term shall automatically be extended for a period of five years from the date on
which such Change of Control occurs.
6. PAYMENTS UPON TERMINATION.
6.1 TERMINATION OF EMPLOYMENT BY EMPLOYER.
(a) TERMINATION WITH CAUSE. If the Employer terminates the
Employee's employment with the Employer at any time "with cause" (as defined
below), the Employer shall only be obligated to pay to the Employee, on or
before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. For purposes of this
paragraph, the Employer may terminate the Employee "with cause" when the
Employer reasonably determines that:
(i) the Employee intentionally, recklessly or as the result of
gross negligence substantially violates his duties under this Agreement or as
otherwise assigned to him from time to time by the Employer; or
(ii) the Employee commits any act or acts which constitute
dishonesty, commission of a felony, or fraud;
(b) TERMINATION WITHOUT CAUSE. If the Employer shall determine to
terminate the Employee for any reason other than "with cause," as defined by
subparagraph 6.1(a) above, the Employer shall be obligated to pay to the
Employee, on
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<PAGE> 4
or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of termination) through the effective
date of such termination, and the amounts, if any, required by the terms of any
applicable Plan in accordance with paragraph 11 hereof. In addition, the
following provisions shall apply:
(i) The Employer shall notify the Employee in writing that the
Employee is being terminated;
(ii) A "Guaranteed Compensation Period" shall commence on the
date the Employee receives written notice of termination;
(iii) The Guaranteed Compensation Period shall cease on the
earlier of:
(A) the one year anniversary of the date the
Employee received written notice of termination, or
(B) the first date as of which the Employee is not
willing or available to perform services for the Employer for any reason
including but not limited to death, disability or other employment. For purposes
of determining the Guaranteed Compensation Period, the term "services" shall
mean either the services the Employee was performing on the date the Employee
received written notice of termination or substantially similar services for
which the Employee is suited by experience or training, provided however, that
there shall be no significant change in the nature or scope of the Employee's
authorities or duties. In addition, the Employer shall not require the Employee
to change location from the particular location at which the Employee normally
performed services as of the date the Employee received written notice of
termination to a location outside a 30-mile radius of such prior location or
require the Employee to undertake new and excessive business travel. Also for
purposes of determining the Guaranteed Compensation Period, the terms "willing"
or "available" shall mean that the Employee, with reasonable notice from the
Employer, reports to the Employer and performs the agreed upon services. During
the
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Guaranteed Compensation Period, the Employee shall continue to receive
regular base salary (hereinafter sometimes referred to as "regular compensation"
or "regular base salary"), with payments being made semi-monthly, and shall
continue to be eligible to participate in the Management Annual Cash Incentive
Bonus Program ("MACIBP") in accordance with paragraph 6.1(b)(iv) below. During
the Guaranteed Compensation Period, the Employee shall cease to actively
participate in all other retirement and welfare benefit plans.
(iv) For any Plan Year under the MACIBP that ends during an
Employee's Guaranteed Compensation Period, the Employee shall be entitled to
receive payments for such Plan Year as if all performance goals for such Plan
Year were met at the "target" level. In addition, the Employee shall be entitled
to receive proportionate payment for any partial Plan Year under the MACIBP that
falls within the Employee's Guaranteed Compensation Period. Any such
proportionate payment shall be calculated based on the assumption that all
performance goals for such Plan Year were met at the "target" level for such
partial Plan Year.
(c) TERMINATION WITHOUT CAUSE AFTER CHANGE OF CONTROL. If the
Employer shall determine to terminate the Employee for any reason other than
"with cause," as defined in paragraph 6.1(a) above, and such termination shall
occur after a Change of Control, in addition to the payments provided in
paragraph 6.1(b), the Employer shall be obligated to make the following
payments:
(i) On or before the effective date of the Employee's
termination, the Employer shall pay the Employee's regular compensation (as in
effect on the date of termination) through the effective date of such
termination.
(ii) If the Employee has not attained an Early Retirement Date
as defined in Section 4.01(b) of the First Security Supplemental Executive
Retirement Plan ("SERP"), the Employer shall pay a benefit equal to the benefit
that would have been paid under the SERP as if the Employee had attained an
Early Retirement Date
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and as if consent had been granted. For purposes of the
calculation of this benefit, Early Retirement Percentages (as defined in Section
5.02 of the SERP) will continue to increase at a rate of 3% per year for each
year prior to age 50. No amount shall be paid under this paragraph 6.1(c)(ii) to
the extent that such benefit is payable under the SERP.
(iii) On or before the effective date of the Employee's
termination of employment, the Employer shall pay "severance pay" in a single
lump sum amount, determined as follows:
(A) the Employee's "regular monthly compensation" shall
be determined by dividing by twelve (12) the greater of (1) the Employee's
annual regular compensation as in effect as of the last day of the full calendar
month immediately prior to the month in which the Change of Control occurred,
and (2) the Employee's annual regular compensation as in effect as of the last
day of the full calendar month immediately prior to the month in which the
termination occurs;
(B) the Employee's "average monthly bonus" shall be
determined by adding together the total amount of bonus and other cash
incentives received by the Employee during each of the three (3) full calendar
years immediately preceding the year in which the termination occurs, and
dividing the sum by thirty-six. If the Employee has worked less than three (3)
full calendar years, the average monthly bonus shall be determined by adding
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(C) the Employee's "gross severance pay" shall be
determined by adding together the Employee's regular monthly compensation and
average monthly bonus, and multiplying the sum by thirty-six. If the Employee
has worked less than three (3) full calendar years, the "gross severance pay"
shall be determined by adding
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<PAGE> 7
together the total amount of bonus and other cash incentives received by the
Employee during the employment period and dividing by the number of months of
employment.
(D) the net amount of severance pay which the Employer
shall pay to the Employee shall be determined by subtracting from the Employee's
gross severance pay any amounts actually paid to the Employee under the First
Security Severance Pay Plan or any successor severance plan or program sponsored
by the Employer, the Corporation or its Affiliate; provided that such amount may
be further reduced as provided in paragraph 17, below, and shall be subject to
the withholding and offset as provided in paragraph 10.
6.2 TERMINATION BY THE EMPLOYEE
(a) TERMINATION BEFORE A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time before a change of
control, in which event the Employer shall only be obligated to pay to the
Employee, on or before the effective date of such termination, the Employee's
regular compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof.
(b) TERMINATION AFTER A CHANGE OF CONTROL. The Employee may
terminate his employment with the Employer at any time after a change of
control, in which event the Employer shall be obligated to pay to the Employee,
on or before the effective date of such termination, the Employee's regular
compensation (as in effect on the date of such termination) through the
effective date of termination, and the amounts, if any, required by the terms of
any applicable Plan in accordance with paragraph 11 hereof. In addition if the
Employee elects to terminate his employment with the Employer due to or as a
result of any "Change in Duties or Compensation" (as defined below) from the
duties and compensation that existed immediately before such Change of Control
occurred, then the Employer shall be obligated to pay to the
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Employee, on or before the thirtieth (30th) day following the date upon which
the Employee gives notice of his intent to terminate his employment, the amount
specified in paragraph 6.1(c) above. The foregoing provisions shall not affect
Employee's entitlement under any plan sponsored by the Corporation or the
Employer as set forth in paragraph 11 hereof.
6.3 LIMITATIONS UPON OBLIGATION TO MAKE PAYMENT. The Employer shall
not be required to make payment under paragraph 6.1(c) or 6.2(b), above, if:
(a) the Employee dies while employed by the Employer; or
(b) the Employee's employment is terminated or the Employee is
transferred as a result of or in connection with a corporate reorganization, the
sale of a subsidiary, a sale of assets, a transfer of a division,
reincorporation, or any similar event, if as part of such event the Employee is
employed or is offered employment by any successor entity in the same position
with no Change in Duties or Compensation as defined by paragraph 7.3, and either
such successor has assumed, or the Employer agrees to remain liable under, this
Agreement.
7. DEFINITIONS.
7.1 CHANGE OF CONTROL. For purposes of this Agreement, "Change of Control"
shall mean the occurrence of any of the following events:
(a) either (i) receipt by the Corporation of a report on Schedule
13D, or an amendment to such a report, filed with the Securities and Exchange
Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the
"1934 Act") disclosing that any person (as such term is used in Section 13(d) of
the 1934 Act) ("Person"), is the beneficial owner, directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation or (ii)
actual knowledge by the Corporation of facts, on the basis of which any Person
is required to file such a report on Schedule 13D, or to make an amendment to
such a report, with the SEC (or would be required to
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file such a report or amendment upon the lapse of the applicable period of time
specified in Section 13(d) of the 1934 Act) disclosing that such Person is the
beneficial owner, directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company;
(b) the purchase by any Person, other than the Corporation or a
wholly-owned subsidiary of the Corporation, of shares pursuant to a tender or
exchange offer to acquire any stock of the Corporation (or securities
convertible into stock) for cash, securities or any other consideration;
provided that, after consummation of the offer, such Person is the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
twenty (20) percent or more of the outstanding stock of the Corporation
(calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock):
(c) approval by the stockholders of the Corporation of (i) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of stock of the
Corporation would be converted into cash, securities or other property, other
than a consolidation or merger of the Corporation in which holders of its common
stock immediately prior to the consolidation or merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (ii) any
consolidation or merger in which the Corporation is the continuing or surviving
corporation but in which the common stockholders of the Corporation immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Corporation), or
(iii) any sale, lease, exchange or other transfer (in one
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<PAGE> 10
transaction or series of related transactions) of all or substantially all the
assets of the Corporation; or
(d) a change in the majority of the members of the Corporation's
Board of Directors within a 24-month period unless the election or nomination
for election by the Corporation's stockholders of each new director was approved
by the vote of at least two-thirds of the directors then still in office who
were in office at the beginning of the 24-month period.
7.2 DETERMINATION BY BOARD OF DIRECTORS. A determination of the Board of
Directors, or the Executive Committee of the Board of Directors, of the
Corporation that a Change of Control within the above definition has occurred
and its decision to activate a similar provision upon such Change of Control
under any plan or other arrangement shall be final and binding on the
Corporation and all persons interested in the Agreement.
7.3 CHANGE IN DUTIES OR COMPENSATION. For purposes of this Agreement,
"Change in Duties or Compensation" shall mean any one or more of the following:
(a) a significant change in the nature or scope of the Employee's
authorities or duties from those authorities or duties of the Employee
immediately prior to the date upon which a Change of Control occurs;
(b) a reduction in the Employee's regular base salary from that
provided to him immediately prior to the date upon which a Change of Control
occurs;
(c) if the Employee shall be subjected to a material decrease in
compensation or benefits (other than decreases imposed equally upon all
employees);
(d) if the Employer requires the Employee to change location from
the particular location at which Employee was located immediately before such
Change of Control to a location outside a 30-mile radius of such prior location,
or requires the Employee to undertake new and excessive business travel without
the Employee's prior consent; or
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(e) if, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting the position of the Employee,
the Employee is unable to exercise the authorities, powers, function or duties
attached to his position immediately prior to the date on which a Change of
Control occurs.
8. OBLIGATIONS OF THE EMPLOYEE. The Employee shall perform conscientiously
and to the best of his ability all duties assigned to him by the Employer (in or
with the Corporation, the Employer or any Affiliate), and shall devote his full
time and attention to the performance of such duties to the exclusion of any
other commercial duties or pursuits whatsoever. The Employee shall not become
involved in any personal investment or business which may adversely affect the
business of the Employer, the Corporation or its Affiliates. Compliance by the
Employee with the Standards for Officers and Professionals of First Security
Corporation and Affiliates, as now in effect or as amended from time to time,
shall be a condition of the Employee's continued employment. The Employee shall
affirm compliance with such Standards at least annually, and shall make
disclosures as required by such Standards.
9. CONFIDENTIAL INFORMATION. The Employee acknowledges and recognizes that
the Employer and its Affiliates are in the financial, investment and banking
business, which business is highly competitive, and that the Employee, in his
position, will have access to and become familiar with certain proprietary and
confidential information of the Employer, the Corporation and its Affiliates,
including without limitation customer, investment and financial data of a highly
confidential nature. The Employee hereby agrees not to use, during the course of
his employment or thereafter, any such confidential or proprietary information
or divulge such information to any person, unless the Employer gives its consent
in writing in each instance, or unless the Employee is compelled to disclose
such information by a governmental process. The Employee
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further hereby agrees not to publish orally or in writing any derogatory
information tending to defame or malign or in fact defaming or maligning the
Employer, the Corporation or its Affiliates, or present or former employees or
directors of the Employer, the Corporation or its Affiliates. The Employee also
hereby agrees and warrants that under no circumstances shall the Employee remove
from the Employer's premises any books, records, documents, customer lists,
financial data, or any other documents. The provisions of this paragraph 9 shall
survive any termination of this Agreement or of the Employee's employment with
the Employer.
10. WITHHOLDING FROM AND OFFSET OF SEVERANCE PAYMENTS. The obligation of
the Employer to make the payments referred to in paragraphs 4 and 6 of this
Agreement shall be subject to the following:
(a) TAXES. The Employer shall withhold all applicable federal, state
and local taxes as required by relevant law and regulation then in effect,
including without limitation FICA and other taxes.
(b) DEBTS AND LIABILITIES OF THE EMPLOYEE. The Employer may withhold
from or offset against such payments any liabilities or debts of the Employee to
the Employer, the Corporation and its Affiliates, and may suspend or defer such
payments during the pendency of resolution of any claims of the Employer, the
Corporation and its Affiliates against the Employee of whatsoever nature.
11. APPLICATION TO OTHER PLANS, ETC. Except as otherwise specifically provided
in this paragraph 11, this Agreement shall not determine, govern or effect the
Employee's entitlement to (a) any payments or benefits after severance under the
MACIBP, (b) any accrued vacation or other compensation under any other plan,
policy or arrangement provided by the Employer, the Corporation or its
Affiliates, or (c) any other employee benefit plan or arrangement. Any benefits
to which Employee may be entitled Under
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the SERP, the First Security Incentive Savings Plan, the First Security
Retirement Plan, the First Security ERISA Excess Plan, the First Security
Corporation Comprehensive Management Incentive Plan, the First Security Deferred
Compensation Plan, the First Security Severance Pay Plan, or any other plan now
or hereafter established by the Employer, the Corporation or its Affiliates for
a group of its eligible employees shall be paid, if required by such plan, in
addition to the payments hereunder, in accordance with and limited by the terms
of the respective plans then in effect; provided that:
(a) the severance payments under this Agreement shall not cause an
increase under any pension, welfare or other plan sponsored by the Employer, the
Corporation or any Affiliate; there shall be no accrual of retirement, vacation,
or any pension and/or welfare benefits of any nature as a result of such
severance payments; and the Employee shall not be deemed employed or on a paid
leave for any purpose or for any period of time as a result of such severance
payments.
(b) The calculation of the amount of severance pay to be paid under
this Agreement shall be reduced by any severance payments that may be due under
the First Security Severance Pay Plan or any successor severance plan or program
then sponsored by the Employer, the Corporation or an Affiliate, that are
actually paid to the Employee. The Employer's right to cancel or reduce any plan
or program now or hereafter in effect shall not be reduced or affected by the
Agreement.
12. ACKNOWLEDGMENTS AND REPRESENTATIONS. The Employee hereby represents
and acknowledges that:
(a) no promises of any special treatment or provision have been made
by any person to the Employee;
(b) nothing in this Agreement shall be construed to limit or prevent
the Employer, the Corporation or any Affiliate from reducing, discontinuing,
terminating or amending any benefit plans or programs in any manner permitted by
law.
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(c) the Employee's legal counsel has reviewed this Agreement, and
the Employee has had an opportunity to consult with an attorney or other person
or advisor of his choice in connection with the execution of this Agreement.
13. NO FIDUCIARY RELATIONSHIP. Nothing contained in this Agreement and no
action taken pursuant to the provisions of this Agreement shall create or be
construed to create a trust of any kind, or a fiduciary relationship between (a)
the Employer, the Corporation or any of its Affiliates, and (b) the Employee or
any other person.
14. NO ASSIGNMENT OF BENEFITS. The rights of the Employee or any other person
to the payment of compensation or other payments under this Agreement may not be
assigned, transferred, pledged, or encumbered in any manner, either voluntarily
or involuntarily. Any attempt to so transfer or otherwise dispose of such
interest shall be void.
15. MERGER OR CONSOLIDATION. In the event of any consolidation or merger of
the Employer into or with another corporation or entity, or the sale of all or
substantially all of the assets of the Employer to another corporation, person
or entity, such person, corporation or entity shall assume the Employer's
obligations under this Agreement and become obligated to perform all of the
terms and conditions hereof. The Employee's employment shall not be deemed to
have terminated in any such event for purposes of this Agreement.
16. NO FUNDING. The Employer shall be under no obligation whatsoever to
purchase or maintain any contract, policy, arrangement or other asset to provide
the benefits under this Agreement. Further, any contract, policy, arrangement,
or other asset which the Employer may utilize to assure itself of the funds to
provide the benefits
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<PAGE> 15
required hereunder shall not serve in any way as security to the Employee for
the Employer's performance under this Agreement. The rights accruing to the
Employee hereunder shall be solely those of an unsecured creditor of the
Employer.
17. LIMITATION ON GOLDEN PARACHUTE PAYMENTS.
17.1 REDUCTION OF BENEFITS. Any provision of the Agreement to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Corporation's or the Employer's Board of Directors (the
"Auditors") determine that any payment or transfer by the Employer to or for the
benefit of the Employee, whether paid or payable (or transferred or
transferable) pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be nondeductible by the Employer for federal income tax
purposes because of the provisions covering "excess parachute payments" in
section 280G of the Internal Revenue Code of 1986, as amended, or any successor
code or law (the "Code"), then the aggregate present value of all payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
paragraph 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Employer because of section 280G
of the Code.
17.2 NOTICE TO THE EMPLOYEE. If the Auditors determine that any Payment
would be nondeductible by the Employer because of section 280G of the Code, then
the Employer shall promptly give-notice of such determination to the Employee,
together with a detailed calculation thereof and of the Reduced Amount. The
Employee may then elect, in his sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount), and shall
advise the Employer in writing of his election within 10 days of receipt of
such notice. If no such election is made by the Employee within such 10-day
period, then the Employer may elect which and how
15
<PAGE> 16
much of the Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Payments equals the Reduced Amount),
and shall advise the Employer in writing of his election within 10 days of
receipt of such notice. If no such election is made by the Employee within such
10-day period, then the Employer may elect which and how much of the Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Payments equals the Reduced Amount) and shall promptly
notify the Employee of such election. For purposes of this paragraph 17, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this paragraph 15 shall be binding
upon the Employer and the Employee and shall be made within sixty (60) days of
the date a payment becomes payable or transferable.
17.3 PAYMENT. As promptly as practicable following such determination and
the elections hereunder, the Employer shall pay or transfer to or for the
benefit of the Employee such amounts as are then due to him under the Agreement
and shall promptly pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under the Agreement.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Employer which should not have been made (an "Overpayment"), or that
additional Payments which will not have been made by the Employer could have
been made (an "Underpayment"), consistent in each case with the calculation of
the Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Employer
or the Employee that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Employee which he shall repay to the Employer,
together with interest at the applicable federal rate provided in section
7872(b)(2) of the Code; provided, however, that no amount shall be payable by
the Employee to the Employer if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has
16
<PAGE> 17
occurred, such Underpayment shall promptly be paid or transferred by the
Employer to or for the benefit of the Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
17.5 DEFINITION OF "EMPLOYER". For purposes of this paragraph 17 only, the
term "Employer" shall include affiliated corporations to the extent determined
by the Auditors in accordance with section 280G(d)(5) of the Code.
18. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration before a law
trained arbitrator in accordance with the American Arbitration Association rules
then applicable and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. Each party to such arbitration shall have an
unlimited number of strikes or objections to the arbitrators on any list of
arbitrators submitted by the American Arbitration Association. The Employer
shall pay any and all attorney's fees incurred by the Employee in connection
with the resolution of any controversy or claim arising out of or relating to
this Agreement or the breach thereof.
19. NOTICES. 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 party.
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 addressed to such
address. 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
17
<PAGE> 18
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 third 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. If
given by telegram, such notice shall be deemed to be given upon the earlier to
occur of the date actually received by the addressee or the business day
following the date upon which it is delivered to the telegraph company.
If to the Employer:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
If to the Employee:
Mark D. Howell
1220 East Walden Lane
Draper, Utah 84020
20. ASSIGNMENT. The Employee may be transferred from employment with the
Employer to employment with another corporation that was affiliated with the
Employer prior to the date on which a Change of Control occurs, in which case
such other corporation or affiliate shall be substituted for the Employer
hereunder, and no termination of the Employee's employment shall be deemed to
have occurred. The Employee may not assign the benefit of this Agreement or
delegate his obligations under this Agreement. Subject to the foregoing
limitation upon assignment and
18
<PAGE> 19
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.
21. DETERMINATION BY THE EMPLOYER. The Employee shall not make any
determinations regarding this Agreement. If the Employee is the President of the
Employer at a time that a determination is to be made by the Employer pursuant
to this Agreement, such determination shall be made by the Board of Directors of
the Employer or an authorized delegates of such Board of Directors.
22. 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.
23. ENFORCEMENT OF SEVERANCE PROVISION. In the event that after a Change of
Control a dispute between the parties on entitlement to severance payments under
this Agreement results in litigation, the Employer shall pay after the
conclusion of such litigation such Employee's costs arising out of or in
connection with such litigation, including without limitation court costs and
reasonable attorneys' fees.
24. CAPTIONS. The captions used herein are for ease of reference only and
shall not define or limit the provisions hereof.
25. ENTIRE AGREEMENT. This Agreement constitutes 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 provisions of any
prior employment agreement between the Employee and the Employer, and all other
prior agreements between the
19
<PAGE> 20
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 of
the party to this Agreement. No promises of any nature have been made in
connection with the employment or continued employment of the Employee other
than as set forth in this Agreement, and provided further that it is expressly
agreed that the Employee shall be entitled to only such benefits as are
expressly provided by the various plans of the Corporation and the Employer for
eligible employees to the extent the Employee qualifies for such benefits
strictly in accordance with the terms and provisions of such plans as now in
effect or as modified from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement on the ____ day of
,__________ 1996.
THE EMPLOYER: THE EMPLOYEE:
FIRST SECURITY CORPORATION
By:_________________________________ _________________
Title: Member of the Board Mark D. Howell
of the Employer, and
President of First
Security Corporation
20
<PAGE> 1
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP
<PAGE> 2
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
First Security Corporation on Form S-4 of our report dated February 22, 1996,
appearing in the Annual Report on Form 10-K of First Security Corporation for
the year ended December 31, 1995, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Salt Lake City, Utah
February 10, 1997
<PAGE> 1
EXHIBIT 25.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
------------------------
THE BANK OF NEW YORK
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(STATE OF INCORPORATION (I.R.S. EMPLOYER
IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
48 WALL STREET, NEW YORK, N.Y. 10286
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
------------------------
FIRST SECURITY CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 87-6118148
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
------------------------
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
(TITLE OF THE INDENTURE SECURITIES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
--------------------------------------------------------- --------------------------
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street,
New York, N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza,
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29
under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
2
<PAGE> 3
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 10th day of January, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
------------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
4
<PAGE> 1
EXHIBIT 25.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
------------------------
THE BANK OF NEW YORK
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(STATE OF INCORPORATION (I.R.S. EMPLOYER
IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
48 WALL STREET, NEW YORK, N.Y. 10286
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
------------------------
FIRST SECURITY CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 87-6118148
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
------------------------
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
(TITLE OF THE INDENTURE SECURITIES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
--------------------------------------------------------- --------------------------
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street,
New York, N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza,
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29
under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
2
<PAGE> 3
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
3
<PAGE> 4
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
OF 48 WALL STREET, NEW YORK, N.Y. 10286
AND FOREIGN AND DOMESTIC SUBSIDIARIES,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........................... $ 4,404,522
Interest-bearing balances.................................................... 732,833
Securities:
Held-to-maturity securities.................................................. 789,964
Available-for-sale securities................................................ 2,005,509
Federal funds sold in domestic offices of the bank:
Federal funds sold........................................................... 3,364,838
Loans and lease financing receivables:
Loans and leases, net of unearned income..................................... 28,728,602
LESS: Allowance for loan and lease losses.................................... 584,525
LESS: Allocated transfer risk reserve........................................ 429
Loans and leases, net of unearned income, allowance, and reserve.......... 28,143,648
Assets held in trading accounts................................................ 1,004,242
Premises and fixed assets (including capitalized leases)....................... 605,668
Other real estate owned........................................................ 41,238
Investments in unconsolidated subsidiaries and associated companies............ 205,031
Customers' liability to this bank on acceptances outstanding................... 949,154
Intangible assets.............................................................. 490,524
Other assets................................................................... 1,305,839
-----------
Total assets......................................................... $ 44,043,010
===========
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
-----------
<S> <C>
LIABILITIES
Deposits:
In domestic offices.......................................................... $ 20,441,318
Noninterest-bearing.......................................................... 8,158,472
Interest-bearing............................................................. 12,282,846
In foreign offices, Edge and Agreement subsidiaries, and IBFs................ 11,710,903
Noninterest-bearing.......................................................... 46,182
Interest-bearing............................................................. 11,664,721
Federal funds purchased in domestic offices of the bank:
Federal funds purchased...................................................... 1,565,288
Demand notes issued to the U.S. Treasury....................................... 293,186
Trading liabilities............................................................ 826,856
Other borrowed money:
With original maturity of one year or less................................... 2,103,443
With original maturity of more than one year................................. 20,766
Bank's liability on acceptances executed and outstanding....................... 951,116
Subordinated notes and debentures.............................................. 1,020,400
Other liabilities.............................................................. 1,522,884
-----------
Total liabilities.................................................... 40,456,160
-----------
EQUITY CAPITAL
Common stock................................................................... 942,284
Surplus........................................................................ 525,666
Undivided profits and capital reserves......................................... 2,129,376
Net unrealized holding gains (losses) on available-for-sale securities......... (2,073)
Cumulative foreign currency translation adjustments............................ (8,403)
-----------
Total equity capital................................................. 3,586,850
-----------
Total liabilities and equity capital................................. $ 44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
ROBERT E. KEILMAN
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. CARTER BACOT
THOMAS A. RENYI
ALAN R. GRIFFITH
Directors
<PAGE> 6
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 10th day of January, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
------------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
6
<PAGE> 1
EXHIBIT 25.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
------------------------
THE BANK OF NEW YORK
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(STATE OF INCORPORATION (I.R.S. EMPLOYER
IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
48 WALL STREET, NEW YORK, N.Y. 10286
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
------------------------
FIRST SECURITY CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 87-6118148
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
------------------------
8.41% SUBORDINATED CAPITAL INCOME SECURITIES
(TITLE OF THE INDENTURE SECURITIES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
--------------------------------------------------------- --------------------------
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street,
New York, N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza,
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29
under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
2
<PAGE> 3
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 10th day of January, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
------------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
4
<PAGE> 5
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ............................... $ 4,404,522
Interest-bearing balances ....................... 732,833
Securities:
Held-to-maturity securities ..................... 789,964
Available-for-sale securities ................... 2,005,509
Federal funds sold in domestic offices of the bank:
Federal funds sold ................................ 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................28,728,602
LESS: Allowance for loan and
lease losses ..............584,525
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve ................ 28,143,648
Assets held in trading accounts ................... 1,004,242
Premises and fixed assets (including
capitalized leases) ............................. 605,668
Other real estate owned ........................... 41,238
Investments in unconsolidated
subsidiaries and associated
companies ....................................... 205,031
Customers' liability to this bank on
acceptances outstanding ......................... 949,154
Intangible assets ................................. 490,524
Other assets ...................................... 1,305,839
-----------
Total assets ...................................... $44,043,010
===========
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices ................ $20,441,318
Noninterest-bearing .......8,158,472
Interest-bearing .........12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,710,903
Noninterest-bearing ..........46,182
Interest-bearing .........11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased ............ 1,565,288
Demand notes issued to the U.S.
Treasury ........................... 293,186
Trading liabilities .................. 826,856
Other borrowed money:
With original maturity of one year
or less .......................... 2,103,443
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 951,116
Subordinated notes and debentures .... 1,020,400
Other liabilities .................... 1,522,884
-----------
Total liabilities .................... 40,456,160
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 2,073)
Cumulative foreign currency transla-
tion adjustments .................. ( 8,403)
-----------
Total equity capital ................ 3,586,850
-----------
Total liabilities and equity
capital ........................... $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
<PAGE> 7
Report of Condition and declare that it has been examined by us and to the best
of our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true and correct.
J. Carter Bacot (3)
Thomas A. Renyi (3) Directors
Alan R. Griffith (3)
<PAGE> 1
EXHIBIT 99.1
FORM OF LETTER OF TRANSMITTAL
<PAGE> 2
LETTER OF TRANSMITTAL
FIRST SECURITY CAPITAL I
OFFER TO EXCHANGE ITS 8.41% CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING 8.41% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
PURSUANT TO THE PROSPECTUS DATED, 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., SALT LAKE CITY TIME, ON , 1997, UNLESS THE OFFER
IS EXTENDED.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST SECURITY BANK, N.A.
BY MAIL/OVERNIGHT DELIVERY/HAND:
FIRST SECURITY BANK, N.A.
CORPORATE TRUST
3RD FLOOR
79 SOUTH MAIN STREET
SLAT LAKE CITY, UTAH 84111
ATTN:
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(801) 246-
FACSIMILE TRANSMISSIONS:
(801) 246-
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Old Capital
Securities (as defined below) either if Old Capital Securities are to be
forwarded herewith or if tenders of Old Capital Securities are to be made by
book-entry transfer to an account maintained by First Security Bank N.A. (the
"Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus.
Holders of Old Capital Securities whose certificates (the "Certificates")
for such Old Capital Securities are not immediately available or who cannot
deliver their Certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date (as defined in the Prospectus) or who
cannot complete the procedures for book-entry transfer on a timely basis, must
tender their Old Capital Securities according to the guaranteed delivery
procedures set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus.
<PAGE> 3
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ALL TENDERING HOLDERS COMPLETE THIS BOX:
Please Print Name Please Show Old Capital Principal Amount Beneficial
and Address of Certificate Securities of Old Capital Holders and
Registered Holder Number(s) Tendered Securities Names in
(Need Not Be (Attach additional Tendered (If Which such
Completed By list if needed.) Principal Amount Securities are
Book-Entry of Old Capital held.
Holders) Securities is Less
than All.)*
</TABLE>
* All Old Capital Securities held shall be deemed tendered unless a lesser
number is specified in this column.
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
<TABLE>
<S> <C>
[] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE
FOLLOWING:
</TABLE>
Name of Tendering Institution: DTC Account Number:
Transaction Code Number:
<TABLE>
<S> <C>
[] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED OLD
CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY
PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
</TABLE>
Name of Registered Holders(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution: DTC Account Number:
Transaction Code Number:
<PAGE> 4
<TABLE>
<S> <C>
[] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD CAPITAL SECURITIES
ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.
[] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL SECURITIES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING
BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
</TABLE>
Name: Address:
Ladies and Gentlemen:
The undersigned hereby tenders to First Security Capital I, a Delaware
business trust (the "Trust") and First Security Corporation, a Delaware
Corporation, as Depositor ("the Company"), the above described aggregate
Liquidation Amount of the Trust's 8.41% Capital Securities due December 15, 2026
(the "Old Capital Securities") in exchange for a like aggregate Liquidation
Amount of the Trust's 8.41% Capital Securities due December 15, 2026 (the "New
Capital Securities") which have been registered under the Securities Act of 1933
(the "Securities Act"), upon the terms and subject to the conditions set forth
in the Prospectus dated , 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus"), receipt of which is
acknowledged, and in this Letter of Transmittal (which, together with the
Prospectus, constitute the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Capital Securities tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company and the Trust in connection with the Exchange Offer) with respect to the
tendered Old Capital Securities, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest),
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver Certificates for Old Capital Securities to the Company or the Trust
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Trust, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Capital Securities to be issued in exchange for
such Old Capital Securities, (ii) present Certificates for such Old Capital
Securities for transfer, and to transfer the Old Capital Securities on the books
of the Trust, and (iii) receive for the account of the Trust all benefits and
otherwise exercise all rights of beneficial ownership of such Old Capital
Securities, all in accordance with the terms and conditions of the Exchange
Offer.
THE UNDERSIGNED HEREBY REPRESENT(S) AND WARRANT(S) THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY, THE TRUST OR THE
EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT
AND TRANSFER OF THE OLD CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED
WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT.
THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE
OFFER.
<PAGE> 5
The name(s) and address(es) of the registered holder(s) of the Old Capital
Securities tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Old Capital
Securities. The Certificate number(s) and the Old Capital Securities that the
undersigned wishes to tender should be indicated in the appropriate boxes above.
If any tendered Old Capital Securities are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Old Capital Securities will be returned (or, in
the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Old Capital Securities pursuant
to any one of the procedures described in "The Exchange Offer -- Procedures for
Tendering Old Capital Securities" in the Prospectus and in the instruction,
hereto will, upon the Company's and the Trust's acceptance for exchange of such
tendered Old Capital Securities, constitute a binding agreement between the
undersigned, the Company and the Trust upon the terms and subject to the
conditions of the Exchange Offer. The undersigned recognizes that, under certain
circumstances set forth in the Prospectus, the Company and the Trust may not be
required to accept for exchange any of the Old Capital Securities tendered
hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions," below, the undersigned hereby directs that the New Capital
Securities be issued in the name(s) of the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, that such New Capital Securities
be credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please deliver New Capital Securities to the
undersigned at the address shown below the undersigned's signature.
BY TENDERING OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE COMPANY OR THE TRUST, (II) ANY NEW
CAPITAL SECURITIES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE
ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO ARRANGEMENT OR
UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE
MEANING OF THE SECURITIES ACT) OF NEW CAPITAL SECURITIES TO BE RECEIVED IN THE
EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE
UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW CAPITAL SECURITIES. BY
TENDERING OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING
THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD CAPITAL SECURITIES WHICH IS A
BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE
LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE
SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A) SUCH OLD CAPITAL
SECURITIES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH OLD
CAPITAL SECURITIES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL
DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING
THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH NEW
CAPITAL SECURITIES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
<PAGE> 6
THE COMPANY AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE PROVISIONS OF
THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS
DEFINED BELOW) IN CONNECTION WITH RESALES OF NEW CAPITAL SECURITIES RECEIVED IN
EXCHANGE FOR OLD CAPITAL SECURITIES, WHERE SUCH OLD CAPITAL SECURITIES WERE
ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 180
DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH NEW
CAPITAL SECURITIES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN
THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED OLD CAPITAL SECURITIES FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH OLD CAPITAL SECURITIES AND
EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM
THE COMPANY OR THE TRUST OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY
FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE
PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT
TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR
INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY WERE MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS
SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER
WILL SUSPEND THE SALE OF NEW CAPITAL SECURITIES PURSUANT TO THE PROSPECTUS UNTIL
THE COMPANY AND THE TRUST HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT
SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR
SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE COMPANY OR THE
TRUST HAS GIVEN NOTICE THAT THE SALE OF THE NEW CAPITAL SECURITIES MAY BE
RESUMED, AS THE CASE MAY BE. IF THE COMPANY OR THE TRUST GIVES SUCH NOTICE TO
SUSPEND THE SALE OF THE NEW CAPITAL SECURITIES, IT SHALL EXTEND THE 90-DAY
PERIOD REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED
TO USE THE PROSPECTUS IN CONNECTION WITH THE RESALE OF NEW CAPITAL SECURITIES BY
THE NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING
OF SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL
HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO
PERMIT RESALES OF THE NEW CAPITAL SECURITIES OR TO AND INCLUDING THE DATE ON
WHICH THE COMPANY OR THE TRUST HAS GIVEN NOTICE THAT THE SALE OF NEW CAPITAL
SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accrued interest on such Old Capital Securities
for any period from and after the last Interest Payment Date to which interest
has been paid or duly provided for on such Old Capital Securities prior to the
original issue date of the New Capital Securities or, if no such interest has
been paid or duly provided for, will not receive any accrued interest on such
Old Capital Securities, and the undersigned waives the right to receive any
interest on such Old Capital Securities accrued from and after such Interest
Payment Date or, if no such interest has been paid or duly provided for, from
and after 15, 1997.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
<PAGE> 7
Please be advised that the Company is registering the New Capital
Securities in reliance on the position of the Staff enunciated in Exxon Capital
Holdings Corp. (available April 13, 1989) and Morgan Stanley & Co. Incorporated
(available June 5, 1991). In addition, the Company has authorized us to inform
you as follows: The Company has not entered into any arrangement or
understanding with any person to distribute the Exchange Notes to be received in
the Exchange Offer and, to the best of its information and belief, each person
participating in the Exchange Offer is acquiring the New Capital Securities in
its ordinary course of business and has no arrangement or understanding with any
person to participate in the distribution of the Exchange Notes to be received
in the Exchange Offer. In this regard, the Company will make each person
participating in the Exchange Offer aware that if such person is participating
in the Exchange Offer for the purpose of distributing the Exchange Notes to be
acquired in the Exchange Offer, such person (a) could not rely on the Staff
position enunciated in Exxon Capital or interpretative letters to similar effect
and (b) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction. The
Company acknowledges that such a secondary resale transaction by such person
participating in the Exchange Offer for the purpose of distributing the New
Capital Securities should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K. Furthermore, the Company will include in the transmittal letter
to be executed by an exchange offeree in order to participate in the Exchange
Offer (x) an acknowledgement that if such exchange offeree is a broker-dealer
that will receive New Capital Securities for its own account in exchange for
Notes that were acquired as a result of market-making activities or other
trading activities, it will deliver a prospectus in connection with any resale
of such New Capital Securities and (y) a statement that by so acknowledging and
by delivering a prospectus, such exchange offeree will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
<PAGE> 8
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
--------------------- , 1997
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificate(s) for the Old Capital Securities hereby tendered or on a security
position listing, or by any person(s) authorized to become the registered
holder(s) by endorsements and documents transmitted herewith (including such
options of counsel, certifications and other information as may be required by
the Trust or the Trustee for the Old Capital Securities to comply with the
restrictions on transfer applicable to the Old Capital Securities). If signature
is by an attorney-in-fact, executor, administrator, trustee, guardian, officer
of a corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone Number
- --------------------------------------------------------------------------------
Tax ID Number
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE
Date:
--------------------- , 199
----
Name of Firm:
- --------------------------------------------------------------------------------
Capacity (full title):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- ---------------------------------------------------------------------------
<PAGE> 9
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, AND 6)
To be completed ONLY if the New Capital Securities are to be issued in the
name of someone other than the registered holder of the Old Capital Securities
whose name(s) appear(s) above.
Issue New Capital Securities to:
[ ] Old Capital Securities not tendered
[ ] Exchange Capital Securities to:
Name(s)
- -------------------------------------------
Address
- ---------------------------------------------
------------------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone
Number
- -------------------------------------------
Tax ID
Number
- -------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, AND 6)
To be completed ONLY if New Capital Securities are to be sent to someone other
than the registered holder of the Old Capital Securities whose name(s) appear(s)
above, or such registered holder(s) at an address other than that shown above.
Mail New Capital Securities to:
[ ] Old Capital Securities not tendered
[ ] Exchange Capital Securities to:
Name(s)
- -------------------------------------------
Address
- ---------------------------------------------
------------------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone
Number
- -------------------------------------------
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer -- Procedures for Tendering Old Capital Securities" in the Prospectus.
Certificates, or timely confirmation of a book-entry transfer of such Old
Capital Securities into the Exchange Agent's account at DTC, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date.
Holders who wish to tender their Old Capital Securities and (i) whose Old
Capital Securities are not immediately available or (ii) who cannot deliver
their Old Capital Securities, this Letter of Transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or (iii) who
cannot complete the procedures for delivery by book-entry transfer on a timely
basis, may tender their Old Capital Securities by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Company, must be received by the
Exchange Agent on or prior to the Expiration Date; and (iii) the Certificates
(or a book-entry confirmation (as defined in the Prospectus)) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within five New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer -- Procedures for Tendering Old Capital Securities" in the
Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Capital
Securities to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or
prior to the Expiration Date. As used herein and in the Prospectus, "Eligible
Institution" means a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as "an eligible guarantor institution," including (as such terms
are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Neither the Company nor the Trust will accept any alternative, conditional
or contingent tenders. Each tendering holder, by execution of a Letter of
Transmittal (or facsimile thereof), waives any right to receive any notice of
the acceptance of such tender.
<PAGE> 11
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any participant
in DTC whose name appears on a security position listing as the owner of
the Old Capital Securities) of Old Capital Securities tendered herewith,
unless such holder(s) has completed either the box entitled "Special
Issuance Instructions" or the box entitled "Special Delivery Instructions"
above, or
(ii) such Old Capital Securities are tendered for the account of a
firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s)on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Capital Securities" is inadequate, the Certificate
number(s)and/or the principal amount of Old Capital Securities and any other
required information should be listed on a separate signed schedule which is
attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. If less than all the Old Capital
Securities evidenced by any Certificate submitted are to be tendered,fill in the
principal amount of Old Capital Securities which are to be tendered in the box
entitled "Principal Amount of Old Capital Securities Tendered (if less than
all)." In such case, new Certificate(s) for the remainder of the Old Capital
Securities that were evidenced by your old Certificate(s) will only be sent to
the holder of the Old Capital Security, promptly after the Expiration Date. All
Old Capital Securities represented by Certificates delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Capital Securities
maybe withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in the
Prospectus on or prior to the Expiration Date. Any such notice of withdrawal
must specify the name of the person who tendered the Old Capital Securities to
be withdrawn, the aggregate principal amount of Old Capital Securities to be
withdrawn, and (if Certificates for Old Capital Securities have been
tendered)the name of the registered holder of the Old Capital Securities as set
forth on the Certificate for the Old Capital Securities, if different from that
of the person who tendered such Old Capital Securities. If Certificates for the
Old Capital Securities have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Certificates for the
Old Capital Securities, the tendering holder must submit the serial numbers
shown on the particular Certificates for the Old Capital Securities to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Old Capital Securities tendered for
the account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in "The
Exchange Offer -- Procedures for Tendering Old Capital Securities," the notice
of withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Old Capital Securities, in which case a notice
of withdrawal will be effective if delivered to the Exchange Agent by written,
telegraphic, telex or facsimile transmission. Withdrawals of tenders of Old
Capital Securities may not be rescinded. Old Capital Securities properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer -- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company and the
Trust, in their sole discretion, whose determination shall be final
<PAGE> 12
and binding on all parties. The Company and the Trust, any affiliates or assigns
of the Company and the Trust,the Exchange Agent or any other person shall not be
under any duty to give any notification of any irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification. Any
Old Capital Securities which have been tendered but which are withdrawn will be
returned to the holder thereof without cost to such holder promptly after
withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Old
Capital Securities tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Old Capital Securities tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Capital Securities are registered in different
name(s)on several Certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal (or facsimiles thereof) as there
are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Company and the Trust, in their sole discretion, of such
persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Old Capital Securities listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless New Capital
Securities are to be issued in the name of a person other than the registered
holder(s). Signature(s) on such Certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Capital Securities listed, the Certificates must
be endorsed or accompanied by appropriate bond powers, signed exactly as the
name or names of the registered owner(s) appear(s) on the Certificates, and also
must be accompanied by such opinions of counsel, certifications and other
information as the Company, the Trust or the Trustee for the Old Capital
Securities may require in accordance with the restrictions on transfer
applicable to the Old Capital Securities. Signatures on such Certificates or
bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Capital Securities
are to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Capital Securities are to be sent to someone other than
the signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be
completed.Certificates for Old Capital Securities not exchanged will be returned
by mail or, if tendered by book-entry transfer, by crediting the account
indicated above maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Company and the Trust will determine, in their sole
discretion, all questions as to the form of documents, validity,
eligibility(including time of receipt) and acceptance for exchange of any tender
of Old Capital Securities, which determination shall be final and binding on all
parties. The Company and the Trust reserve the absolute right to reject any and
all tenders determined by either of them not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the Company
and the Trust, be unlawful. The Company and the Trust also reserve the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer -- Certain
Conditions to the Exchange Offer" or any conditions or irregularity in any
tender of Old Capital Securities of any particular holder whether or not similar
conditions or irregularities are waived in the case of other holders. The
Company's and the Trust's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. The Company, the Trust, any affiliates or
assigns of the Company,
<PAGE> 13
the Trust, the Exchange Agent, or any other person shall not be under any duty
to give notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a holder whose tendered Old Capital Securities are accepted for
exchange is required to provide the Exchange Agent with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to Old Capital
Securities exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day
period,amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W8,
signed under penalties of perjury, attesting to that holder's exempt
status.Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather,the
U.S. Federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any
Certificate(s)representing Old Capital Securities have been lost, destroyed or
stolen, the holder should promptly notify the Exchange Agent. The holder will
then be instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
<PAGE> 14
11. SECURITY TRANSFER TAXES. Holders who tender their Old Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, New Capital Securities are to be delivered
to, or are to be issued in the name of, any person other than the registered
holder of the Old Capital Securities tendered, or if a transfer tax is imposed
for any reason other than the exchange of Old Capital Securities in connection
with the Exchange Offer, then the amount of any such transfer tax (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE> 15
TO BE COMPLETED BY ALL
TENDERING SECURITY HOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME: FIRST SECURITY BANK, N.A.
SUBSTITUTE FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) AND CERTIFICATION
PART 1 -- PLEASE PROVIDE YOUR TIN ON THE LINE AT RIGHT AND CERTIFY BY SIGNING
AND DATING BELOW
TIN
- ------------------------------------------
Social Security Number or Employer Identification Number
NAME
ADDRESS
CITY STATE ZIP CODE
PART 2
Awaiting
TIN [ ]
PART 3 -- CERTIFICATION
UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number shown on this form
is my correct taxpayer identification number (or I am waiting for a number to be
issued to me), (2) I am not subject to backup withholding either because (i) I
am exempt from backup withholding, (ii) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (iii) the IRS has notified me
that I am no longer subject to backup withholding, and (3) any other information
provided on this form is true and correct.
SIGNATURE DATE
You must cross out item (iii) in Part (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not been notified by the
IRS that you are no longer subject to backup withholding.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the
<PAGE> 16
time of payment, 31% of all payments made to me on account of the New Capital
Securities shall be retained until I provide a taxpayer identification number to
the Exchange Agent and that, if I do not provide my taxpayer identification
number within 60 days, such retained amounts shall be remitted to the Internal
Revenue Service as backup withholding and 31% of all reportable payments made to
me thereafter will be withheld and remitted to the Internal Revenue Service
until I provide a taxpayer identification number.
Signature Date , 1997
<PAGE> 1
EXHIBIT 99.2
FORM OF NOTICE OF GUARANTEED DELIVERY
<PAGE> 2
NOTICE OF GUARANTEED DELIVERY FOR TENDER OF 8.41% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
FIRST SECURITY CAPITAL I
FULLY AND UNCONDITIONALLY GUARANTEED BY FIRST SECURITY CORPORATION
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Trust's (as defined below) 8.41% Capital Securities due
December 15, 2026 (the "Old Capital Securities") are not immediately available,
(ii) Old Capital Securities, the Letter of Transmittal and all other required
documents cannot be delivered to First Security Bank, N.A. (the "Exchange
Agent") on or prior to the Expiration Date (as defined in the Prospectus
referred to below) or (iii) the procedures for delivery by book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand, overnight courier or mail, or transmitted by facsimile
transmission, to the Exchange Agent. See "The Exchange Offer -- Procedures for
Tendering Old Capital Securities" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST SECURITY BANK, N.A.
BY MAIL/OVERNIGHT DELIVERY/HAND:
3RD FLOOR
CORPORATE TRUST
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
ATTN:
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(801) 246-
FACSIMILE TRANSMISSIONS:
(801) 246-
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF
A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN
"ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE
MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER
OF TRANSMITTAL.
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to First Security Capital I, a Delaware
business trust (the "Trust"), upon the terms and subject to the conditions set
forth in the Prospectus dated , 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Old Capital Securities
set forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering Old
Capital Securities."
Name(s) of Registered Holder(s):
- ----------------------------------------------
Aggregate Principal Amount Tendered:
- -----------------------------------------
Certificate No(s).:
- ---------------------------------------------------------------
Address(es):
- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number(s):
- -----------------------------------------
If Old Capital Securities will be tendered by book-entry transfer, provide the
following information:
Signature(s):
- ---------------------------------------------------------------------
DTC Account Number:
- ---------------------------------------------------------
Date:
- -----------------------------------------------------------------------------
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at its address set forth above, either the Old Capital
Securities tendered hereby in proper form for transfer, or confirmation of the
book-entry transfer of such Old Capital Securities to the Exchange Agent's
account at The Depositary Trust Company ("DTC"), pursuant to the procedures for
book-entry transfer set forth in the Prospectus, in either case together with
one or more properly completed and duly executed Letter(s) of Transmittal (or
facsimile thereof) and any other required documents within five business days
after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Old Capital Securities tendered hereby to the Exchange Agent
within the time period set forth above and that failure to do so could result in
a financial loss to the undersigned.
Name of Firm:
--------------------------------
Authorized Signature:
---------------------------
Title:
---------------------------------------
Address:
-------------------------------------
-------------------------------------
Telephone Number:
----------------------------
Date:
---------------------------------------
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF OLD CAPITAL SECURITIES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
<PAGE> 1
EXHIBIT 99.3
FORM OF EXCHANGE AGENT AGREEMENT
<PAGE> 2
FORM OF EXCHANGE AGENT AGREEMENT
February , 1997
First Security Bank, N.A.
Attention: Corporate Trust
3rd Floor
79 South Main Street
Salt Lake City, Utah 84111
Ladies and Gentlemen:
FIRST SECURITY CORPORATION, a Delaware corporation, as Depositor ("the
Company") and FIRST SECURITY CAPITAL I, a Delaware business trust (the "Trust")
hereby appoint FIRST SECURITY BANK, N.A. ("FSB") to act as exchange agent (the
"Exchange Agent") in connection with an exchange offer by the Company and the
Trust to exchange up to $150,000,000 aggregate Liquidation Amount of the Trust's
8.41% Capital Securities due December 15, 2026 (the "New Capital Securities"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like aggregate Liquidation Amount of the Trust's
outstanding 8.41% Capital Securities due December 15, 2026 (the "Old Capital
Securities" and together with the New Capital Securities, the "Capital
Securities"). The terms and conditions of the exchange offer are set forth in a
Prospectus dated , 1997 (as the same may be amended or supplemented
from time to time, the "Prospectus") and in the related Letter of Transmittal,
which together constitute the "Exchange Offer." The registered holders of the
Capital Securities are hereinafter referred to as the "Holders." Capitalized
terms used herein and not defined shall have the respective meanings described
thereto in the Prospectus.
On the basis of the representations, warranties and agreements of the
Company, the Trust and FSB contained herein and subject to the terms and
conditions hereof, the following sets forth the agreement between the Company,
the Trust and FSB, as Exchange Agent for the Exchange Offer:
1. APPOINTMENT AND DUTIES AS EXCHANGE AGENT.
a. The Company and the Trust hereby authorize FSB to act as Exchange Agent
in connection with the Exchange Offer and FSB agrees to act as Exchange Agent in
connection with the Exchange Offer. As Exchange Agent, FSB will perform those
services as are outlined herein, including, but not limited to, accepting
tenders of Old Capital Securities, and communicating generally regarding the
Exchange Offer with brokers, dealers, commercial banks, trust companies and
other persons, including Holders of the Old Capital Securities.
b. The Company and the Trust acknowledge and agree that FSB has been
retained pursuant to this Agreement to act solely as Exchange Agent in
connection with the Exchange Offer, and in such capacity, FSB shall perform such
duties in good faith as are outlined herein.
c. FSB will examine each of the Letters of Transmittal and certificates for
Old Capital Securities and any other documents delivered or mailed to FSB by or
for Holders of the Old Capital Securities, and any book-entry confirmations (as
defined in the Prospectus) received by Wilmington Trust with respect to the Old
Capital Securities, to ascertain whether:
(i) the Letters of Transmittal and any such other documents are duly
executed and properly completed in accordance with the instructions set
forth therein and that such book-entry confirmations are in due and proper
form and contain the information required to be set forth therein,
(ii) the Old Capital Securities have otherwise been properly tendered,
and
(iii) Holders have provided their correct Tax Identification Number or
required certification. Determination of all questions as to validity,
form, eligibility and acceptance for exchange of any Old Capital Securities
shall be made by the Company or the Trust, whose determination shall be
final and
<PAGE> 3
binding. In each case where the Letters of Transmittal or any other
documents have been improperly completed or executed or where book-entry
confirmations are not in due and proper form or omit certain information,
or any of the certificates for Old Capital Securities are not in proper
form for transfer or some other irregularity in connection with the tender
or acceptance of the Old Capital Securities exists, FSB will endeavor upon
request of the Company or the Trust to advise the tendering Holders of the
irregularity and to take any other action as the Company or the Trust may
request to cause such irregularity to be corrected. Notwithstanding the
above, FSB shall not be under any duty to give any notification of any
irregularities in tenders or incur any liability for failure to give any
such notification.
d. With the approval of the President, any Senior Vice President, any
Executive Vice President, or any Vice President of the Company, (such approval,
if given orally, to be confirmed in writing) or any other party designated by
any such officer, FSB is authorized to waive any irregularities in connection
with any tender of Old Capital Securities pursuant to the Exchange Offer.
e. Tenders of Old Capital Securities may be made only as set forth in the
Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer" and Old Capital Securities shall be considered properly tendered
only when tendered in accordance with such procedures set forth therein.
Notwithstanding the provisions of this paragraph, Old Capital Securities which
the President, any Senior Vice President, any Executive Vice President, or any
Vice President or any other designated officer of the Company, shall approve
(such approval, if given orally, to be confirmed in writing) as having been
properly tendered shall be considered to be properly tendered.
f. FSB shall advise the Company and the Trust with respect to any Old
Capital Securities received as soon as possible after 5:00 p.m., Mountain Time,
on the Expiration Date and accept its instructions with respect to disposition
of such Old Capital Securities.
g. FSB shall deliver certificates for Old Capital Securities tendered in
part to the transfer agent for split-up and shall return any untendered Old
Capital Securities or Old Capital Securities which have not been accepted by the
Company and the Trust to the Holders promptly after the expiration or
termination of the Exchange Offer.
h. Upon acceptance by the Company and the Trust of any Old Capital
Securities duly tendered pursuant to the Exchange Offer (such acceptance if
given orally, to be confirmed in writing), the Company and the Trust will cause
New Capital Securities in exchange therefor to be issued as promptly as possible
and FSB will deliver such New Capital Securities on behalf of the Company and
the Trust at the rate of $100,000 (100 Capital Securities) principal amount of
New Capital Securities for each $100,000 principal amount of Old Capital
Securities tendered as promptly as possible after acceptance by the Company and
the Trust of the Old Capital Securities for exchange and notice (such notice if
given orally, to be confirmed in writing) of such acceptance by the Company and
the Trust. Unless otherwise instructed by the Company or the Trust, FSB shall
issue New Capital Securities only in denominations of $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in excess thereof.
i. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and the conditions set forth in the Prospectus and the
Letter of Transmittal, Old Capital Securities tendered pursuant to the Exchange
Offer may be withdrawn at any time on or prior to the Expiration Date in
accordance with the terms of the Exchange Offer.
j. Notice of any decision by the Company and the Trust not to exchange any
Old Capital Securities tendered shall be given by the Company or the Trust
either orally (if given orally, to be confirmed in writing) or in a written
notice to FSB.
k. If, pursuant to the Exchange Offer, the Company and the Trust do not
accept for exchange all or part of the Old Capital Securities tendered because
of an invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer -- Certain Conditions to the
Exchange Offer" or otherwise, FSB shall, upon notice from the Company and the
Trust (such notice if given orally, to be confirmed in writing), promptly after
the expiration or termination of the Exchange Offer return such certificates for
unaccepted Old Capital Securities (or effect appropriate book-entry transfer),
together with
<PAGE> 4
any related required documents and the Letters of Transmittal relating thereto
that are in FSB's possession, to the persons who deposited such certificates.
l. Certificates for reissued Old Capital Securities, unaccepted Old Capital
Securities or New Capital Securities shall be forwarded by (a) first-class
certified mail, return receipt requested under a blanket surety bond obtained by
FSB protecting FSB, the Company and the Trust from loss or liability arising out
of the non-receipt or non-delivery of such certificates or (b) by registered
mail insured by FSB separately for the replacement value of each such
certificate.
m. FSB is not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, commercial bank, trust
company or other nominee or to engage or use any person to solicit tenders.
n. As Exchange Agent, FSB:
(i) shall have no duties or obligations other than those specifically
set forth herein or as may be subsequently agreed to in writing;
(ii) will make no representations and will have no responsibilities as
to the validity, value or genuineness of any of the certificates for the
Old Capital Securities deposited pursuant to the Exchange Offer, and will
not be required to and will make no representation as to the validity,
value or genuineness of the Exchange Offer;
(iii) shall not be obligated to take any legal action hereunder which
might in FSB's reasonable judgment involve any expense or liability, unless
FSB shall have been furnished with indemnity satisfactory to it and
additional fees for the taking of such action;
(iv) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to FSB and reasonably
believed by FSB to be genuine and to have been signed by the proper party
or parties;
(v) may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due execution
and validity and effectiveness of its provisions, but also as to the truth
and accuracy of any information contained therein, which FSB believes in
good faith to be genuine and to have been signed or represented by a proper
person or persons acting in a fiduciary or representative capacity;
(vi) may rely on and shall be protected in acting upon written or oral
instructions from the President, any Senior Vice President, any Executive
Vice President, any Vice President, or any other designated officer of the
Company;
(vii) may consult with its own counsel with respect to any questions
relating to FSB's duties and responsibilities and the advice of such
counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by FSB hereunder in
good faith and in accordance with the advice of such counsel; and
(viii) shall not advise any person tendering Old Capital Securities
pursuant to the Exchange Offer as to whether to tender or refrain from
tendering all or any portion of its Old Capital Securities or as to the
market value, decline or appreciation in market value of any Old Capital
Securities that may or may not occur as a result of the Exchange Offer or
as to the market value of the New Capital Securities. FSB shall take such
action as may from time to time be requested by the Company or the Trust to
furnish copies of the Prospectus, Letter of Transmittal and the Notice of
Guaranteed Delivery or such other forms as may be approved from time to
time by the Company and the Trust, to all persons requesting such documents
and to accept and comply with telephone requests for information relating
to the Exchange Offer. The Company and the Trust will furnish you with
copies of such documents at your request. Notwithstanding the foregoing, it
is understood that the Company and the Trust will be primarily responsible
for supplying copies of the Prospectus, the Letter of Transmittal and the
Notice of Guaranteed Delivery and responding to requests for confirmation.
<PAGE> 5
p. FSB shall advise orally and promptly thereafter confirm in writing to
the Company and the Trust and such other person or persons as the Company and
the Trust may request, daily (and more frequently during the week immediately
preceding the Expiration Date and if otherwise reasonably requested) up to and
including the Expiration Date, the aggregate principal amount of Old Capital
Securities which have been tendered pursuant to the terms of the Exchange Offer
and the items received by FSB pursuant to the Exchange Offer and this Agreement.
In addition, FSB will also provide, and cooperate in making available to the
Company and the Trust, or any such other person or persons upon request (such
request if made orally, to be confirmed in writing) made from time to time, such
other information in its possession as the Company and the Trust may reasonably
request. Such cooperation shall include, without limitation, the granting by FSB
to the Company and the Trust, and such person or persons as the Company and the
Trust may request, access to those persons on Wilmington Trust's staff who are
responsible for receiving tenders, in order to ensure that immediately prior to
the Expiration Date the Company and the Trust shall have received adequate
information in sufficient detail to enable the Company and the Trust to decide
whether to extend the Exchange Offer. FSB shall prepare a final list of all
persons whose tenders were accepted, the aggregate principal amount of Old
Capital Securities tendered, the aggregate principal amount of Old Capital
Securities accepted and deliver said list to the Company and the Trust.
q. Letters of Transmittal, book-entry confirmations and Notices of
Guaranteed Delivery shall be stamped by FSB as to the date and the time of
receipt thereof and shall be preserved by FSB for a period of time at least
equal to the period of time FSB preserves other records pertaining to the
transfer of securities, or one year, whichever is longer, and thereafter shall
be delivered by FSB to the Company and the Trust. FSB shall dispose of unused
Letters of Transmittal and other surplus materials by returning them to the
Company or the Trust.
r. FSB hereby expressly waives any lien, encumbrance or right of set-off
whatsoever that FSB may have with respect to funds deposited with it for the
payment of transfer taxes by reasons of amounts, if any, borrowed by the Company
or the Trust, or any of its or their subsidiaries or affiliates pursuant to any
loan or credit agreement with FSB or for compensation owed to FSB hereunder or
for any other matter.
2. COMPENSATION.
$ will be payable to FSB in its capacity as Exchange Agent;
provided, that FSB reserves the right to receive reimbursement from the Company
for any reasonable out-of-pocket expenses incurred as Exchange Agent in
performing the services described herein.
3. INDEMNIFICATION.
a. The Company and the Trust hereby agree to protect, defend, indemnify and
hold harmless FSB against and from any and all costs, losses, liabilities,
taxes, expenses (including reasonable counsel fees and disbursements) and claims
imposed upon or asserted against FSB on account of any action taken or omitted
to be taken by FSB in connection with its acceptance of or performance of its
duties under this Agreement and the documents related thereto as well as the
reasonable costs and expenses of defending itself against any claim or liability
arising out of or relating to this Agreement and the documents related thereto.
This indemnification shall survive the release, discharge, termination, and/or
satisfaction of this Agreement. Anything in this Agreement to the contrary
notwithstanding, neither the Company nor the Trust shall be liable for
indemnification or otherwise for any loss, liability, cost or expense to the
extent arising out of FSB's bad faith, gross negligence or willful misconduct.
In no case shall the Company or the Trust be liable under this indemnification
agreement with respect to any claim against FSB until the Company and the Trust
shall be notified by FSB, by letter, of the written assertion of a claim against
FSB or of any other action commenced against FSB, promptly after FSB shall have
received any such written assertion or shall have been served with a summons in
connection therewith, provided, that, FSB's failure to give such notice shall
not excuse the Company or the Trust from its obligations hereunder. The Company
and the Trust shall be entitled to participate at their own expense in the
defense of any such claim or other action, and, if the Company and the Trust so
elect, the Company or the Trust may assume the defense of any pending or
threatened action against FSB in respect of which indemnification may be sought
hereunder with counsel reasonably acceptable to FSB,
<PAGE> 6
in which case the Company or the Trust, as applicable, shall not thereafter be
responsible for the fees and disbursements of legal counsel for FSB under this
paragraph; provided that the Company and the Trust shall not be entitled to
assume the defense of any such action if the named parties to such action
include the Company or the Trust and FSB and representation of the parties by
the same legal counsel would, in the written opinion of counsel for FSB, be
inappropriate due to actual or potential conflicting interests between them. It
is understood that neither the Company nor the Trust shall be liable under this
paragraph for the fees and disbursements of more than one legal counsel for FSB.
In the event that the Company or the Trust shall assume the defense of any such
suit with counsel reasonably acceptable to FSB, the Company or the Trust, as
applicable, shall not therewith be liable for the fees and expenses of any
counsel retained by FSB.
b. FSB agrees that, without the prior written consent of the Company and
the Trust (which consent shall not be unreasonably withheld), it will not
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which indemnification could
be sought in accordance with the indemnification provisions of this Agreement
(whether or not FSB, the Company or the Trust or any of its directors, officers
and controlling persons is an actual or potential party to such claim, action or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Company or the Trust and its directors, officers
and controlling persons from all liability arising out of such claim, action or
proceeding.
c. The Company agrees to indemnify and hold harmless the Trust from and
against any and all losses, claims, damages and liabilities whatsoever, as due
from the Trust under this Section.
4. TAX INFORMATION.
The Company and the Trust shall arrange to comply with all requirements
under the tax laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service. The Company and the Trust understand that they are required, in
certain instances, to deduct 31% with respect to interest paid on the New
Capital Securities and proceeds from the sale, exchange, redemption or
retirement of the New Capital Securities from Holders who have not supplied
their correct Taxpayer Identification Number or required certification. Such
funds will be turned over to the Internal Revenue Service. FSB shall notify the
Company and the Trust of any Holder who has failed to supply such Taxpayer
Identification Number or certification.
5. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware applicable to contracts executed in and to be
performed in that state.
6. NOTICES.
Any communication or notice provided for hereunder shall be in writing and
shall be given (and shall be deemed to have been given upon receipt) by delivery
in person, telecopy, or overnight delivery or by registered or certified mail
(postage prepaid, return receipt requested) to the applicable party at the
addresses indicated below:
<TABLE>
<S> <C>
If to the Company: First Security Corporation
2nd Floor
79 South Main Street
Salt Lake City, Utah 84111
Attn: Scott C. Ulbrich
Telephone: 801-246-5706
Facsimile: 801-246-
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
If to FSB: First Security Bank, N.A.
Corporate Trust
Third Floor
79 South Main Street
Salt Lake City, Utah 84111
Telephone: 801-246-
Facsimile: 801 246-
If to the Trust: c/o David R. Wilson
4th Floor
41 East First South Street
Salt Lake City, Utah 84111
Telephone: 801-246-5342
Facsimile: 801-246-
With a copy to: Richards Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19801-0001
Telecopier No.: (302) 658-6548
Attention: Bernard Kelley, Esq.
</TABLE>
or, as to each party, at such other address as shall be designated by such party
in a written notice complying as to delivery with the terms of this Section.
7. PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto and nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement. Without limitation to
the foregoing, the parties hereto expressly agree that no holder of Old Capital
Securities or New Capital Securities shall have any right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement.
8. COUNTERPARTS; SEVERABILITY.
This Agreement may be executed in one or more counterparts, and by
different parties hereto on separate counterparts, each of which when so
executed shall be deemed an original, and all of such counterparts shall
together constitute one and the same agreement. If any term or other provision
of this Agreement or the application thereof is invalid, illegal or incapable of
being enforced by any rule of law, or public policy, all other provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the agreements contained herein is not affected
in any manner adverse to any party. Upon such determination that any term or
provision or the application thereof is invalid, illegal or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the agreements contained herein may be performed
as originally contemplated to the fullest extent possible.
9. CAPTIONS.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
10. ENTIRE AGREEMENT; AMENDMENT.
This Agreement constitutes the entire understanding of the parties hereto
with respect to the subject matter hereof. This Agreement may not be amended or
modified nor may any provision hereof be waived except in writing signed by each
party to be bound thereby.
<PAGE> 8
11. TERMINATION.
This Agreement shall terminate upon the earlier of (a) the 90th day
following the expiration, withdrawal, or termination of the Exchange Offer, (b)
the close of business on the date of actual receipt of written notice by FSB
from the Company and the Trust stating that this Agreement is terminated, (c)
one year following the date of this Agreement, or (d) the time and date on which
this Agreement shall be terminated by mutual consent of the parties hereto.
12. MISCELLANEOUS.
FSB hereby acknowledges receipt of the Prospectus and the Letter of
Transmittal and the Notice of Guaranteed Delivery and further acknowledges that
it has examined each of them. Any inconsistency between this Agreement, on the
one hand, and the Prospectus and the Letter of Transmittal and the Notice of
Guaranteed Delivery (as they may be amended or supplemented from time to time),
on the other hand, shall be resolved in favor of the latter three documents,
except with respect to the duties, liabilities and indemnification of FSB as
Exchange Agent which shall be controlled by this Agreement.
Kindly indicate your willingness to act as Exchange Agent and FSB's
acceptance of the foregoing provisions by signing in the space provided below
for that purpose and returning to the Company a copy of this Agreement so
signed, whereupon this Agreement and FSB's acceptance shall constitute a binding
agreement between FSB, the Company and the Trust.
Very truly yours,
FIRST SECURITY CORPORATION
By:
--------------------------------------
Name: Scott C. Ulbrich
Title: Chief Financial Officer
FIRST SECURITY CAPITAL I
By:
--------------------------------------
Name: David R. Wilson
Title: Regular Trustee
Accepted as of the date first above written:
FIRST SECURITY BANK, N.A.
By:
--------------------------------------
Name:
Title: Authorized Executive Officer
