<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH , 1997
REGISTRATION NO. 333-21759
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
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)
---------------------
SCOTT C. ULBRICH
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
A. ROBERT THORUP, ESQ.
RAY, QUINNEY & NEBEKER
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>
==================================================================================================================
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
- ------------------------------------------------------------------------------------------------------------------
<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 (paid)
- ------------------------------------------------------------------------------------------------------------------
8.41% Junior Subordinated Debentures
of First Security Corporation, due
2026(2)............................. -- -- -- N/A
- ------------------------------------------------------------------------------------------------------------------
First Security Corporation Guarantee
with respect to Subordinated Capital
Income Securities(3)................ -- -- -- N/A
- ------------------------------------------------------------------------------------------------------------------
Total(4)..................... $150,000,000 100% $150,000,000 $45,495.00 (paid)
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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 MARCH 10, 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 APRIL 11, 1997, 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 MARCH 10, 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
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(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 April 11, 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 March 10, 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 April 11, 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
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<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.
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<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
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<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>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits................... 2.75x 2.19x 3.02x 4.62x 4.55x
Including Interest on Deposits................... 1.59x 1.41x 1.70x 1.72x 1.54x
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding Interest on Deposits................... 2.79x 2.19x 3.02x 4.62x 4.54x
Including Interest on Deposits................... 1.59x 1.41x 1.70x 1.72x 1.54x
</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 December 31, 1996, and
as adjusted to give effect to the consummation of the sale of the Old Capital
Securities.
<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...................................... 150,000 150,000
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)................................ 304,320 304,320
Non-Bank.......................................................... 1,039 1,039
---------- ----------
Total long-term debt...................................... 794,055 794,055
---------- ----------
Guaranteed Preferred Beneficial Interests in Company's Junior
Subordinated Debentures -- old(3)................................. 150,000 --
Guaranteed Preferred Beneficial Interests in Company's Junior
Subordinated Debentures -- new(3)................................. -- 150,000
STOCKHOLDERS' EQUITY
Series A, $3.15 Cumulative Convertible Preferred Stock:
(10,459 shares outstanding)....................................... 540 540
Common Stock (par value $1.25, authorized 300,000,000 shares, issued
and outstanding 76,171,674 shares)(4)............................. 95,338 95,338
Paid-in surplus................................................ 130,398 130,398
Retained earnings.............................................. 923,375 923,375
Net unrealized loss on securities available for sale........... 877 877
---------- ----------
Subtotal.......................................................... 1,149,988 1,149,988
Less: common treasury stock at cost (573,820 shares).............. (9,880) (9,880)
---------- ----------
Total common stockholders' equity................................. 1,140,108 1,140,108
---------- ----------
Total stockholders' equity................................ 1,140,648 1,140,648
---------- ----------
Total long-term debt and stockholders' equity............. $2,084,703 $2,084,703
========== ==========
Capital ratios:
Tier 1 Capital.................................................... 11.34% 11.74%
Total Capital..................................................... 14.50% 14.50%
Tier 1 Leverage Ratio............................................. 8.16% 8.16%
</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 almost all mature in 1996-2000.
(3) As described herein, the 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, which
reflect $4,640,000 in nonregistered notes issued by the Company to the
Trust.
(4) Shares issued and outstanding and as adjusted exclude 3,759,827 shares
reserved for issuance upon exercise of outstanding employee stock options,
187,000 shares reserved for issuance upon exercise of conversion rights of
preferred stock, 1,147,000 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 April
11, 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.
Stock Transfer/Corporate Trust
3rd Floor
79 South Main Street
Salt Lake City, Utah 84111
Attention:
Telephone: (801) 246-5292
Facsimile: (801) 246-5053
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 SEPTEMBER 6, 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
MARCH 10, 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 previously
** Filed herewith. 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 March 6, 1997
- --------------------------------------------- Officer, Director
Spencer F. Eccles
/s/ MORGAN J. EVANS* President and Chief Operating March 6, 1997
- --------------------------------------------- Officer, Director
Morgan J. Evans
/s/ SCOTT C. ULBRICH* Executive Vice President and March 6, 1997
- --------------------------------------------- Chief Financial Officer
Scott C. Ulbrich (Principal Financial and
Accounting Officer)
/s/ JAMES C. BEARDALL* Director March 6, 1997
- ---------------------------------------------
James C. Beardall
/s/ RODNEY H. BRADY* Director March 6, 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 March 6, 1997
- ---------------------------------------------
Thomas D. Dee II
/s/ Director
- ---------------------------------------------
Dr. David P. Gardner
/s/ ROBERT GARFF* Director March 6, 1997
- ---------------------------------------------
Robert Garff
/s/ DAVID B. HAIGHT*
- ---------------------------------------------
David B. Haight Director March 6, 1997
/s/ Director
- ---------------------------------------------
Jay Dee Harris
/s/ ROBERT T. HEINER* Director March 6, 1997
- ---------------------------------------------
Robert T. Heiner
/s/ KAREN H. HUNTSMAN* Director March 6, 1997
- ---------------------------------------------
Karen H. Huntsman
/s/ G. FRANK JOKLIK* Director March 6, 1997
- ---------------------------------------------
G. Frank Joklik
/s/ B. Z. KASTLER* Director March 6, 1997
- ---------------------------------------------
B. Z. Kastler
/s/ Director
- ---------------------------------------------
Joseph G. Maloof
/s/ SCOTT S. PARKER* Director March 6, 1997
- ---------------------------------------------
Scott S. Parker
/s/ DR. ARTHUR K. SMITH* Director March 6, 1997
- ---------------------------------------------
Dr. Arthur K. Smith
/s/ JAMES L. SORENSON* Director March 6, 1997
- ---------------------------------------------
James L. Sorenson
/s/ HAROLD J. STEELE* Director March 6, 1997
- ---------------------------------------------
Harold J. Steele
/s/ JAMES WILSON* Director March 6, 1997
- ---------------------------------------------
James Wilson
FOR THE TRUST:
/s/ BRAD D. HARDY* Regular Trustee March 6, 1997
- ---------------------------------------------
Brad D. Hardy
</TABLE>
II-6
<PAGE> 75
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- --------------
<C> <S> <C>
/s/ SCOTT C. ULBRICH* Regular Trustee March 6, 1997
- ---------------------------------------------
Scott C. Ulbrich
/s/ DAVID R. WILSON* Regular Trustee March 6, 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
*By Attorney in Fact March 6, 1997
/s/ A. ROBERT THORUP
- ---------------------------------------------
A. Robert Thorup
Attorney in Fact
</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 previously
** Filed herewith. 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 12.1
STATEMENT RE COMPUTATION OF RATIOS
FIRST SECURITY CORPORATION
Computation of the Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
(In Thousands)
<TABLE>
<CAPTION>
------- For the years ended December 31, ---------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
EXCLUDING THE DIVIDEND REQUIREMENT
OF PREFERRED STOCK:
Earnings:
Net Income 177,843 120,005 140,134 114,056 100,343
Total Provision (Benefit) For Income Taxes 99,752 70,191 81,043 59,211 49,909
Income before income tax provision (benefit) 277,595 190,196 221,177 173,267 150,252
Fixed Charges:
Total Interest Expense 471,232 459,868 315,415 240,794 280,499
Interest on deposits 313,010 300,146 205,725 192,992 238,135
Fixed charges, excluding interest on deposits 158,222 159,722 109,690 47,802 42,364
Fixed charges, including interest on deposits 471,232 459,868 315,415 240,794 280,499
Adjusted earnings, excluding interest on deposits 435,817 349,918 330,867 221,069 192,616
Adjusted earnings, including interest on deposits 748,827 650,064 536,592 414,061 430,751
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits 2.75 2.19 3.02 4.62 4.55
Including interest on deposits 1.59 1.41 1.70 1.72 1.54
INCLUDING THE DIVIDEND REQUIREMENT
OF PREFERRED STOCK:
Earnings:
Net Income 177,843 120,005 140,134 114,056 100,343
Total Provision (Benefit) For Income Taxes 99,752 70,191 81,043 59,211 49,909
Income before income tax provision (benefit) 277,595 190,196 221,177 173,267 150,252
Fixed Charges:
Total Interest Expense 471,232 459,868 315,415 240,794 280,499
Interest on deposits 313,010 300,146 205,725 192,992 238,135
Dividend requirement of preferred stock 33 35 39 43 48
Adjustment to compute pretax preferred dividend 12 13 15 16 18
Fixed charges, excluding interest on deposits 158,267 159,770 109,744 47,861 42,430
Fixed charges, including interest on deposits 471,277 459,916 315,469 240,853 280,565
Adjusted earnings, excluding interest on deposits 435,862 349,966 330,921 221,128 192,682
Adjusted earnings, including interest on deposits 748,872 650,112 536,646 414,120 430,817
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements:
Excluding interest on deposits 2.75 2.19 3.02 4.62 4.54
Including interest on deposits 1.59 1.41 1.70 1.72 1.54
</TABLE>
Note: Earnings have been restated to reflect the retroactive adoption of SFAS
109, "Accounting for Income Taxes" and the November 1993
pooling-of-interests merger with First National Financial Corporation.
<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 Pre-Effective Amendment No.
1 to Registration Statement of First Security Corporation and First Security
Capital I 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
March 6, 1997
<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: Stock Transfer/Corporate Trust
5th Floor
61 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 March 10, 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) 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.
Compensation according to its regular fee schedule 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. Such
fees shall in no event be less than $500 in advance at the time of signing and
$1,500 for each year's services, paid in advance.
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
<PAGE> 6
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, 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: 801-246-6928
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
If to FSB: First Security Bank, N.A.
Stock Transfer/Corporate Trust
5th Floor
61 South Main Street
Salt Lake City, Utah 84111
Telephone: 801-246-5292
Facsimile: 801 246-5053
If to the Trust: c/o David R. Wilson, Trustee
4th Floor
41 East First South Street
Salt Lake City, Utah 84111
Telephone: 801-246-5342
Facsimile: 801-246-5370
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: /s/ SCOTT C. ULBRICH
--------------------------------------
Name: Scott C. Ulbrich
Title: Chief Financial Officer
FIRST SECURITY CAPITAL I
By: /s/ DAVID R. WILSON
--------------------------------------
Name: David R. Wilson
Title: Regular Trustee
Accepted as of the date first above written:
FIRST SECURITY BANK, N.A.
By: /s/ CHRISTINA COOPER
--------------------------------------
Name: Christina Cooper
Title: Authorized Executive Officer
