<PAGE>
As filed with the Securities and Exchange Commission on June 10, 1998.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------------
FIRST SECURITY CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 6711 87-6118148
-------- ---- ----------
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-6000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------------
SCOTT C. ULBRICH
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5706
(Address, including zip code, and telephone number, including
area code, of agent for service)
----------------------
Copies To:
A. ROBERT THORUP, ESQ. STANLEY F. FARRAR, ESQ.
RAY, QUINNEY & NEBEKER SULLIVAN & CROMWELL
79 SOUTH MAIN STREET 444 SOUTH FLOWER STREET
SALT LAKE CITY, UTAH 84111 LOS ANGELES, CALIFORNIA 90071
(801) 323-3359 (213) 955-8000
----------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
----------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration number of the earlier
effective registration statement for the same offering. [_] ____________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_] ____________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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============================================================================================================================
TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED(1) OFFERING PRICE PER OFFERING PRICE(3) REGISTRATION FEE
UNIT(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities $ (4), (6)
- ----------------------------------------------------------------------------------------------------------------------------
Preferred Stock (6)
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$1.25 (7) (5) (6)
- ----------------------------------------------------------------------------------------------------------------------------
Warrants to Purchase (5) (6)
Common Stock
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL $1,500,000,000 (2) $1,500,000,000 $442,500(8)
============================================================================================================================
</TABLE>
/1/Pursuant to Rule 457(o) under the Securities Act of 1933, which permits the
registration fee to be calculated on the basis of the maximum offering price of
all securities listed, the table does not specify by each class information as
to the amount to be registered, proposed maximum offering price per Unit or
proposed maximum offering price. There are being registered hereunder such
presently indeterminate principal amount or number of Debt Securities, shares of
Preferred Stock, shares of Common Stock, Common Stock Rights, and Warrants to
Purchase Common Stock as may be offered from time to time, with an aggregate
initial offering price not to exceed $1,500,000,000 (or the equivalent thereof
in one or more foreign or composite currencies, including the European Currency
Unit).
/2/The proposed maximum offering price per unit will be determined from time to
time by the Registrant in connection with the issuance by the Registrant of the
securities registered hereunder.
/3/Estimated solely for the purpose of computing the registration fee.
/4/Exclusive of accrued interest, if any.
/5/The aggregate amount of Common Stock registered hereunder is limited to that
which is permissible under Rule 415(a)(4) under the Securities Act of 1933.
/6/No separate consideration will be received for (i) Debt Securities, Preferred
Stock or Common Stock that are issued upon conversion of or in exchange for Debt
Securities or Preferred Stock or (ii) Common Stock to be issued upon exercise of
related Warrants to purchase Common Stock.
/7/Each share of Common Stock registered hereby includes one Right to purchase
additional of the Company's securities, which Right will not be evidenced
separately from the Common Stock prior to the occurrence of certain events.
These Rights will be triggered by a future acquisition of a certain percentage
of the Company's outstanding Common Stock by a stockholder or group of
stockholders.
/8/A fee of $284,485 was previously paid in connection with the registration by
the Company of $600,000,000 in aggregate initial offering price of its Debt
Securities, shares of Preferred Stock, shares of Common Stock, Common Stock
Rights and Warrants to Purchase Common Stock under the Registration Statement on
Form S-3 (File No. 333-3377), of which $450,000,000 has not been sold. This
remaining $450,000,000 earlier registered amount has been deducted from the
$1,500,000,000 registered amount on this Registration Statement to bring the
amount on which the filing fee for this Registration Statement is calculated
to $1,050,000,000. Accordingly wired funds to the Commission lock box in the
amount of $309,750 will accompany the filing of this Registration Statement.
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
<PAGE>
PROSPECTUS
$ 1,500,000,000
[LOGO]
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
AND WARRANTS TO PURCHASE COMMON STOCK
_____________________________________
First Security Corporation (the "Company") may from time to time issue and offer
(a) its notes, debentures or other unsecured evidences of indebtedness in one or
more series ("Debt Securities"), which may be either senior ("Senior Debt
Securities") or subordinated ("Subordinated Debt Securities") in priority of
payment; (b) shares of one or more series of its Preferred Stock ("Preferred
Stock"); (c) shares of its Common Stock (par value $1.25) ("Common Stock"); and
(d) warrants to acquire Common Stock ("Common Stock Warrants") either directly
or in conversion or exchange for other securities. (When appropriate, all of
the foregoing types of securities are referred to herein as "the Securities".)
THE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
The Senior Debt Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Subordinated Debt Securities will be
subordinated to all of the Company's existing and future Senior Debt, as
defined. See "Description of Debt Securities."
The Company may offer the Securities up to an aggregate initial offering price
not to exceed US$ 1,500,000,000 or, as to Debt Securities, its equivalent based
on the applicable exchange rate at the time of offering in such foreign
currencies or units of two or more currencies thereof as may be designated by
the Company at the time of such an offering. Debt Securities or Preferred Stock
of each series will be offered on terms determined at the time of sale. When
any of the Securities is offered, a supplement to this Prospectus (the
"Prospectus Supplement") setting forth certain terms of the offered Securities
will be delivered together with this Prospectus. With regard to Debt Securities
or Preferred Stock in respect of which this Prospectus is being delivered, the
Prospectus Supplement will set forth, if applicable, the specific designation,
aggregate principal amount or redemption value, rate (or method of calculation)
or dividend and time of payment of any interest or dividend, maturity, initial
public offering price, place or places of payment of interest or dividends,
redemption terms and other terms of such Securities.
The Securities may be sold to underwriters for public offering pursuant to the
terms of offering fixed at the time of sale, or any or all of the Securities may
be sold to the public by the Company directly or through one or more agents or
dealers. Presently the Company plans on using J.P. Morgan Securities Inc., or a
group of underwriters represented by such firm. J.P. Morgan Securities Inc. or
First Security Capital Markets, Inc. may also act as agent for the Company.
Those underwriters or agents, if any, that will be involved in the sale of any
of the Securities, their names and any applicable fee, commission, purchase
price or discount arrangements with them will be set forth, or will be
calculated from the information set forth, in a Prospectus Supplement. See
"Plan of Distribution."
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF ANY SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________________
J.P. MORGAN & CO. FIRST SECURITY CAPITAL MARKETS, INC.
THE DATE OF THIS PROSPECTUS IS JULY , 1998.
<PAGE>
No dealer, salesman or other person has been authorized to give
any information or to make any representation not contained in this Prospectus
or any Prospectus Supplement in connection with the offer made by this
Prospectus and any such Prospectus Supplement and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any Underwriter. Neither this Prospectus nor any Prospectus
Supplement constitutes an offer to sell or a solicitation of an offer to buy any
of the Securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sale made hereunder shall, under
any circumstances, create an implication that the information herein is correct
as of any time subsequent to the date hereof or that there has been no change in
the affairs of the Company since such date.
FOR NORTH CAROLINA RESIDENTS:
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED OR
DISAPPROVED THIS OFFERING, NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information can be inspected and copies obtained at the
offices of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549; at Public Reference Facilities at the Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and at the
New York Regional Office, Seven World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can be obtained upon written request from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Company's filings with the
Commission may also be viewed and copied through the Commission's EDGAR database
available through the world wide web. The Commission's home page can be accessed
at www.sec.gov.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement under the Securities Act of 1933 (the "Securities Act")
with respect to the Securities. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all the information set forth in
the Registration Statement, including the exhibits thereto, which may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following
documents of the Company heretofore filed by it with the Commission:
(a) Annual Report on Form 10-K for the year ended December
31, 1997; and
2
<PAGE>
(b) Proxy Statement dated as of March 18, 1998; and
(c) Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
(d) Reports on Form 8-K dated January 27, 1998 and February
19, 1998.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Securities made hereby are
incorporated herein by reference, and such documents shall be deemed to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom
this Prospectus is delivered, upon request of any such person, a copy of any or
all of the foregoing documents incorporated herein by reference (other than the
exhibits to such documents). Written requests should be directed to:
Scott C. Ulbrich
Executive Vice President
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
Telephone requests may be directed to (801) 246-5706.
FIRST SECURITY CORPORATION
GENERAL
The Company is a Delaware incorporated multi-bank holding company
headquartered in Salt Lake City, Utah. At March 31, 1998, the Company and its
subsidiaries had total consolidated assets and shareholders' equity of $18.3
billion and $1.4 billion, respectively. IN MAY 1998, THE COMPANY COMPLETED ITS
ACQUISITION OF CALIFORNIA STATE BANK (REFERRED TO HEREIN AS "FIRST SECURITY
CALIFORNIA"). ALTHOUGH THE COMPANY INTENDS TO RESTATE HISTORICAL FINANCIAL
STATEMENTS FOR THE EFFECT OF THE CALIFORNIA STATE BANK POOLING OF INTERESTS
ACQUISITION, THE FINANCIAL INFORMATION ABOUT THE COMPANY INCLUDED IN THIS
PROSPECTUS HAS NOT BEEN RESTATED FOR CALIFORNIA STATE BANK. FINANCIAL
INFORMATION THAT APPEARS IN A PROSPECTUS SUPPLEMENT PUBLISHED SUBSEQUENTLY TO
THE RELEASE OF SUCH RESTATED FINANCIAL INFORMATION (ON OR ABOUT AUGUST 15, 1998)
MAY NOT BE COMPARABLE WITH THE FINANCIAL INFORMATION CONTAINED IN THIS
PROSPECTUS.
3
<PAGE>
The principal banking subsidiaries of the Company are First
Security Bank, N.A. ("First Security Bank") and First Security Bank of New
Mexico, N.A. ("First Security New Mexico"), both of which are commercial banking
institutions providing a broad range of banking, fiduciary, financial and other
services. First Security Bank operates a total of 295 branches in Utah, Idaho,
Oregon and Wyoming. First Security New Mexico operates a total of 31 branches in
the northern areas of New Mexico. The Company owns another, smaller national
bank in New Mexico with 11 branches in the Las Cruces area market. The Company
also operates state chartered banks in Nevada ("First Security Nevada") and
California (First Security California). All of the Company's banking
subsidiaries will be referred to hereafter as "the Banks". Nonbank subsidiaries
owned by the Company include a leasing company, a mortgage company, a securities
broker-dealer, an investment adviser, an insurance agency, a credit life
insurance company and a management and services company.
Under longstanding policy of the Board of Governors of the
Federal Reserve System ("the Federal Reserve Board"), a bank holding company is
expected to act as a source of financial strength for its subsidiary banks and
to commit resources to support such banks. As a result of that policy, the
Company may be required to commit resources to its subsidiary banks in
circumstances where it might not otherwise do so.
A substantial portion of the Company's cash flow is typically
derived from dividends directly from its bank and nonbank subsidiaries, and from
interest on loans to the Company's nonbank subsidiaries. Various statutory
provisions limit the amount of dividends subsidiary Banks and certain nonbank
subsidiaries can pay to the Company without regulatory approval. In addition,
because the Company is a bank holding company, its rights and the rights of its
creditors and stockholders, including the holders of the Securities, to
participate in the assets of any subsidiary upon liquidation or recapitalization
will be subject to the prior claims of the subsidiary's creditors, except to the
extent that the Company may itself be a creditor with recognized claims against
the subsidiary. See "Supervision and Regulation."
The Company maintains its principal executive offices at 79 South
Main Street, Salt Lake City, Utah 84111, telephone 801-246-6000.
COMPETITION
Based on deposits in the various states where it operates, at
June 30, 1997, First Security Bank was the largest bank in Utah, the second
largest bank in Idaho, the 7th largest bank in Oregon, and the 8th largest bank
in Wyoming. First Security New Mexico was the second largest bank in the
Albuquerque area and the third largest bank in New Mexico. First Security Nevada
was the 5th largest bank in Nevada. First Security California is a relatively
smaller, more localized competitor in California.
The Company's Banks compete with other banking organizations in
the states in which they operate on the basis of price, service and convenience.
Other types of financial institutions, such as savings banks, savings and loan
associations and credit unions, offer a wide range of deposit and loan services
(including commercial loans) and, in some instances, fiduciary services. The
Company's subsidiaries also compete with brokerage firms, insurance companies
and mutual fund companies which provide investment products and, in many cases,
the substantial equivalent of checking accounts, credit cards and similar
products traditionally provided by commercial banks. Major retailers compete
with the
4
<PAGE>
Company's lending operations by offering credit cards and retail installment
contracts. It is anticipated that competition from nonbank organizations will
continue to grow.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
For the fiscal years ended December 31, 1997, 1996, 1995, 1994
and 1993 the Company's consolidated ratios of earnings to combined fixed charges
and preferred stock dividends, and its ratio of earnings to fixed charges,
excluding interest on deposits were 2.35, 2.75, 2.19, 3.02, and 4.62,
respectively; and such ratios including interest on deposits were 1.55, 1.59,
1.41, 1.70, and 1.72, respectively. For purposes of computing the consolidated
ratio of earnings to combined fixed charges and preferred stock dividends,
earnings represent net income plus income taxes and fixed charges. Fixed
charges, excluding interest on deposits, include interest expense (except
interest paid on deposits), capitalized interest, an amount equal to the pretax
earnings required to meet applicable preferred stock dividend requirements and
the interest factor included in rents. Fixed charges, including interest on
deposits, include all interest expense, capitalized interest, an amount equal to
the pretax earnings required to meet applicable preferred stock dividend
requirements and the interest factor included in rents.
SUPERVISION AND REGULATION
References in this section to applicable statutes and regulations
are brief summaries only and do not purport to be complete. The reader should
consult such statutes and regulations themselves for a full understanding of the
details of their operation.
Bank Holding Company Regulation
- -------------------------------
The Company is a bank holding company registered under the Bank
Holding Company Act of 1956 (the "BHC Act"), and is subject to supervision and
regulation by the Federal Reserve Board. Federal laws subject bank holding
companies to particular restrictions on the types of activities in which they
may engage, and to a range of supervisory requirements and activities, including
regulatory enforcement actions for violation of laws and policies. In addition,
Utah law authorizes the state bank regulators to supervise and regulate under
limited circumstances a holding company controlling a Utah domiciled bank.
- ACTIVITIES "CLOSELY RELATED" TO BANKING. The BHC Act prohibits
a bank holding company, with certain limited exceptions, from acquiring direct
or indirect ownership or control of any voting shares of any company which is
not a bank or from engaging in any activities other than those of banking,
managing or controlling banks and certain other subsidiaries, or furnishing
services to or performing services for its subsidiaries. One principal exception
to these prohibitions allows the acquisition of interests in companies whose
activities are found by the Federal Reserve Board to be so closely related to
banking, managing, or controlling banks as to be a proper incident thereto. Such
activities include making or servicing loans, performing certain data processing
services, acting as an investment or financial advisor to certain investment
trusts and investment companies, and providing securities brokerage services.
5
<PAGE>
- SECURITIES ACTIVITIES. The Federal Reserve Board has approved
applications by bank holding companies to engage, through nonbank subsidiaries,
in certain securities underwriting activities, provided that the affiliates
would not be "principally engaged" in such activities for purposes of Section 20
of the Glass-Steagall Act. Subject to various limitations, holding companies
have been permitted to underwrite and deal in corporate debt and equity
securities through such subsidiaries. The Company organized such a subsidiary,
First Security Capital Markets, Inc., and commenced business operations on April
1, 1998.
- SAFE AND SOUND BANKING PRACTICES. Bank holding companies are
not permitted to engage in unsafe and unsound banking practices. The Federal
Reserve Board may order a bank holding company to terminate an activity or
control of a nonbank subsidiary if such activity or control constitutes a
significant risk to the financial safety, soundness or stability of a subsidiary
bank and is inconsistent with sound banking principles.
The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA") expanded the Federal Reserve Board's authority to prohibit
activities of bank holding companies and their nonbanking subsidiaries which
represent unsafe and unsound banking practices or which constitute violations of
laws or regulations. Notably, FIRREA increased the amount of monetary penalties
which the Federal Reserve Board can assess for such practices or violations to
as high as $1 million per day. FIRREA also expanded the scope of individuals and
entities against which such penalties may be assessed.
- ANTI-TYING RESTRICTIONS. Bank holding companies and their bank
and nonbank affiliates are prohibited from tying the provision of certain
services, such as extensions of credit, to other services offered by a holding
company or its affiliates.
- ANNUAL REPORTING; EXAMINATIONS. The Company is required to file
an annual report with the Federal Reserve Board and such additional information
as the Federal Reserve Board may require pursuant to the BHC Act. The Federal
Reserve Board may examine a bank holding company or any of its subsidiaries, and
charge the company for the cost of such an examination.
- CAPITAL ADEQUACY REQUIREMENTS. The Federal Reserve Board
monitors the capital adequacy of bank holding companies. The Federal Reserve
Board uses a combination of risk-based guidelines and leverage ratios to
evaluate capital adequacy. The Federal Reserve Board has adopted a system based
upon the Basle Accord, an international standard for risk-based capital
guidelines, to evaluate the capital adequacy of bank holding companies. Under
the risk-based capital guidelines, different categories of assets are assigned
different risk weights, based generally on the perceived credit risk of the
asset. These risk weights are multiplied by corresponding asset balances to
determine a "risk-weighted" asset base. Certain off-balance sheet items, which
previously were not expressly considered in capital adequacy computations, are
added to the risk-weighted asset base by converting them to a balance sheet
equivalent and assigning to them the appropriate risk weight. Total capital is
defined as the sum of "Tier 1" and "Tier 2" capital elements, with "Tier 2"
being limited to 100% of "Tier 1." For bank holding companies, "Tier 1" capital
includes, with certain restrictions, common stockholders' equity, retained
earnings, non-cumulative perpetual preferred stock and minority interests in
consolidated subsidiaries less certain intangibles. "Tier 2" capital includes,
with certain limitations, certain forms of non-qualifying perpetual preferred
stock, maturing capital instruments (such as qualifying convertible and/or
subordinated debt), the reserve for possible loan losses and specified levels of
certain intangibles.
6
<PAGE>
In addition to the risk-based capital guidelines, the Federal
Reserve Board has adopted the use of a leverage ratio as an additional tool to
evaluate the capital adequacy of banks and bank holding companies. The leverage
ratio is a company's "Tier 1" capital divided by its adjusted total assets. This
leverage ratio must be at least 3.0% for bank holding companies with either the
Federal Reserve Board's highest asset rating, called "BOPEC 1", or which have
implemented the Federal Reserve Board's risk-based capital measure for market
risk. For all other bank holding companies, the minimum leverage ratio is 4.0%,
and institutions planning acquisitions are expected to maintain higher ratios.
The following table sets forth the current regulatory
requirements for capital ratios of bank holding companies as compared with the
Company's capital ratios at Mach 31, 1998:
<TABLE>
<CAPTION>
-----------------------------------------
TIER 1 TOTAL
CAPITAL TO CAPITAL TO
LEVERAGE RISK-WEIGHTED RISK-WEIGHTED
RATIO ASSETS/(1)/ ASSETS/(2)/
<S> <C> <C> <C>
- --------------------------------------------------------------------
REGULATORY MINIMUM 4.00% 4.00% 8.00%
- --------------------------------------------------------------------
THE COMPANY'S ACTUAL 7.45% 10.31% 13.04%
- --------------------------------------------------------------------
</TABLE>
/(1)/ Shareholders' equity less goodwill (Tier 1 capital) divided by risk-
weighted assets.
/(2)/ Tier 1 capital plus reserve for possible loan losses (limited to 1.25% of
total risk-weighted assets) plus qualified subordinated and convertible debt
(Tier 2 capital) divided by risk-weighted assets.
Bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. Management cannot predict whether these capital requirements will change
or whether they will materially affect the Company's financial position or
operating ability.
- AUDIT REPORTS. Federal law requires insured depository
institutions with $500 million or more in total assets, such as the Company and
each of First Security Bank, First Security New Mexico, First Security Nevada,
and First Security California, to submit annual audit reports prepared by
independent auditors to federal and state regulators. In most cases, the audit
report of the institution's holding company can be used to satisfy this
requirement. The annual audit report shall include financial statements prepared
in accordance with generally accepted accounting principles, statements
concerning management's responsibility for the financial statements, internal
controls and compliance with legal requirements designated by the FDIC, and an
attestation by the auditor regarding the statements of management. Federal law
also requires that independent audit committees be formed, consisting of outside
directors only. The committees of institutions with assets of $3 billion or
more, such as the Company, must include members with experience in banking or
financial management, must have access to outside counsel, and must not include
representatives of large customers. The Company's Board of Directors includes an
independent audit committee which complies with these requirements.
- ACQUISITIONS BY BANK HOLDING COMPANIES. The BHC Act requires
every bank holding company to obtain the prior approval of the Federal Reserve
Board before it may acquire all or substantially all of the assets of any bank,
or ownership or control of any voting shares of any bank, if
7
<PAGE>
after such acquisition it would own or control, directly or indirectly, more
than 5% of the voting shares of such bank.
The Federal Reserve Board may allow the acquisition by a bank
holding company of an interest in a bank located in another state if the bank
holding company is adequately capitalized and adequately managed regardless of
the law of the state in which the target bank is located. Congress has
eliminated most restrictions on interstate bank acquisitions and interstate
branching. A bank holding company may now acquire a bank anywhere in the nation,
irrespective of state laws. Subject to a state "opting out" of the new federal
program, a bank may also branch nationwide. None of the states in which the
Company has subsidiary banks have "opted out" of this regulatory regime. The
Company faces competition from large financial institutions from other parts of
the United States in substantially all of its markets.
In addition, FDICIA has eased restrictions on cross-industry
mergers between commercial banks and savings institutions. Members of the Bank
Insurance Fund ("BIF"), such as the Company, and the Savings Association
Insurance Fund are generally allowed to merge, assume each other's deposits, and
transfer assets in exchange for an assumption of deposit liabilities.
Subsidiary Bank Regulation
- --------------------------
Three of the Company's bank subsidiaries are national banks,
which are subject to regulation and supervision by the Office of the Comptroller
of the Currency (the "Comptroller"). The other banks are each subject to
regulation by regulators in their respective states and the FDIC. Bank
regulations on both the federal and state levels are broad in their scope and
materially affect the business of the Company and its banks.
All of the Company's subsidiary banks are subject to the
requirements of and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
thereon, and limitations on the types of investments that may be made and the
types of services that may be offered. Various consumer laws and regulations
also affect the operations of the banks. In addition to the impact of
regulation, commercial banks are affected significantly by actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability.
- RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES. Section 23A of
the Federal Reserve Act imposes quantitative and qualitative limits on loan
transactions between a bank and its affiliates, and also requires certain levels
of collateral for such loans. It also limits the amount of advances to third
parties which are collateralized by the securities or obligations of the Company
or its subsidiaries. Section 23B of the Federal Reserve Act requires that
certain transactions between the Company's subsidiary banks and their affiliates
must be on terms at least as favorable to the Company or its subsidiaries as
those prevailing for comparable transactions with other nonaffiliated companies.
In the absence of such comparable transactions, any transaction between the
Company and its affiliates must be on terms and under circumstances, including
credit standards, that in good faith would be offered to or would apply to
nonaffiliated companies. The Company is currently in material compliance with
the requirements of Sections 23A and 23B.
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- RESTRICTIONS ON SUBSIDIARY BANK DIVIDENDS. The Federal Reserve
Board, the Comptroller and the FDIC have each issued policy statements to the
effect that bank holding companies and member banks, national banks and state
banks should generally only pay dividends out of current operating earnings. The
prior approval of the Comptroller is required if the total of all dividends
declared by the board of directors of a national bank, such as First Security
Bank and First Security New Mexico, in any calendar year will exceed the
aggregate of the bank's net profits (as defined by regulatory authorities) for
that year and its retained net profits for the preceding two years. Certain
generally similar restrictions govern the other banking subsidiaries of the
Company. In addition, national banks can pay dividends only to the extent that
retained net profits exceed "bad debts", which are generally defined to include
the principal amount of loans that are in arrears as to interest by nine months
or more and that are not secured and that are not in the process of collection.
As of March 31, 1998, the Company's banks could have declared additional
dividends to the Company of approximately $326 million without regulatory
approval or restriction. Federal banking regulators also may prohibit federally
insured banks from paying dividends if the payment of such dividend would leave
the bank "undercapitalized" as defined in FDICIA and the implementing
regulations, or the payment of dividends would, in light of the financial
condition of such bank, constitute an unsafe or unsound practice. Applicable
California and Nevada law place similar restrictions on the payment of dividends
by the Company's banks organized under the laws of those states.
- EXAMINATIONS. The FDIC periodically examines and evaluates
insured banks. Based upon such an evaluation, the FDIC may revalue the assets of
an insured institution and require that it establish specific reserves to
compensate for the difference between the FDIC-determined value and the book
value of such assets. FDICIA requires that these on-site examinations be
conducted every 12 months, except that certain well-capitalized banks may be
examined every 18 months. The rules and regulations of the Comptroller, which
regulate the Company's national banks, and the various state banking authorities
regulating the Company's state-chartered banks, also provide for periodic
examinations by those agencies.
- CURRENT REGULATORY STRUCTURE. The laws and regulations
affecting banks and bank holding companies are under continual review. For
example, recent federal legislative proposals include bills which would
consolidate all banking regulators into one or two regulatory agencies and
others which would permit bank holding companies to affiliate with investment
banking firms. The rules and the regulatory agencies in this area have changed
significantly over recent years, and there is reason to expect that similar
changes, including changes which may materially affect the Company's operations,
will continue in the future.
USE OF PROCEEDS
Unless otherwise set forth in the Prospectus Supplement, the net
proceeds from the sale of the Securities will be applied to the Company's
general funds to be utilized for such corporate purposes as may be determined by
management, including payment of cash amounts due upon completion of
acquisitions, funding of investments in or extensions of credit to the Company's
subsidiaries, and repayment of borrowings. Except as otherwise described in the
Prospectus Supplement, specific allocations of the proceeds to such purposes
will not have been made at the date of the Prospectus Supplement, although
management of the Company will have determined that funds should be raised at
that time in anticipation of future funding requirements. The precise amounts
and timing of payments due upon completion of acquisitions, of investments in
and extensions of credit to the subsidiaries, and the repayment of borrowings
will depend upon funding requirements and the availability of other funds.
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Pending such application, net proceeds may be temporarily invested or applied to
the reduction of short-term indebtedness.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities
sets forth certain general terms and provisions of the Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by a Prospectus Supplement and the extent, if any, to which
such general provisions may not apply thereto will be described in the
Prospectus Supplement relating to such Debt Securities.
The Debt Securities may be Senior Debt Securities or Subordinated
Debt Securities (both including but not limited to Medium-Term Notes). The
Senior Debt Securities will be issued under an Indenture dated as of March 1,
1994 (the "Senior Indenture") between the Company and The First National Bank of
Chicago, as Trustee (together with its successor trustee, if any, the "Senior
Trustee"), and the Subordinated Debt Securities will be issued under an
Indenture dated as of March 1, 1994 (the "Subordinated Indenture") between the
Company and The First National Bank of Chicago, as Trustee (together with its
successor trustee, if any, the "Subordinated Trustee"). The Senior Indenture and
the Subordinated Indenture are collectively referred to herein as the
"Indentures," copies of the forms of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part. References to the
"Trustee" below shall mean the Senior Trustee or the Subordinated Trustee. The
following summaries of the material provisions of the Indenture are not complete
restatements of the provisions themselves, and are subject to, and qualified in
their entirety by reference to, the provisions of the Indenture applicable to a
particular series of Debt Securities (the "Applicable Indenture"), including the
definitions therein of certain terms. Wherever particular sections, articles or
defined terms of the Indentures are referred to, it is intended that such
sections, articles or defined terms shall be incorporated herein by reference.
Section and article references used herein are references to the Applicable
Indenture. Capitalized terms not otherwise defined herein shall have the meaning
given them in the Applicable Indenture.
GENERAL
Neither Indenture limits the amount of Debt Securities which may
be issued thereunder, and Debt Securities of any series may be issued thereunder
up to the aggregate principal amount which may be authorized from time to time
by the Company. Neither the Indentures nor the Debt Securities will limit or
otherwise restrict the amount of other indebtedness which may be incurred or the
other securities which may be issued by the Company or any of its Subsidiaries.
The Debt Securities will be unsecured direct obligations of the Company.
Because the Company is a holding company, its rights and the
rights of its creditors, including the holders of the Debt Securities, to
participate in the assets of any Subsidiary upon the latter's liquidation or
recapitalization would be subject to the prior claims of such Subsidiary's
creditors except to the extent that the Company may itself be a creditor with
claims against the Subsidiary that are recognized by a court having jurisdiction
over such claims.
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Unless otherwise indicated in the Prospectus Supplement, principal of
and any premium and interest on the Debt Securities will be payable, and the
transfer of the Debt Securities will be registrable, at the currently designated
office of the Trustee at One First National Plaza, Chicago, Illinois 60670. In
addition, payment of interest on Debt Securities may, at the option of the
Company, be made by check mailed to the address of the person entitled thereto
as it appears on the Security Register. (Sections 301, 305 and 1002). Acting
in accordance with each Indenture, the Company intends also to designate the
principal office of First Security Bank as an office where principal, premium,
and interest may be paid and the transfer of the Debt Securities may be
registered. (Sections 301, 305 and 1002)
Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. (Section 302) No
service charge will be made for any registration of transfer or exchange of the
Debt Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Section 305) The Indentures also provide that the Debt Securities of any
series, if so specified with respect to a particular series, may be issued in
permanent global form. See " Global Debt Securities."
Reference is made to the Prospectus Supplement for a description of
the following terms, where applicable, of each series of Debt Securities in
respect of which this Prospectus is being delivered: (1) the title of the Debt
Securities of the series; (2) any limit on the aggregate principal amount of the
Debt Securities of the series; (3) the date or dates on which the principal of
the Debt Securities of the series will be payable; (4) the rate or rates (which
may be fixed or variable) at which the Debt Securities of the series will bear
interest, if any, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable, and the Regular
Record Dates for such Interest Payment Dates; (5) the place or places where the
principal of, premium, if any, and interest on the Debt Securities of the series
shall be payable; (6) the period or periods within which, the price or prices at
which and the terms and conditions upon which the series of Debt Securities may
be redeemed, in whole or in part, at the option of the Company; (7) the
obligation, if any, of the Company to redeem or purchase the Debt Securities of
the series pursuant to any sinking fund or analogous provision or at the option
of the Holders thereof and the period or periods within which, the price or
prices at which and the terms and conditions upon which Debt Securities of the
series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation; (8) the denomination or denominations in which such Debt Securities
are authorized to be issued; (9) the currency of payment of principal of,
premium, if any, and interest on the Debt Securities of the series; (10) any
index or formula used to determine the amount of payment of principal of,
premium, if any, and interest on the Debt Securities of the series; (11) if
other than the principal amount thereof, the portion of the principal amount of
Debt Securities of the series which shall be payable upon declaration of
acceleration of the Maturity thereof; (12) whether the Debt Securities of the
series shall be issued in whole or in part in the form of one or more Global
Securities and, if so, the Depositary for such Global Security or Securities;
(13) the portion of the principal amount of such Debt Securities which will be
payable upon declaration of acceleration of the Maturity thereof, if other than
the principal thereof; (14) any additional Events of Default or, in the case of
Subordinated Debt Securities, Default, solely with respect to the Debt
Securities; (15) whether the provisions of the applicable Indenture described
under "Defeasance and Covenant Defeasance" will be applicable to such Debt
Securities; (16) any additional restrictive covenants included solely for the
benefit of the Debt Securities; (17) if the Debt Securities are Subordinated
Debt Securities, whether the provisions in the Subordinated Indenture described
under "Subordination of Subordinated Debt Securities" or other subordination
provisions will be applicable to such Subordinated Debt Securities; and (18) any
other terms of the series of Debt Securities not inconsistent with the
provisions of the Applicable Indenture.
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The Debt Securities may be issued as Original Issue Discount Debt
Securities, to be offered and sold at a discount below their stated principal
amount. Any such Original Issue Discount Debt Securities will be described in
the Prospectus Supplement related thereto, which description will include a
discussion of the material federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Debt Securities.
An "Original Issue Discount Security" is generally a Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon the declaration of acceleration of the Maturity thereof upon the
occurrence of an Event of Default and the continuation thereof.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are
convertible into or exchangeable for shares of Common Stock, Preferred Stock or
Warrants will be set forth in the Prospectus Supplement related thereto. Such
terms may include provisions for conversion or exchange, either mandatory, at
the option of the holder, or at the option of the Company, in which the number
of shares of Common Stock, Preferred Stock or Warrants to be received by the
holders of Debt Securities would be calculated according to the market price of
Common Stock, Preferred Stock or Warrants as of a time stated in the Prospectus
Supplement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The payment of the principal of and interest on the Subordinated Debt
Securities will, to the extent set forth in the Subordinated Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Subordinated Indenture). In certain events of
insolvency, the payment of the principal of and interest on the Subordinated
Debt Securities will, to the extent set forth in the Subordinated Indenture,
also be effectively subordinated in right of payment to the prior payment in
full of all Other Financial Obligations (as defined in the Subordinated
Indenture and defined below). Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency or similar proceedings of the Company, the holders of all
Senior Indebtedness will first be entitled to receive payment in full of all
amounts due or to become due thereon before the Holders of the Subordinated Debt
Securities will be entitled to receive any payment in respect of the principal
of or interest on the Subordinated Debt Securities. If upon any such payment or
distribution of assets to creditors, there remain, after giving effect to such
subordination provisions in favor of the holders of Senior Indebtedness, any
amounts of cash, property or securities available for payment or distribution in
respect of Subordinated Debt Securities (as defined in the Subordinated
Indenture, "Excess Proceeds") and if, at such time, any Entitled Persons in
respect of Other Financial Obligations have not received payment in full of all
amounts due or to become due on or in respect of such Other Financial
Obligations, then such Excess Proceeds shall first be applied to pay or provide
for the payment in full of such Other Financial Obligations before any payment
or distribution may be made in respect of the Subordinated Debt Securities. In
the event of the acceleration of the maturity of any Debt Securities, the
holders of all Senior Indebtedness will first be entitled to receive payment in
full of all amounts due thereon before the Holders of the Subordinated Debt
Securities will be entitled to receive any payment upon the principal of or
interest on the Subordinated Debt Securities. No payments on account of
principal of or interest on the Subordinated Debt Securities or on account of
the purchase or acquisition of Subordinated Debt Securities may be made if there
shall have occurred and be continuing a default in any payment with respect to
Senior Indebtedness, or if any judicial proceeding shall be pending with respect
to any such default. (Article Thirteen of the Subordinated Indenture)
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By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of insolvency, creditors of the Company who are not
holders of Senior Indebtedness or of the Subordinated Debt Securities may
recover less, ratably, than Holders of Senior Indebtedness and may recover more,
ratably, than the Holders of the Subordinated Debt Securities. By reason of the
obligation of the Holders of Subordinated Debt Securities to pay over any Excess
Proceeds to Entitled Persons in respect of Other Financial Obligations, in the
event of insolvency, holders of Existing Subordinated Indebtedness (as defined
in the Subordinated Indenture and defined below) may recover less, ratably, than
Entitled Persons in respect of Other Financial Obligations and may recover more,
ratably, than the Holders of Subordinated Debt Securities.
Unless otherwise specified in the Prospectus Supplement relating
to the particular series of Subordinated Debt Securities offered thereby, Senior
Indebtedness is defined in the Subordinated Indenture as (a) the principal of
(and premium, if any), and interest on all indebtedness of the Company for money
borrowed, whether outstanding on the date of execution of the Subordinated
Indenture or thereafter created, assumed or incurred, except (i) such
indebtedness as is by its terms expressly stated to be junior in right of
payment to the Subordinated Debt Securities and (ii) such indebtedness as is by
its terms expressly stated to rank pari passu with the Subordinated Debt
---- -----
Securities and (b) any deferrals, renewals or extensions of any such Senior
Indebtedness; provided, however, that Senior Indebtedness shall not include
-------- -------
Existing Subordinated Indebtedness. (Section 101 of the Subordinated Indenture)
The term "indebtedness for money borrowed" when used with respect to the Company
is defined to mean any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, and any deferred obligation of,
or any such obligation guaranteed by, the Company for the payment of the
purchase price of property or assets. (Section 101 of the Subordinated
Indenture)
Unless otherwise specified in the Prospectus Supplement relating
to the particular series of Subordinated Debt Securities offered thereby,
Existing Subordinated Indebtedness means the Company's 7.50% Subordinated Notes
due 2002 issued under an Indenture, dated as of August 1, 1991, between the
Company and Norwest Bank Minnesota, N.A., as trustee; the Company's 7.00%
Subordinated Notes Due 2005 issued under the Subordinated Indenture; and the
Company's 8.41% Subordinated Capital Income Securities due 2026.
Unless otherwise specified in the Prospectus Supplement relating
to the particular series of Subordinated Debt Securities offered thereby, Other
Financial Obligations means (a) obligations of the Company under direct credit
substitutes, (b) obligations of, or any such obligation directly or indirectly
guaranteed by, the Company for purchased money or funds, (c) any deferred
obligation of, or any such obligation directly or indirectly guaranteed by, the
Company for the payment of the purchase price of property or assets, (d) any
obligation of, or any such obligation directly or indirectly guaranteed by, the
Company for the payment of rent or other amounts under a lease of property or
assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles, and (e) all obligations of the Company to make payment
pursuant to the terms of financial instruments, such as (i) securities contracts
and foreign currency exchange contracts, (ii) derivative instruments, such as
swap agreements (including interest rate and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange rate agreements, options, commodity futures
contracts, commodity option contracts and (iii) in the case of both (i) and (ii)
above, similar financial instruments, other than (A) obligations on account of
Senior Indebtedness and (B) obligations on account of indebtedness for money
borrowed ranking pari passu with or subordinate to the Subordinated Debt
---- -----
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Securities. Unless otherwise specified in the Prospectus Supplement relating to
the particular series of Subordinated Debt offered thereby, Entitled Persons
means any person who is entitled to payment pursuant to the terms of Other
Financial Obligations. (Section 101 of the Subordinated Indenture)
Indebtedness of the Company senior to the Subordinated Debt
Securities, at March 31, 1998, totalled approximately $990 million ($350 million
of the currently outstanding subordinated debt securities are ranked pari passu
----------
with the new Subordinated Debt Securities).
The Company's obligations under the Subordinated Debt Securities
shall rank pari passu in right of payment with each other and with the Existing
---- -----
Subordinated Indebtedness, subject to the obligations of the Holders of
Subordinated Debt Securities to pay over any Excess Proceeds to Entitled Persons
in respect of Other Financial Obligations as provided in the Subordinated
Indenture.
The Subordinated Indenture does not limit or prohibit the
incurrence of additional Senior Indebtedness, which may include indebtedness
that is senior to the Subordinated Debt Securities, but subordinate to other
obligations of the Company, including obligations of the Company in respect of
Other Financial Obligations. The Senior Debt Securities, when issued, will
constitute Senior Indebtedness.
The Prospectus Supplement may further describe the provisions, if
any, applicable to the subordination of the Subordinated Debt Securities of a
particular series.
CERTAIN COVENANTS IN THE SENIOR INDENTURE
Restrictions on Certain Dispositions of Major Constituent Banks. The
---------------------------------------------------------------
Senior Indenture provides that, except as described below under "Consolidation,
Merger and Sale of Assets", the Company will not (a) sell, assign, transfer, or
otherwise dispose of any shares of, or securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of, Voting Stock of a
Major Constituent Bank (as defined below) (or a Subsidiary owning Voting Stock
of a Major Constituent Bank) or permit a Major Constituent Bank (or a Subsidiary
owning Voting Stock of a Major Constituent Bank) to issue any shares of, or
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of such Voting Stock, if, in each case, after giving effect to
any such transaction and to the issuance of the maximum number of shares of
Voting Stock of such Major Constituent Bank (or Subsidiary) issuable upon the
exercise of all such convertible securities, options, warrants or rights, the
Major Constituent Bank would cease to be a Controlled Subsidiary, or (b) permit
a Major Constituent Bank (or a Subsidiary owning Voting Stock of a Major
Constituent Bank) to (i) merge or consolidate with or into any other
corporation, unless the surviving corporation is, or upon consummation of the
merger or consolidation will become, a Controlled Subsidiary; or (ii) lease,
sell or transfer all or substantially all of its properties and assets to any
Person, except to a Controlled Subsidiary or a Person that, upon such lease,
sale or transfer, will become a Controlled Subsidiary. The Senior Indenture,
however, provides that any such sale or other disposition of securities, any
such merger or consolidation or any such lease, sale or transfer of properties
and assets will not be prohibited (i) if required by any law or any rule,
regulation or order of any governmental agency or authority, (ii) if required as
a condition imposed by any law or rule, regulation or order of any governmental
agency or authority to the acquisition by the Company, directly or indirectly,
of any Person, provided that, after giving effect to such other prohibited
transaction and such acquisition, (A) such Person will be a Controlled
Subsidiary and (B) the Consolidated Banking Assets (as defined below) of the
Company will be at least equal to the Consolidated Banking Assets of the Company
prior thereto, or (iii) if the proceeds from such otherwise
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prohibited transaction are within 180 days after such transaction, or such
longer period of time as may be necessary to obtain regulatory approval in
connection therewith, invested by the Company, pursuant to an understanding or
agreement in principle reached at the time of such otherwise prohibited
transaction, in one or more Controlled Subsidiaries (including any Person which
upon such investment becomes a Controlled Subsidiary) engaged in the banking
business or any other business then legally permissible for bank holding
companies. (Section 1008)
"Major Constituent Bank" means, as of March 31, 1998, First Security
Bank and First Security New Mexico or (ii) any Subsidiary Bank the consolidated
banking assets of which constitute 20% or more of the aggregate consolidated
banking assets of all Subsidiary Banks. "Controlled Subsidiary" means any
Subsidiary more than 80% of the outstanding shares of the Voting Stock of which
is at the time owned directly or indirectly by the Company or by one or more
Controlled Subsidiaries or by the Company and one or more Controlled
Subsidiaries. "Consolidated banking assets" of a Subsidiary Bank means all
assets owned directly or indirectly by such Subsidiary Bank and reflected on the
Company's consolidated balance sheet prepared in accordance with generally
accepted accounting principles. (Section 101)
Restrictions on Liens on Voting Stock of Major Constituent Banks. The
----------------------------------------------------------------
Senior Indenture provides that the Company will not create, assume, incur or
suffer to be created, assumed or incurred or to exist any pledge, encumbrance or
lien, as security for indebtedness for borrowed money, upon any shares of, or
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of a Major Constituent Bank now or hereafter
owned by the Company, directly or indirectly, without making effective provision
whereby any Debt Securities shall be equally and ratably secured with any and
all such indebtedness if, treating such pledge, encumbrance or lien as a
transfer of the shares of, or securities convertible into or options, warrants,
or rights to subscribe for or purchase shares of, Voting Stock subject thereto
to the secured party and after giving effect to the issuance of the maximum
number of shares of Voting Stock of such Major Constituent Bank issuable upon
the exercise of all such convertible securities, options, warrants or rights,
the Major Constituent Bank would not continue to be a Controlled Subsidiary.
(Section 1009)
Neither the Senior Indenture nor the Subordinated Indenture contain
any restriction on the Company's ability to enter into a highly leveraged
transaction or any provision affording any special protection to Holders in the
event that the Company engages in a highly leveraged transaction.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Indenture provides that the Company, without the consent of the
holders of any of the Outstanding Debt Securities, may consolidate with or merge
into, or convey, transfer, or lease its properties and assets substantially as
an entirety to, any Person, provided that (a) the successor is a Person
organized under the laws of any domestic jurisdiction and assumes the Company's
obligations on the Debt Securities and under the Indenture, (b) after giving
effect to the transaction there exists no Event of Default or, in the case of
the Subordinated Indenture, Default, and no event which, after notice or lapse
of time would become an Event of Default or, in the case of the Subordinated
Indenture, Default, shall have occurred and be continuing, and (c) certain other
conditions are met. (Section 801)
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GLOBAL DEBT SECURITIES
If any Debt Securities of a series are to be issued in permanent
global form, the Prospectus Supplement relating thereto will describe the
circumstances, if any, under which beneficial owners of interests in any such
permanent global Debt Security may exchange such interests for certificated Debt
Securities of such series and of like tenor and principal amount in any
authorized form and denomination. Principal of and any premium and interest on a
permanent global Debt Security will be payable in the manner described in the
Prospectus Supplement relating thereto. (Section 205).
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide under Article 13 (for the Senior Indenture) and
Article 14 (for the Subordinated Indenture), if such provision is made
applicable to the particular Debt Securities of any series pursuant to Section
301 of the Applicable Indenture (which will be indicated in the Prospectus
Supplement applicable thereto), that the Company may elect either (A) to defease
and be discharged from any and all obligations with respect to such Debt
Securities then outstanding (including, in the case of Subordinated Debt
Securities, the provisions described under "Subordination of Subordinated Debt
Securities" and except for the obligations to register the transfer or exchange
of such Debt Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of the Debt
Securities and to hold moneys for payment in trust) ("defeasance") or (B) to be
released from its obligations with respect to such Debt Securities then
outstanding under Sections 1006 through Section 1009 of the Senior Indenture and
Sections 1006 and 1007 of the Subordinated Indenture (and any other sections
applicable to such Debt Securities that are determined pursuant to Section 301
to be subject to covenant defeasance), the occurrence of an event of default
specified in, in the case of Senior Debt Securities, Section 501(4) of the
Senior Indenture, and in the case of Subordinated Debt Securities, Section
503(C) of the Subordinated Indenture (with respect to Sections 1006 through
Section 1009 of the Senior Indenture and Sections 1006 and 1007 of the
Subordinated Indenture or any other section applicable to such Debt Securities
that are determined pursuant to Section 301 to be subject to covenant
defeasance), or, in the case of Senior Debt Securities, Section 501(5) of the
Senior Indenture, and in the case of Subordinated Debt Securities, Section
503(D) of the Subordinated Indenture (Section 1006 of the Indentures containing
the covenant to maintain properties, Section 1007 of the Indentures containing
the covenant to pay taxes and other claims, Section 1008 of the Senior Indenture
containing the restrictions described under "Restrictions on Certain
Dispositions of Major Constituent Banks", Section 1009 of the Senior Indenture
containing the restrictions described under "Restriction on Liens on Voting
Stock of Major Constituent Banks" and Sections 501(4) and 501(5) of the Senior
Indenture and Sections 503(C) and 503(D) of the Subordinated Indenture
containing the provisions described under "Defaults" relating to covenant
defaults and cross-defaults, respectively) and, in the case of Subordinated Debt
Securities, the provisions described under "Subordination of Subordinated Debt
Securities" ("covenant defeasance"), upon the deposit with the Senior Trustee or
Subordinated Trustee (or other qualifying trustee), in trust for such purpose,
of money, and/or U.S. Government Obligations which through the payment of
principal and interest in accordance with their terms will provide money, in an
amount sufficient, without reinvestment, to pay the principal of (and premium,
if any) and interest on such Debt Securities to maturity or redemption, as the
case may be, and any mandatory sinking fund or analogous payments thereon. As a
condition to defeasance or covenant defeasance, the Company must deliver to the
Senior Trustee or Subordinated Trustee an Opinion of Counsel (as specified in
the Applicable Indenture) to the effect that the Holders of such Debt Securities
will not recognize income, gain or loss for Federal income tax purposes as a
result of such defeasance or covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times
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as would have been the case if such defeasance or covenant defeasance had not
occurred. Such opinion, in the case of defeasance under clause (A) above, must
refer to and be based upon a ruling of the Internal Revenue Service issued to
the Company or published as a revenue ruling or upon a change in applicable
Federal income tax law, in any such case after the date of the Applicable
Indenture.
Under current Federal income tax law, defeasance would likely be
treated as a taxable exchange of Debt Securities to be defeased for interests in
the defeasance trust. As a consequence a holder would recognize gain or loss
equal to the difference between the holder's cost or other tax basis for such
Debt Securities and the value of the holder's proportionate interest in the
defeasance trust, and thereafter would be required to include in income a
proportionate share of the income, gain and loss of the defeasance trust. Under
current Federal income tax law, covenant defeasance would ordinarily not be
treated as a taxable exchange of such Debt Securities. Purchasers of such Debt
Securities should consult their own advisors with respect to the tax
consequences to them of such defeasance and covenant defeasance, including the
applicability and effect of tax laws other than the Federal income tax law.
The Company may exercise its defeasance option with respect to such
Debt Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of such Debt Securities may
not be accelerated by reference to the covenants noted under clause (B) above.
However, if such an acceleration were to occur, the realizable value at the
acceleration date of the money and U.S. Government Obligations in the defeasance
trust could be less than the principal and interest then due on such Debt
Securities, in that the required deposit in the defeasance trust is based upon
scheduled cash flows rather than market value, which will vary depending upon
interest rates and other factors. (Article 13 and Article 14 of the Senior
Indenture and the Subordinated Indenture, respectively).
The Prospectus Supplement may further describe the provisions, if any,
applicable to defeasance or covenant defeasance with respect to the Debt
Securities of a particular series.
DEFAULT
The Senior Indenture
--------------------
The following are Events of Default under the Senior Indenture with
respect to Senior Debt Securities of any series: (1) failure to pay principal
of or premium, if any, on any Debt Securities of that series when due; (2)
failure to pay any interest on any Senior Debt Securities of that series, when
due, continued for 30 days; (3) failure to deposit any sinking fund payment,
when due, in respect of any Senior Debt Securities of that series; (4) failure
to perform any other covenant of the Company in the Senior Indenture (other than
a covenant included in the Senior Indenture solely for the benefit of series of
Senior Debt Securities other than that series), continued for 60 days after
written notice as provided in the Senior Indenture; (5) failure to pay when due
the principal of or the acceleration of any indebtedness for borrowed money by
the Company or any Major Constituent Bank, in any individual instance or in the
aggregate in the principal amount in excess of $1,000,000, if such indebtedness
is not discharged or such acceleration is not annulled within 10 days after
written notice as provided in the Senior Indenture; (6) certain events in
bankruptcy, insolvency, or reorganization of the Company or any Major
Constituent Bank; and (7) any other Event of Default provided in any
supplemental indenture entered into with respect to Senior Debt Securities of a
particular series as described in the Prospectus Supplement. (Section 501)
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If an Event of Default with respect to Senior Debt Securities of any
series shall occur and be continuing, either the Trustee or the Holders of at
least 25% in aggregate principal amount of the outstanding Senior Debt
Securities of that series by notice as provided in the Indenture may declare the
principal amount to be due and payable immediately. At any time after a
declaration of acceleration with respect to Senior Debt Securities of any series
has been made, but before a judgment or decree for payment of money has been
obtained by the Trustee, the Holders of a majority in aggregate principal amount
of outstanding Senior Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Section 502)
The Subordinated Indenture
--------------------------
The Subordinated Indenture defines an Event of Default with respect to
any series of Subordinated Debt Securities as being certain events involving the
bankruptcy, insolvency or reorganization of the Company or any other Event of
Default provided with respect to Debt Securities of any series. (Section 501) If
any Event of Default with respect to Subordinated Debt Securities of any series
at the time outstanding occurs and is continuing, either the Trustee or the
Holders of not less than 25% in principal amount of the outstanding Subordinated
Debt Securities of that series may declare the principal amount of all
Subordinated Debt Securities of that series to be due and payable immediately
(provided that no such declaration is required upon certain events of
bankruptcy, insolvency or reorganization), but upon certain conditions such
declaration may be annulled and past defaults (except, unless theretofore cured,
a default in payment of principal of (or premium, if any), or interest on the
Subordinated Debt Securities of that series and certain other specified
defaults) may be waived by the Holders of a majority in principal amount of the
outstanding Subordinated Debt Securities of that series on behalf of the Holders
of all Subordinated Debt Securities of that series. (Sections 502 and 513)
The Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of Subordinated Debt
Securities upon a default in the payment of principal or interest or in the
performance of any covenant or agreement in the Subordinated Debt Securities of
the particular series or in the Subordinated Indenture. The Subordinated
Indenture defines a Default with respect to Subordinated Debt Securities of any
series as any one of the following events: (1) an Event of Default; (2) failure
to pay any interest on any Subordinated Debt Securities of that series, when
due, continued for 30 days; (3) failure to pay principal of (or premium, if
any), on any Subordinated Debt Securities of that series when due; (4) failure
to deposit any sinking fund payment, when due, in respect of any Subordinated
Debt Securities of that series; (5) failure to perform any other covenant of the
Company in the Subordinated Indenture (other than a covenant included in the
Subordinated Indenture solely for the benefit of a series of Subordinated Debt
Securities other than that series) continued for 60 days after written notice as
provided in the Subordinated Indenture; (6) failure to pay when due the
principal of or the acceleration on any indebtedness for borrowed money by the
Company or a Major Constituent Bank, in any individual instance or in the
aggregate in the principal amount in excess of $3,000,000, if such indebtedness
is not discharged or such acceleration is not annulled within 10 days after
written notice as provided in the Subordinated Indenture; and (7) any other
Default with respect to Subordinated Debt Securities of a particular series as
described in the Prospectus Supplement. In case a Default shall occur and be
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders by appropriate judicial proceeding as the
Trustee deems most effectual. (Section 503)
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The Senior and Subordinated Indentures
--------------------------------------
Reference is made to the Prospectus Supplement for the particular
provisions relating to acceleration of the Maturity of any portion of the
principal amount of a series of Debt Securities upon the occurrence of an Event
of Default and the continuation thereof.
Each Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the applicable
Indenture at the request or direction of any of the Holders unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 603) Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the outstanding Debt Securities of any
series will have the right to direct the time, method, and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Debt Securities of that
series. (Series 512)
Under each Indenture the Company is required to furnish annually to
the Trustee a statement as to the performance by the Company of certain of its
obligations under such Indenture and as to any default in such performance.
(Section 1004)
MODIFICATION OF INDENTURES AND WAIVER OF CONDITIONS
Modifications and amendments of each Indenture may be made by the
Company and the Trustee with the consent of the Holders of 66-2/3% in aggregate
principal amount of the outstanding Debt Securities of each series affected by
such modification or amendment, provided, however, that no such modification or
-------- -------
amendment may, without the consent of the Holder of each outstanding Debt
Security of each series affected thereby, (1) change the stated maturity date of
the principal of, or any installment of principal of or interest on, any Debt
Securities; (2) reduce the principal amount of, the rate of interest on or any
premium payable upon the redemption of any Debt Securities; (3) reduce the
amount of the principal of any Original Issue Discount Security that would be
due and payable upon a declaration of acceleration of the Maturity thereof; (4)
change any Place of Payment where, or the coin or currency in which, payment of
principal of, or any premium or interest on, any Debt Securities may be made;
(5) impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Securities; or (6) in the case of the Subordinated
Indenture, modify the provisions thereof with respect to the subordination of
the Subordinated Debt Securities in a manner adverse to the Holders thereof; or
(7) reduce the percentage in principal amount of outstanding Debt Securities of
any series, the consent of whose Holders is required for modification or
amendment of the Applicable Indenture or for waiver of compliance with certain
provisions of the Applicable Indenture or for waiver of certain defaults.
(Section 902)
Each Indenture provides that the Holders of 66-2/3% in aggregate
principal amount of the outstanding Debt Securities of any series may, on behalf
of all Holders of Debt Securities of that series, waive, insofar as that series
is concerned, compliance by the Company with certain restrictive provisions of
the Applicable Indenture with respect to the Debt Securities of such series.
(Section 1010 of the Senior Indenture, Section 1008 of the Subordinated
Indenture) The Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of any series may, on behalf of all Holders of Debt
Securities of that series, waive any past default under the Applicable Indenture
with respect to the Debt Securities of such series except a default in the
payment of principal or any premium or interest with respect to the Debt
Securities of such series or in respect of a covenant or provision of the
Applicable Indenture which
19
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cannot be modified or amended without the consent of the Holders of each
outstanding Debt Security of such series. (Section 513)
REGARDING THE TRUSTEE
The First National Bank of Chicago is the Senior Trustee under the
Senior Indenture and the Subordinated Trustee under the Subordinated Indenture.
Certain of the Company's subsidiaries now, or in the future may, maintain
deposit accounts and/or other banking relationships with the Trustee.
DESCRIPTION OF PREFERRED STOCK
The following statements are brief summaries of the material
provisions relating to the Company's Preferred Stock and are qualified in their
entirety by the provisions of the Company's Certificate of Incorporation and
Bylaws which have been filed with the Commission.
- SERIES A PREFERRED STOCK. The Company's Certificate of Incorporation
authorizes the issuance of 400,000 shares of preferred stock with no par value.
On March 31, 1998, there were 9,541 shares of $3.15 Cumulative Convertible
Preferred Stock, Series "A" (the "Series A Preferred Stock") outstanding.
Holders of Series A Preferred Stock have the right to receive semi-annual
dividends at the annual rate of $3.15 per share. Such right is cumulative and
such dividends are payable before dividends may be paid on the Company's Common
Stock. Each share of Series A Preferred Stock is convertible into 41.00625
shares of the Company's Common Stock. This conversion right is subject to
adjustment in certain events to protect against dilution of the conversion
rights attached to the Series A Preferred Stock. In the event of a liquidation,
dissolution or winding up of the Company, the holders of Series A Preferred
Stock are entitled to receive cash value of $52.50 per share plus unpaid
accumulated preferred dividends before any distribution is made to holders of
the Company's Common Stock. The Company may, at the option of the Board of
Directors, redeem all or any part of the outstanding Series A Preferred Stock at
the redemption price of $52.50 per share plus unpaid accumulated preferred
dividends. The Series A Preferred Stock is currently not publicly traded.
Holders of the Company's Series A Preferred Stock are entitled to one
vote per share on all matters submitted to a vote of stockholders. Voting for
the election of directors is not cumulative. If at any time four or more semi-
annual dividends on the Series A Preferred Stock are in default, in whole or in
part, the holders of the Series A Preferred Stock as a class will be entitled to
elect four directors and the holders of the Company's Common Stock will be
entitled to elect the remaining directors. Holders of any additional Preferred
Stock hereafter issued may have such full or limited voting rights as are
provided by the Board of Directors.
- JUNIOR SERIES B PREFERRED STOCK. 175,163 shares of the Company's
Preferred Stock are reserved under the Rights Agreement between the Company and
First Security Bank, in connection with the Rights associated with the Company's
Common Stock. (See "DESCRIPTION OF COMMON STOCK -- Rights Plan")
---
- Additional Series of Preferred Stock. The Board of Directors of the
------------------------------------
Company is authorized by the Certificate of Incorporation to provide, without
further shareholder action, for the issuance of one or more series of preferred
stock. The Board of Directors has the power to fix various terms with respect
to each series, including voting powers, designations, preferences and relative,
participating, optional or
20
<PAGE>
other special rights, qualifications, limitations, restrictions and redemption,
conversion or exchangeability provisions. Holders of any series of preferred
stock will have no pre-emptive rights.
The applicable Prospectus Supplement will set forth the following
specific terms regarding the series of Preferred Stock offered thereby: (i) the
designation, number of shares and liquidation preference per share; (ii) the
initial public offering price; (iii) the dividend rate or rates; (iv) the index,
if any, upon which the amount of dividends, if any, is determined; (v) the dates
on which dividends, if any, will accrue and be payable and the designated record
dates for determining the holders entitled to such dividends; (vi) any
redemption or sinking fund provisions; (vii) any conversion or exchange
provisions; (viii) provisions for issuance of global securities; (ix) the
currency (which may be composite currency) in which payment of dividends, if
any, shall be payable if other than United States dollars; (x) voting rights;
and (xi) any additional terms, preferences or rights.
Under regulations adopted by the Federal Reserve Board, if the holders
of shares of any series of preferred stock of the Company become entitled to
vote for the election of directors because the Board of Directors of the Company
has failed to declare or pay dividends on such series, such series may then be
deemed a class of "voting securities" and a holder of 25 percent or more of such
series (or a holder of five percent or more if it otherwise exercises a
"controlling influence" over the Company) may then be subject to regulation as a
bank holding company in accordance with the Bank Holding Company Act of 1956, as
amended. In addition, at such time as such series is deemed a class of voting
securities, any other bank holding company may be required to obtain the prior
approval of the Federal Reserve Board to acquire five percent or more of such
series and any person other than a bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire ten percent or
more of such series.
The shares of Preferred Stock will, when issued, be fully paid and
nonassessable and will have no pre-emptive rights.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the Preferred Stock will be specified in the Prospectus Supplement
relating thereto.
Because the Company is a holding company, its rights, the rights of its
creditors and of its stockholders, including the holders of any shares of
Preferred Stock, to participate in any distribution of assets of any subsidiary
upon the latter's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent that the Company may
itself be a creditor with recognized claims against the subsidiary. The
principal sources of the Company's revenues are dividends received from its
subsidiary Banks. Various statutory provisions limit the amount of dividends
the Company's subsidiary Banks and certain nonbank subsidiaries can pay without
regulatory approval, and various regulations can also restrict the payment of
dividends. Certain proposed regulations could further limit the ability of the
Company's subsidiary Banks to pay dividends to the Company, and federal statutes
limit the ability of subsidiary Banks to make loans to the Company. See
"Supervision and Regulation."
Dividends
---------
The holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds legally available therefor, cumulative or non-cumulative cash or other
dividends at such rate or rates and on such dates as will be set forth in the
Prospectus Supplement relating to such series. Such rates may be fixed or
variable or both. If
21
<PAGE>
variable, the formula used for determining the dividend rate for each dividend
period will be set forth in the Prospectus Supplement. Dividends will be
payable to the holders of record as they appear on the stock books of the
Company on such record dates as will be fixed by the Board of Directors of the
Company and specified in the Prospectus Supplement. If the Board of Directors
of the Company fails to declare a dividend payable on a dividend payment date on
any series of the Preferred Stock for which dividends are noncumulative
("Noncumulative Preferred Stock"), then the holders of such series of the
Preferred Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and the Company will have
no obligation to pay a dividend for such period, whether or not dividends on
such series are declared payable on any future dividend payment dates.
No dividends may be declared in respect of any dividend period on any
other series or class of preferred stock ranking on a parity as to dividends
unless full cumulative dividends on all outstanding shares of each series of
Preferred Stock on which dividends are cumulative shall have been paid in full
or contemporaneously are declared and paid through the most recent dividend
payment date, unless otherwise indicated in the Prospectus Supplement. In the
event that full cumulative dividends on such Preferred Stock have not been
declared and paid or set apart when due, the Company may not declare or pay any
dividends on, or make other distributions on or make any payment on account of
the purchase, redemption, or other retirement, of its Common Stock or any other
stock of the Company ranking as to dividends or upon liquidations junior to such
Preferred Stock (other than, in the case of dividends or distributions,
dividends or distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Common Stock or such other junior ranking
stock), unless full cumulative dividends on such Preferred Stock are made or set
apart for payment, unless otherwise indicated in the Prospectus Supplement.
Redemption
----------
The shares of any series of Preferred Stock may be provided to be
redeemable at the option of the Company and may be provided to be subject to
mandatory redemption pursuant to a sinking fund or otherwise, in each case upon
the terms, on the date or dates and at the redemption price or prices set forth
in the Prospectus Supplement related to such series. If fewer than all shares
of Preferred Stock are to be redeemed, the shares to be redeemed shall be
selected by the Company pro rata or by lot, or by any other method determined by
the Board of Directors to be equitable. Under regulations of the Federal
Reserve Board, any perpetual preferred stock redeemable at the option of the
Company may qualify as Tier 1 or Tier 2 capital only if the redemption is
subject to prior approval of the Federal Reserve Board. Therefore, any
redemption of Preferred Stock at the option of the Company will require the
prior approval of the Federal Reserve Board in order for the Preferred Stock to
qualify as capital for bank regulatory purposes.
If any dividends on shares of any series of Preferred Stock are in
arrears, no shares of Common Stock or shares of capital stock ranking junior to
or on parity with the Preferred Stock shall be redeemed and no shares of such
series of Preferred Stock shall be redeemed unless all outstanding shares of
such series are simultaneously redeemed, and the Company shall not purchase or
otherwise acquire any shares of such series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of such series
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of such series.
22
<PAGE>
Any notice of redemption shall be given by mailing to each record holder
of the shares to be redeemed, not less than 40 days nor more than 70 days prior
to the date fixed for the redemption thereof, to the respective addresses of
such holders as the same shall appear on the Company's stock books. Each such
notice shall state: (i) the redemption date; (ii) the number of shares and
series of the Preferred Stock to be redeemed; (iii) the redemption price and the
manner in which such redemption price is to be paid and delivered; (iv) the
place or places where certificates for such shares of Preferred Stock are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date. If fewer
than all shares of any series of the Preferred Stock held by any holder are to
be redeemed, the notice mailed to such holder shall also specify the number of
shares to be redeemed from such holder.
If notice of redemption has been given, from and after the redemption
date for the shares of the series of the Preferred Stock called for redemption
(unless default shall have occurred by the Company in providing money for the
payment of the redemption price of the shares so called for redemption),
dividends on the shares of Preferred Stock so called for redemption will cease
to accrue, any right to convert the shares of Preferred Stock will terminate,
such shares will no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Company (except the right to receive the
redemption price) will cease. Upon surrender in accordance with such notice of
the certificates representing any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Company will so require
and the notice shall so state), the redemption price set forth above will be
paid out of funds provided by the Company. If fewer than all of the shares
represented by any such certificate are redeemed, a new certificate will be
issued representing the unredeemed shares without cost to the holder thereof.
Liquidation Preference
----------------------
Upon any liquidation, dissolution or winding up of the Company, the
holders of shares of each series of Preferred Stock shall be entitled to receive
out of the assets of the Company available for distribution to stockholders,
before any distribution of assets is made to or set apart for the holders of
Common Stock or of any other shares of stock of the Company ranking as to such a
distribution junior to the shares of such series, with respect to the Preferred
Stock, an amount described in the Prospectus Supplement relating to such series
of Preferred Stock. If, in any case of any such liquidation, dissolution or
winding up of the Company, the assets of the Company or the proceeds thereof
shall be insufficient to pay in full the amounts payable with respect to shares
of each series of Preferred Stock, and any other shares of stock of the Company
ranking as to any such distribution on a parity therewith, the holders of shares
of such series of Preferred Stock and of such other shares will share ratably in
any such distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of shares of such series of Preferred Stock of the full preferential
amounts to which they are entitled, the holders of shares of such series of
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company, unless otherwise provided in the
Prospectus Supplement. A consolidation or merger of the Company with one or
more corporations shall not be deemed to be a liquidation, dissolution or
winding up of the Company.
The terms, if any, on which shares of any series of Preferred Stock are
convertible into or exchangeable for Debt Securities or Common Stock will be set
forth in the Prospectus Supplement relating thereto. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Company, in which the number of shares of Common
23
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Stock to be received by the holders of Preferred Stock would be calculated
according to the market price of Common Stock as of a time stated in the
Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any Prospectus Supplement may
relate, including a Prospectus Supplement providing that Common Stock will be
issuable in conversion of or exchange for Debt Securities or Preferred Stock
issued by the Company. The statements below describing the Common Stock are in
general terms and are in all respects subject to and qualified in their entirety
by reference to the applicable provisions of the Company's Certificate of
Incorporation and Bylaws.
General
-------
The Company is currently authorized to issue up to 600,000,000 shares of
Common Stock with a par value of $1.25 per share. As of March 31, 1998, there
were issued and outstanding 176,028,000 shares (net of shares held as Treasury
Stock). At such date, there were an additional 5,736,445 shares reserved for
issuance under the Company's Comprehensive Management Incentive Plan as stock
bonuses and other awards; 1,006,000 shares reserved for issuance under the
Company's Dividend Reinvestment Plan; 391,241 shares reserved for issuance upon
the conversion of the Company's Series A Preferred Stock, and 10,103,930 shares
reserved for issuance upon exercise of outstanding stock options.
The Company's Common Stock has no pre-emptive or conversion rights.
The Company's Common Stock is not subject to redemption by the Company,
and there is no restriction on the repurchase by the Company of shares of the
Company's Common Stock except for certain regulatory limits.
Voting
------
The holders of the Company's Common Stock are entitled to voting rights
for the election of directors and for other purposes, subject to the voting
rights of the holders of Preferred Stock conferred by law and to the specific
voting rights granted to each series of Preferred Stock and to voting rights
which may in the future be granted to subsequently created series of Preferred
Stock.
Dividends
---------
Dividends will be determined by the Company's Board of Directors in
light of circumstances existing at the time, including the earnings and
financial condition of the Company, and there is no assurance that dividends
will continue to be paid at current levels. No material restrictions have been
imposed on the Company's ability to pay dividends from its earned surplus by
bank regulators or applicable law. As of March 31, 1998, approximately $650
million could be applied to dividend payments to its shareholders and certain
other payments without impairing capital to inadequate levels under federal
regulatory requirements. Payment of dividends on the Company's Common Stock is
also subject to the prior rights of the Company's outstanding Preferred Stock.
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<PAGE>
Rights Plan
-----------
As of August 28, 1989, the Company adopted a Shareholder Rights
Agreement (the "Plan") and the Board of Directors of the Company on that date
(a) declared a dividend of one "Right" for each share of the Company's Common
Stock held of record as of the close of business on September 8, 1989, and (b)
authorized the issuance of one Right in respect of each share of the Company's
Common Stock issued after September 8, 1989 and prior to the occurrence of
certain events described in the Plan, primarily involving the acquisition of
target levels of the Company's shares by persons not then holding such amounts.
Each Right entitles the registered holder to purchase from the Company a unit
consisting of one-thousandth of a share of Junior Series B Preferred Stock at a
purchase price of $13.17 per unit. The Rights are attached to all shares of the
Company's Common Stock that were outstanding on September 8, 1989 or have been
issued since that date, and no separate Rights Certificates have been or will be
distributed until the occurrence of certain events described in the Rights
Agreement. Until the occurrence of such events, no Right may be exercised or
traded separately from the Company's Common Stock. Following separation, the
Rights may, depending upon the occurrence of certain events described in the
Rights Agreement, entitle the holders thereof to either purchase or receive
additional shares of the Company's Common Stock. The Rights will expire at the
close of business on August 28, 1999, unless earlier redeemed by the Company,
which may be done at $0.01 per Right, in accordance with the terms of the Plan.
The Plan is designed to protect the Company's stockholders' interests in
the event of an unsolicited attempt to acquire the Company, including a gradual
accumulation of shares in the open market. The Company believes that the Plan
provides protection against a partial or two-tier tender offer that does not
treat all stockholders equally and against other coercive takeover tactics which
could impair the Company's Board of Directors' ability to represent the
Company's stockholders fully. Management believes that the Rights should also
deter any attempt by a controlling stockholder to take advantage of the Company
through self-dealing transactions. The Plan is not intended to prevent a
takeover of the Company. Issuing the Rights has no dilutive effect, does not
affect reported earnings per share, and does not change the way in which the
Company's shares are traded. However, the exercise of Rights by some but not
all of the Company's stockholders would have a dilutive effect on nonexercising
stockholders. Moreover, some may argue that the Plan has the potential for
"entrenching" current management by allowing current voting stockholders to
increase their voting shares, thus making a tender offer more difficult and
costly.
Supermajority Vote Requirement
------------------------------
The Company's Certificate of Incorporation provides that, in general, an
affirmative vote of not less than 80% of the outstanding shares of the Company's
Common Stock is required to approve or authorize certain major corporate
transactions involving the Company and holders of more than 15% of the Company's
Common Stock (including certain mergers, substantial dispositions of assets,
liquidation or dissolution, or recapitalization). The 80% vote is not required
in some such circumstances, including certain transactions which have been
approved in advance by a majority of the Board of Directors, or where holders of
the Company's Common Stock receive a price per share that satisfies the fairness
criteria set forth in the Certificate of Incorporation.
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SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203 ("Section 203") of the Delaware General Corporation Law (the
"DGCL") applies to Delaware corporations with a class of voting stock listed on
a national securities exchange, authorized for quotation on an inter-dealer
quotation system or held of record by 2,000 or more persons. In general,
Section 203 prevents an "interested stockholder" (defined generally as any
person owning, or who is an affiliate or associate of the corporation and has
owned in the preceding three years, 15% or more of a corporation's outstanding
voting stock and the affiliates and associates of such person) from engaging in
a "business combination" (as defined) with a Delaware corporation for three
years following the date such person became an interested stockholder, unless
(i) before such person became an interested stockholder, the board of directors
of the corporation approved either the business combination or the transaction
in which the interested stockholder became an interested stockholder; (ii) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
right to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer); or (iii) on or subsequent to the
date such person became an interested stockholder, the business combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors.
Section 203 could have the effect of delaying, deferring or preventing a
change of control of the Company.
LIMITATION OF DIRECTORS' LIABILITY
The DGCL authorizes corporations to limit or eliminate the personal
liability of directors, to the corporation and its stockholders, for monetary
damages in connection with the breach of a director's fiduciary duty of care.
The duty of care requires that, when acting on behalf of the corporation,
directors must exercise an informed business judgment based on all material
information reasonably available to them. Absent the limitation authorized by
the Delaware statute, directors could be accountable to corporations and their
stockholders for monetary damages for conduct that does not satisfy such duty of
care. Although the statute does not change a director's duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. The Company's Certificate of Incorporation limits the
liability of the Company's directors to the Company or its stockholders to the
fullest extent permitted by the Delaware statute as in effect from time to time.
Specifically, directors of the Company will not be personally liable for
monetary damages for breach of a director's fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases or redemptions as
provided in Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit.
26
<PAGE>
The inclusion of this provision in the Certificate of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Company and its
stockholders. This provision does not affect a director's responsibilities
under certain other laws such as the federal securities laws or state or federal
environmental laws.
OFFICER AND DIRECTOR INDEMNIFICATION
The Company's Bylaws require indemnification of the Company's directors
and executive officers to the full extent permitted by the DGCL, except in
connection with an action initiated by such officer or director or in an action
against the Company, its directors, officers, employees or agents, unless (i)
such indemnification is expressly required by law, (ii) the proceeding in
question was authorized by the Board of Directors or (iii) such indemnification
is otherwise authorized by the DGCL. The Company's Bylaws provide that the
Company shall have the power, but shall not be required, to indemnify its other
officers, employees and agents as set forth in the DGCL.
The Company provides liability insurance for its officers and directors
for certain losses arising from claims or charges which may be made against them
while acting in their capacities as directors or officers of the Company.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of a
particular series of Common Stock. The Common Stock Warrants are to be issued
under warrant agreements (each a "Common Stock Warrant Agreement") to be entered
into between the Company and First Security Bank, as warrant agent (the "Common
Stock Warrant Agent"), all as set forth in the Prospectus Supplement relating to
the particular issue of Common Stock Warrants (the "Offered Common Stock
Warrants"). A copy of the Common Stock Warrant Agreement, including the form of
common stock warrant certificate (the "Common Stock Warrant Certificate")
representing the Common Stock Warrants, substantially in the form in which it
will be executed, is filed as an exhibit to the Registration Statement. The
following summaries of certain provisions of the Common Stock Warrant Agreement
and Common Stock Warrant Certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Common Stock Warrant Agreement and the Common Stock Warrant
Certificates, respectively, including the definitions therein of certain terms.
GENERAL
If Common Stock Warrants are offered, the Prospectus Supplement will
describe the terms of the Offered Common Stock Warrants, the Common Stock
Warrant Agreement relating to the Offered Common Stock Warrants and the Common
Stock Warrant Certificates representing the Offered Common Stock Warrants
including the following information:
(i) the number of shares of Common Stock purchasable upon exercise
of Common Stock Warrants and the price at which such number of shares of
Common Stock may be purchased upon such exercise;
27
<PAGE>
(ii) the date on which the right to exercise such Common Stock
Warrants shall commence and the date (the "Expiration Date") on which
such right shall expire;
(iii) United States Federal income tax consequences applicable to
such Common Stock Warrants; and
(iv) any other terms of such Common Stock Warrants.
Common Stock Warrants for the purchase of Common Stock will be offered
and exercisable for U.S. dollars only. Common Stock Warrants will be issued in
registered form only. The exercise price for Common Stock Warrants will be
subject to adjustment in accordance with the applicable Prospectus Supplement.
EXERCISE OF COMMON STOCK WARRANTS
Each Common Stock Warrant will entitle the holder to purchase for cash
such number of shares (as applicable) of Common Stock, at such exercise price as
shall in each case be set forth in, or calculable from, the Prospectus
Supplement relating to the Offered Common Stock Warrants, which exercise price
may be subject to adjustment upon the occurrence of certain events as set forth
in such Prospectus Supplement. Offered Common Stock Warrants may be exercised
at any time up to the close of business of the Expiration Date set forth in the
Prospectus Supplement relating to the Offered Common Stock Warrants. After the
close of business on the Expiration Date (or such later date to which such
Expiration Date may be extended by the Company), unexercised Common Stock
Warrants will become void. The place or places where, and the manner in which,
Common Stock Warrants may be exercised shall be specified in the Prospectus
Supplement relating to such Common Stock Warrants.
Prior to the exercise of any Common Stock Warrants to purchase Common
Stock, holders of such Common Stock Warrants will not have any rights of holders
of the Common Stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through agents, (ii) through
underwriters, (iii) through dealers and (iv) directly to purchasers. Such
agents may be affiliates of the Company, and offers and sales of Securities may
include secondary market transactions by affiliates of the Company.
Securities may be offered and sold through agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Securities will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Any such agent may be deemed
to be an underwriter, as that term is defined in the Securities Act, of the
Securities so offered and sold. Agents may be entitled under agreements which
may be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act.
28
<PAGE>
As and when Securities are offered in an underwritten offering, an
underwriting agreement concerning the Offered Securities will be executed and
delivered by the Company and one or more underwriters. The Company currently
intends J.P. Morgan Securities Inc. to be such an underwriter, and the text of
an underwriting agreement negotiated between the Company and J.P. Morgan
Securities Inc. will be placed on file with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part. Any arrangements and
any special terms of the transaction, including compensation of underwriters and
dealers, if any, will be set forth in the Prospectus Supplement which will be
used by the underwriters to make resales of the Securities.
Underwriters will acquire Securities for their own account and may
resell such Securities from time to time in one or more transactions, including
negotiated transactions, at fixed public offering prices or at varying prices
determined at the time of sale. Securities may be offered to the public either
through underwriting syndicates represented by one or more managing
underwriters, or directly by such managing underwriter(s). An underwriter may
be entitled, under the relevant underwriting agreement, to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act. If an underwriter is utilized in the sale of the Securities,
the underwriting agreement will provide that the obligations of the underwriter
are subject to certain conditions precedent and that the underwriter with
respect to a sale of Securities will be obligated to purchase all such
Securities if any are purchased.
If a dealer is utilized in the sale of the Securities, the Company will
sell such Securities to the dealer, as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such dealer
at the time of resale. Any such dealer may be deemed to be an underwriter, as
such term is defined in the Securities Act, of the Securities so offered and
sold. Dealers may be entitled, under agreements which may be entered into with
the Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act. The name of the dealer and the
terms of the transaction will be set forth in the Prospectus Supplement relating
thereto.
Offers to purchase Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of the
Securities Act, with respect to any sale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
In addition, the Company may use its affiliate, First Security Capital
Markets, Inc., a registered broker-dealer, as a selling agent with respect to
the Securities at the same prices, concessions and discounts to dealers
applicable to an underwriter.
The Company may authorize agents and underwriters to solicit offers by
certain institutions to purchase the Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
stated in the Prospectus Supplement. Each Contract will be for an amount not
less than, and, unless the Company otherwise agrees, the aggregate principal
amount of Securities sold pursuant to Contracts shall be not less nor more than,
the respective amounts stated in the Prospectus Supplement. Institutions with
whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions but shall in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except that any related sale of Securities to underwriters shall have occurred
and the purchase by an institution of the Securities covered by its Contract
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject.
29
<PAGE>
A commission indicated in the Prospectus Supplement will be paid to underwriters
and agents soliciting purchases of Offered Securities pursuant to Contracts
accepted by the Company.
The place and time of delivery of the Securities are set forth in the
accompanying Prospectus Supplement.
This Prospectus and related Prospectus Supplements may be used by direct
and indirect subsidiaries of the Company in connection with offers and sales
related to secondary market transactions. Such subsidiaries may act as principal
or agent in such transactions. Such sales will be made at prices related to
prevailing market prices at the time of sale.
The participation of an affiliate or subsidiary of the Company in the
offer and sale of the Securities will comply with the requirements of Rule 2720
of the Conduct Rules of the National Association of Securities Dealers, Inc.
(the "NASD") regarding underwriting securities of an affiliate. No NASD member
participating in offers and sales will execute a transaction in the Securities
in a discretionary account without the prior written specific approval of the
member's customer.
Certain of the underwriters or agents and their associates may be
customers of, engage in transactions with, and perform services for, the Company
in the ordinary course of business.
EXPERTS
The consolidated financial statements as of December 31, 1997 and 1996,
and for each of the three years in the period ended December 31, 1997
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for
the Company by Ray, Quinney & Nebeker, 79 South Main Street, Salt Lake City,
Utah 84111; and for any underwriters by Sullivan & Cromwell, 444 South Flower
Street, Los Angeles, California 90071. Alonzo W. Watson, a shareholder and
director of Ray, Quinney & Nebeker, is an officer of the Company. Another
shareholder and director of the law firm is the daughter of the Chief Executive
Officer of the Company. As of March 31, 1998, Ray, Quinney & Nebeker attorneys,
together with their immediate families, beneficially owned less than 4% of the
then outstanding Common Stock of the Company. From time to time, Sullivan &
Cromwell has performed legal services for the Company.
30
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
Securities and Exchange Commission
Registration Fee.................... $ 442,500
Rating Agency Fees................... 100,000
Blue Sky Fees and Expenses........... 10,000
Accounting Fees and Expenses......... 30,000
Legal Fees and Expenses.............. 100,000
Printing and Engraving Expenses...... 40,000
Trustee's Fees and Expenses.......... 30,000
Miscellaneous Expenses............... 15,000
---------
$ 767,500
=========
</TABLE>
ALL OF THE ABOVE ITEMS EXCEPT THE REGISTRATION FEE ARE ESTIMATED.
ITEM 15. Indemnification of Directors and Officers.
Indemnification. Delaware law provides that a director, employee,
---------------
officer or agent of a corporation may be indemnified against liability (other
than in an action by or in the right of the corporation) and other costs
incurred by such person in connection with such proceeding, provided such person
acted in good faith and in a manner such person reasonably believed to be in,
and not opposed to, the best interests of the corporation, and, with respect to
any criminal proceeding, had no reason to believe the conduct was unlawful. For
actions or suits brought by or in the name of the corporation, Delaware provides
that a director, employee, officer or agent of a corporation may be indemnified
against expenses incurred by such person in connection with such proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in and not opposed to, the best interests of the corporation, except that
if such person is adjudged to be liable to the corporation, such person can be
indemnified if and only to the extent that a court determines that despite the
adjudication of liability, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court shall deem proper. On the other hand, if he/she prevails, indemnification
is mandatory. Under Delaware law, the determination of whether an officer or
director is entitled to indemnification (that is, whether or not the person has
met the statutory standard of conduct required for indemnification) is to be
made in certain circumstances by independent legal counsel. First Security
Corporation's Certificate of Incorporation, as amended, provide for
indemnification of such persons to the full extent allowed by applicable law.
The proposed forms of Underwriting Agreement and Distribution Agreement, filed
as Exhibits 1(a) and 1(b), respectively, to this Registration Statement provide
for indemnification of the Company's officers and directors who signed the
Registration Statement against certain liabilities, including liabilities under
the Securities Act.
II-31
<PAGE>
Director's Liability. Delaware allows a corporation to provide, in
--------------------
its articles or certificate of incorporation, a provision which limits or
eliminates the personal liability of a director to the corporation and its
shareholders or stockholders for monetary damages for such person's breach of
fiduciary duty, provided that such provision may not so limit a director's
liability (i) for a breach of his or her duty of loyalty to the corporation;
(ii) for acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law; (iii) for unlawful payments of dividends, certain
stock repurchases or redemptions; or (iv) for any transaction from which the
director derived an improper personal benefit.
These provisions have the effect of protecting a corporation's directors
against personal liability from breaches of their duty of care. First Security
Corporation, with the approval of its stockholders, amended its Certificate of
Incorporation to include such provisions in 1988.
ITEM 16. Exhibits.
(1) Form of Underwriting Agreement.
(3)(a) Certificate of Incorporation of the Company, as amended,
(Incorporated by reference to Exhibit 4(a) of the Company's
Registration Statement on Form S-3 (No. 33-38483)), and as
subsequently amended in other filings.
(3)(b) By-laws of the Company (Incorporated by reference to Exhibit
3(3) of the Company's Annual Report on Form 10-K for the year
ended December 31, 1997).
(4)(a) Form of Indenture, dated as of March 1, 1994, between the
Registrant and The First National Bank of Chicago, as Trustee,
including form of Debt Security, with respect to the Senior
Debt Securities (incorporated by reference to Exhibit 4(a) of
the Company's Registration Statement on Form S-3 (No. 33-
52609).
(4)(b) Form of Indenture, dated as of March 1, 1994, between the
Registrant and The First National Bank of Chicago, as Trustee,
including form of Debt Security, with respect to the
Subordinated Debt Securities (incorporated by reference to
Exhibit 4(b) of the Company's Registration Statement on Form S-
3 (No. 33-52609).
(4)(c) Shareholder Rights Agreement, dated as of August 26, 1989,
between the Company and First Security Bank, N.A., as Rights
Agent (Incorporated by reference to Exhibits 4(c) and 4(d) of
the Company's Registration Statement on Form S-3 (No. 33-
42784)).
(4)(d) Form of Certificate of Designations with respect to the
Preferred Stock (incorporated by reference to Exhibit 4(d) of
the Company's Registration Statement on Form S-3 (No. 33-
52609)).
II-32
<PAGE>
(4)(e) Form of specimen certificate representing the Common Stock
(Incorporated by reference to Exhibit 4(e) of the Company's
Registration Statement on Form S-3 (No. 33-42784)).
(4)(f) Form of specimen certificate representing the Preferred Stock
(incorporated by reference to Exhibit 4(f) of the Company's
Registration Statement on Form S-3 (No. 33-52609)).
(4)(g) Form of Warrant Agreement for Common Stock (including form of
Common Stock Warrant Certificate)
(5) Opinion of Ray, Quinney & Nebeker.
(12) Computation of Ratios of Earnings to Fixed Charges and Earnings
to Combined Fixed Charges and Preferred Stock Dividends.
(23)(a)Consent of Deloitte & Touche LLP.
(23)(b)Consent of Ray, Quinney & Nebeker (included in Exhibit (5)).
(24) Powers of Attorney (included in signature pages).
(25) Statement of Eligibility of The First National Bank of Chicago
under Trust Indenture Act of 1939 on Form T-1.
II-33
<PAGE>
ITEM 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the 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 Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned Registrant hereby further undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 and each filing of the Registrant's
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement
II-34
<PAGE>
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-35
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Salt Lake City, Utah, on the 9th day of July, 1998.
FIRST SECURITY CORPORATION
By: /s/ Morgan J. Evans
------------------------------
Morgan J. Evans
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date or dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Spencer F. Eccles Chairman and Chief
- -----------------------------
Spencer F. Eccles Executive Officer, Director July 9, 1998
/s/ Morgan J. Evans President and Chief
- ----------------------------
Morgan J. Evans Operating Officer, Director July 9, 1998
II-36
<PAGE>
/s/ Scott C. Ulbrich Executive Vice President July , 1998
- ----------------------------
Scott C. Ulbrich and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ James C Beardall Director July , 1998
- ----------------------------
James C. Beardall
/s/ Rodney H. Brady Director July , 1998
- ----------------------------
Rodney H. Brady
/s/ James E. Bruce Director July , 1998
- ----------------------------
James E. Bruce
/s/ Thomas D. Dee II Director July , 1998
- ----------------------------
Thomas D. Dee II
/s/ Dr. David P. Gardner Director July , 1998
- ----------------------------
Dr. David P. Gardner
/s/ Robert Garff Director July , 1998
- ----------------------------
Robert Garff
/s/ Jay Dee Harris Director July , 1998
- ----------------------------
Jay Dee Harris
/s/ Robert T. Heiner Director July , 1998
- ----------------------------
Robert T. Heiner
/s/ Karen H. Huntsman Director July , 1998
- ----------------------------
Karen H. Huntsman
/s/ G. Frank Joklik Director July , 1998
- ----------------------------
G. Frank Joklik
/s/ B. Z. Kastler Director July , 1998
- ----------------------------
B. Z. Kastler
II-37
<PAGE>
/s/ J. Bernard Machen Director July , 1998
- ----------------------------
Dr. J. Bernard Machen
/s/ Joseph G. Maloof Director July , 1998
- ----------------------------
Joseph G. Maloof
/s/ Michele Papen-Daniel Director July , 1998
- ----------------------------
Michele Papen-Daniel, Ph.D.
/s/ Scott S. Parker Director July , 1998
- ----------------------------
Scott S. Parker
/s/ James L. Sorenson Director July , 1998
- ----------------------------
James L. Sorenson
/s/ Harold J. Steele Director July , 1998
- ----------------------------
Harold J. Steele
/s/ James R. Wilson Director July , 1998
- ----------------------------
James R. Wilson
II-38
<PAGE>
COMMON STOCK WARRANT AGREEMENT
dated as of July 9, 1998
between
FIRST SECURITY CORPORATION
and
FIRST SECURITY BANK, N. A., as Warrant Agent
Common Stock Warrants
Expiring ________________, ____
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
---------
ISSUANCE OF WARRANTS AND FORM, EXECUTION,
DELIVERY AND REGISTRATION OF WARRANT CERTIFICATES
<TABLE>
<CAPTION>
<S> <C>
SECTION 1.01 Issuance of Warrants........................................... 2
SECTION 1.02 Form, Execution and Delivery of Warrant Certificates........... 2
SECTION 1.03 Transfer of Warrants........................................... 4
SECTION 1.04 Lost, Stolen, Mutilated or Destroyed Warrant Certificates...... 5
SECTION 1.05 Cancellation of Warrant Certificates........................... 6
SECTION 1.06 Treatment of Holders [IF WARRANTS ARE TO BE ISSUED IN BOOK-
ENTRY FORM: and Beneficial Owners] of Warrant Certificates................. 6
ARTICLE II
EXERCISE PRICE, DURATION AND EXERCISE OF WARRANTS
SECTION 2.01 Exercise Price................................................. 7
SECTION 2.02 Duration of
Warrants.................................................................... 7
SECTION 2.03 Exercise of Warrants........................................... 7
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS
[If Warrants are to be issued in Book-Entry form:
AND BENEFICIAL OWNERS OF WARRANTS
SECTION 3.01 No Rights as Holders of Warrant Securities Conferred by
Warrants or Warrant Certificates............................................ 10
SECTION 3.02 Holder [If Warrants are to be issued in Book-Entry form: and
Beneficial Owner] of Warrant May Enforce Rights............................. 10
ARTICLE IV
CONCERNING THE WARRANT AGENT
SECTION 4.01 Warrant Agent.................................................. 10
SECTION 4.02 Limitations on Warrant Agent's Obligations..................... 11
SECTION 4.03 Compliance With Applicable Laws................................ 12
SECTION 4.04 Resignation and Appointment of Successor....................... 12
</TABLE>
i
<PAGE>
ARTICLE V
MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.02 Amendments............................................ 11
SECTION 5.02 Merger, Consolidation, Sale, Transfer or Conveyance... 11
SECTION 5.03 Notices and Demands to the Company and Warrant Agent.. 11
SECTION 5.04 Addresses............................................. 11
SECTION 5.05 GOVERNING LAW......................................... 11
SECTION 5.06 Delivery of Prospectus................................ 11
SECTION 5.07 Obtaining of Governmental Approvals................... 11
SECTION 5.08 Payment of Taxes...................................... 11
SECTION 5.09 Benefits of Warrant Agreement......................... 11
SECTION 5.10 Headings.............................................. 11
SECTION 5.11 Severability.......................................... 11
SECTION 5.12 Counterparts.......................................... 11
SECTION 5.13 Inspection of Agreement............................... 11
</TABLE>
ii
<PAGE>
COMMON STOCK WARRANT AGREEMENT
COMMON STOCK WARRANT AGREEMENT, dated as of July 9, 1998 (as modified,
amended or supplemented, this "Agreement"), between FIRST SECURITY CORPORATION,
a Delaware corporation (the "Company") and FIRST SECURITY BANK, a national bank,
as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H:
(If Securities and Warrants are to be offered together: WHEREAS, the
Company proposes to sell [title of Securities being Offered] (the "Offered
Securities") together with warrants (each, a "Warrant") representing the right
to purchase [title of Securities purchasable upon exercise of Warrants] [If
Warrants for Depositary Shares are to be offered, each representing a 1/___th
interest in a share of [title of securities represented by Depositary Shares]]
(the "Warrant Securities" [If Warrants for Depositary Shares are to be offered:
, which term shall also refer, as appropriate, to such [title of securities
represented by Depositary Shares]), such warrant certificates and other warrant
certificates issued pursuant to this Agreement being herein called the "Warrant
Certificates"; and]
(If offer consists of Warrants alone: WHEREAS, the Company proposes to
sell warrant certificates evidencing one or more warrants (each, a "Warrant")
representing the right to purchase [title of Securities purchasable upon
exercise of Warrants] [If Warrants for Depositary Shares are to be offered: each
representing a 1/____th interest in a share of [title of securities represented
by the Depositary Shares]] (the "Warrant securities" [If Warrants for Depositary
Shares are to be offered: , which term shall also refer, as appropriate, to such
[title of securities represented by the Depositary Shares]), such warrant
certificates and other warrant certificates issued pursuant to this Agreement
being herein called the "Warrant Certificates"; and]
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange, exercise and cancellation of the Warrants, and the
Company wishes to set forth in this Agreement, among other things, the
provisions of the Warrants, the form of the Warrant Certificates evidencing the
Warrants and the terms and conditions upon which the Warrants may be issued,
transferred, exchanged, exercised and canceled;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
1
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ARTICLE I
ISSUANCE OF WARRANTS AND FORM, EXECUTION,
DELIVERY AND REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01 Issuance of Warrants. Each Warrant shall represent
------------ --------------------
the right subject to the provisions contained herein and therein, to purchase
[______] Warrant Securities [in the aggregate principal amount of $______] at
the Exercise Price set forth in Section 2.01. [If Securities and Warrants are to
be offered together: Warrants shall be issued in units with the Offered
Securities [If Warrants are not immediately detachable: and shall not be
separately transferable [Unless Warrants are not detachable: before ___________,
____ (the "Detachment Date")]].] [If Warrants are to be offered separate:
Warrants shall be issued as a separate security and shall be transferable from
and after the date of issuance.' [If Warrants are to be offered in Book-Entry
form: [All] [A portion] of the Warrants shall initially be represented by one or
more global certificates (each, a "Global Warrant Certificate").] [If Securities
and Warrants are to be offered together and in definitive form: Each Warrant
Certificate included in such a unit shall evidence [______] Warrants for each
[$______ principal amount of] [______] Offered Securities included in such
unit.} [If Warrants are to be offered separately and in definitive form: Each
Warrant Certificate shall evidence [_______] Warrants.]
SECTION 1.02 Form, Execution and Delivery of Warrant Certificates.
------------ ----------------------------------------------------
(a) One or more Warrant Certificate evidencing Warrants to purchase
not more than [______] [$______ in aggregate principal amount of] Warrant
Securities (except as provided in Sections 1.03, 1.04 and 2.03(e) may be
executed by the Company and delivered to the Warrant Agent upon the execution of
this Warrant Agreement or from time to time thereafter.
(b) Each Warrant Certificate, whenever issued, shall be in
registered form substantially in the form set forth in Exhibit A hereto, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Agreement. [If Warrants are issued in Book-
Entry form: Each Global Warrant Certificate shall bear such legend or legends as
may be required by the Depository in order for it to accept the Warrants for its
book-entry settlement system.] Each Warrant Certificate shall be printed,
lithographed, typewritten, mimeographed or on steel engraved borders or
otherwise reproduced in any other manner as may be approved by the officers
executing the same (such be conclusive evidence of such approval) and may have
such letters, number or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as the
officers of the Company executing the same may approve (such execution to be
conclusive evidence of such approval) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto, or with any regulation of any
stock exchange on which the Warrants [If Securities and Warrants are to be
offered together: , the Offered Securities] or the Warrant Securities may be
listed, or to conform to usage. Each Warrant Certificate shall be signed on
behalf of the Company by its Chief
2
<PAGE>
Executive Officer, President or any Executive or Senior Vice President. The
signature of any such officer on any Warrant Certificate may be manual or
facsimile. Each Warrant Certificate, when so signed on behalf of the Company,
shall be delivered to the Warrant Agent together with an order for the
countersignature and delivery of such Warrants.
(c) The Warrant Agent shall, upon receipt of any Warrant Certificate
duly executed on behalf of the Company, countersign such Warrant Certificate and
deliver such Warrant Certificate to or upon the order o the Company. Each
Warrant Certificate shall be dated the date of its countersignature.
(d) No Warrant Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, and no Warrant evidenced
thereby may be exercised, unless such Warrant Certificate has been countersigned
by the manual signature of the Warrant Agent. Such signature by the Warrant
Agent upon any Warrant Certificate executed by the Company shall be conclusive
evidence that such Warrant Certificate has been duly issued under the terms of
this Agreement.
(e) If any officer of the Company who has signed any Warrant
Certificate either manually or by facsimile signature shall cease to be such
officer before such Warrant Certificate shall have been countersigned and
delivered by the Warrant Agent, such Warrant Certificate nevertheless may be
countersigned and delivered as though the person who signed such Warrant
certificate had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall be the proper
officers of the Company as specified in this Section 1.02, regardless of whether
at the date of the execution of this Agreement any such person was such officer.
(f) The Holders shall [If Warrants are to be issued in Book-Entry
form: , except as stated below with respect to Warrants evidenced by a global
Warrant Certificate,] be entitled to receive Warrants in physical, certificated
form.
[If Warrants are to be issued in Book-Entry form: (g) A Global Warrant
Certificate may be exchanged for a new Global Warrant Certificate, or one or
more new global Warrant Certificates may be issued, to reflect the issuance by
the Company of additional Warrants. To effect such an exchange, the Company
shall deliver to the Warrant Agent one or more new Global Warrant Certificates
duly executed on behalf of the Company as provided in Section 1.02. The Warrant
Agent shall authenticate each new Global Warrant Certificate as provided in
Section 1.02 and shall deliver each new Global Warrant Certificate to the
Depository. The Warrant Agent shall cancel each Global Warrant Certificate
delivered to it by the Depository in exchange therefor, if any.]
SECTION 1.03 Transfer of Warrants.
--------------------
[If Warrants are to be issued in Book-Entry form: (a) [All] [A portion] of
the Warrants shall initially be represented by one or more Global Warrant
Certificates deposited with [the
3
<PAGE>
Depository Trust Company] (the "Depository") and registered in the name of [Cede
& Co.], a nominee of the Depository. The Depository, or such other entity as is
agreed to by the Depository, may hold each Global Warrant Certificate as
custodian for Depository. Except as provided for in Section 1.03(b) hereof, no
person acquiring Warrants traded on any securities exchange with book-entry
settlement through the Depository shall receive or be entitled to receive
physical delivery of definitive Warrant Certificates evidencing such Warrants.
Ownership of beneficial interests in the Warrants shall be shown on, and the
transfer of such ownership shall be effected through, records maintained by (i)
the Depository or its nominee for each Global Warrant Certificate, or (ii)
institutions that have accounts with the Depository (such institution, with
respect to a Warrant in its account, a "Participant").]
[If Warrants are to be issued in Book-Entry form: (b) If the Depository
subsequently ceases to make its book-entry settlement system available for the
Warrants, the Company may instruct the Warrant Agent regarding making other
arrangements for book-entry settlement. In the event that the receipts are not
eligible for, or it is no longer necessary to have the Warrants available in,
book-entry form, the Warrant Agent shall provide written instructions to the
Depository to deliver to the Warrant Agent for cancellation each Global Warrant
Certificate, and the Company shall instruct the Warrant Agent to deliver to the
Depository definitive Warrant Certificates in physical form evidencing such
Warrants. Such definitive Warrant Certificates shall be in the form annexed
hereto as Exhibit A with appropriate insertions, modifications and omissions, as
provided above.]
[If Securities and Warrants are to be offered together: (c) [If Warrants
are not immediately detachable: Prior to the Detachment Date,] Warrants may be
transferred or exchanged only together with the Offered Security to which such
Warrant is attached, and only for the purpose of effecting, or in conjunction
with, a transfer or exchange of such Offered Security. Furthermore, [If
Warrants are not immediately detachable: on or prior to the Detachment Date,]
each transfer of an Offered Security on the register relating to such Offered
Securities shall operate also to transfer the Warrants to which such Offered
Security was initially attached. [If Warrants are not immediately detachable:
From and after the Detachment Date, the above provisions shall be of no further
force and effect.]
(d) A Warrant Certificate may be transferred at the option of the
Holder thereof upon surrender of such Warrant Certificate at the corporate trust
office of the Warrant Agent, properly endorsed or accompanied by appropriate
instruments of transfer and written instructions for transfer, all in form
satisfactory to the Company and the Warrant Agent {If Warrants are to be issued
in Book-Entry form: ; provided, however, that except as otherwise provided
herein or in any Global Warrant Certificate, each Global Warrant Certificate may
be transferred only in whole and only to the Depository, to another nominee of
the Depository, to a successor depository, or to a nominee of a successor
depository]. Upon any such registration of transfer, the Company shall execute,
and the Warrant Agent shall countersign and deliver, as provided in Section
1.02, in the name of the designated transferee a new Warrant Certificate or
Warrant Certificates of any authorized denomination evidencing in the aggregate
a like number of unexercised Warrants.
4
<PAGE>
(e) [If Warrants are not immediately detachable: After the Detachment
Date,] Upon surrender at the corporate office of the Warrant Agent, properly
endorsed or accompanied by appropriate instruments of transfer and written
instructions for such exchange, all in form satisfactory to the Company and the
Warrant Agent, one or more Warrant Certificates may be exchanged for one or more
Warrant Certificates in any other authorized denominations; provided that such
new Warrant Certificate(s) evidence the same aggregate number of Warrants as the
Warrant Certificate(s) so surrendered. Upon any such surrender for exchange, the
Company shall execute, and the Warrant Agent shall countersign and deliver, as
provided in Section 1.02, in the name of the Holder of such Warrant
Certificates, the new Warrant Certificates.
(f) The Warrant Agent shall keep, at its corporate trust office, books
in which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates in accordance with Section 1.02 and transfers,
exchanges, exercises and cancellations of outstanding Warrant Certificates.
Whenever any Warrant Certificates are surrendered for transfer or exchange in
accordance with this Section 1.03, an authorized officer of the Warrant Agent
shall manually countersign and deliver the Warrant Certificates which the Holder
making the transfer or exchange is entitled to receive.
(g) No service charge shall be made for any transfer or exchange of
Warrant Certificates, but the Company may require payment of a sum sufficient to
cover any stamp or other tax or other governmental charge that may be imposed in
connection with any such transfer or exchange.
SECTION 1.04 Lost, Stolen, Mutilated or Destroyed Warrant Certificates.
------------ ---------------------------------------------------------
Upon receipt by the Company and the Warrant Agent of evidence satisfactory to
them of the ownership of and the loss, theft, destruction or mutilation of any
Warrant Certificate and of indemnity satisfactory to them and, in the case of
mutilation, upon surrender of such Warrant Certificate to the Warrant Agent for
cancellation, then, in the absence of notice to the Company or the Warrant Agent
that such Warrant Certificate has been acquired by a bona fide purchaser, the
Company shall execute, and an authorized officer of the Warrant Agent shall
manually countersign and deliver, in exchange for or in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate of
the same tenor and for a like number of Warrants. No service charge shall be
made for any replacement of Warrant Certificates, but the Company may require
the payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in connection with any such exchange. To
the extent permitted under applicable law, the provisions of this Section 1.04
are exclusive with respect to the replacement of mutilated, lost, stolen or
destroyed Warrant Certificates and shall preclude any and all other rights or
remedies.
SECTION 1.05 Cancellation of Warrant Certificates. Any Warrant
------------ ------------------------------------
Certificate surrendered to the Warrant Agent for transfer, exchange or exercise
of the Warrants evidenced thereby shall be promptly canceled by the Warrant
Agent and shall not be reissued and, except as expressly permitted by this
Agreement, no Warrant Certificate shall be issued hereunder in lieu
5
<PAGE>
thereof. The Warrant Agent shall deliver to the Company from time to time or
otherwise dispose of canceled Warrant Certificates in a manner satisfactory to
the Company. Any Warrant Certificate surrendered to the Company for transfer,
exchange or exercise of the Warrants evidenced thereby shall be promptly
delivered to the Warrant Agent and such transfer, exchange or exercise shall not
be effective until such Warrant Certificate has been received by the Warrant
Agent.
SECTION 1.06 Treatment of Holders [IF WARRANTS ARE TO BE ISSUED IN
-----------------------------------------------------
BOOK-ENTRY FORM: and Beneficial Owners] of Warrant Certificates.
- ----------------------------------------------------------------
(a) The term "Holder", as used herein, shall mean any person in whose name at
the time any Warrant Certificate shall be registered upon the books to be
maintained by the Warrant Agent for that purpose [If Securities and Warrants
that are not immediately detachable are offered: or, prior to the Detachment
Date, the person in whose name the Offered Security to which such Warrant
Certificate was initially attached is registered upon the register relating to
such Offered Securities. At all times prior to the Detachment Date, the Company
will, or will cause the registrar of the Offered Securities to, make available
to the Warrant Agent such information as to holders of the Offered Securities as
may be necessary to keep the Warrant Agent's records current]. [If Warrants are
to be issued in Book-Entry form: the Holder of each Global Warrant Certificate
shall initially be [Cede & Co.], a nominee of the Depository.]
[If Warrants are to be issued in Book-Entry Form: (b) The term "Beneficial
Owner" as used herein shall mean any person in whose name ownership of
beneficial interests in Warrants evidenced by a Global Warrant Certificate is
recorded in the records maintained by the Depository or its nominee, or by a
Participant [If Securities and Warrants that are not immediately detachable are
offered: , or, prior to the Detachment Date, the person in whose name the
Offered Security to which such Warrant Certificate was initially attached is
registered upon the register relating to such Offered Securities].]
( ) Every Holder [If Warrants are to be issued in Book-Entry form: and
every Beneficial Owner] consents and agrees with the Company, the Warrant Agent
and with every subsequent Holder [If Warrants are to be issued in Book-Entry
form: and Beneficial Owner] that until the Warrant Certificate is transferred
on the books of the Warrant Agent, the Company and the Warrant Agent may treat
the registered Holder of such Warrant Certificate as the absolute owner of the
Warrants evidenced thereby for any purpose and as the person entitled to
exercise the rights attaching to the Warrants evidenced thereby, any notice to
the contrary notwithstanding.
6
<PAGE>
ARTICLE II
EXERCISE PRICE, DURATION AND EXERCISE OF WARRANTS
SECTION 2.01 Exercise Price. The exercise price of each Warrant
--------------
shall be $______ (the "Exercise Price") [modify as appropriate to reflect terms
of offered Warrants].
SECTION 2.02 Duration of Warrants. [Subject to the limitations set
---------------------
forth herein,] Each Warrant may be exercised in whole but not in part [Unless
Warrants may be exercised on only one date: on any Business Day (as defined
below) occurring during the period (the "Exercise Period") commencing on [its
date of issuance] [________, _____] and ending at 5:00 P.M., New York time,] on
_________, _____ (the "Expiration Date"). Each Warrant remaining unexercised
after 5:00 P.M., New York time, on the Expiration Date shall become void, and
all rights of the Holder under this Agreement shall cease.
As used herein, the term "Business Day" means any day which is not a
Saturday or Sunday and is not a legal holiday or a day on which banking
institutions generally are authorized or obligated by law or regulation to close
in New York and North Carolina.
SECTION 2.03 Exercise of Warrants.
--------------------
(a) A Holder may exercise a Warrant by delivering, not later than 5:00
P.M., New York time, on [Unless Warrants may be exercised on only one date: any
Business Day during the Exercise Period (the "Exercise Date")] [If Warrants may
be exercised on only one date: the Expiration Date] to the Warrant Agent at its
corporate trust department (i) the Warrant Certificate evidencing the Warrants
to be exercised, [If Warrants are to be issued in Book-Entry form: and, in the
case of a Global Warrant Certificate, the Warrants to be exercised (the "Book-
Entry Warrants") free on the records of the Depository to an account of the
Warrant Agent at the Depository designated for such purpose in writing by the
Warrant Agent to the Depository from time to time,] (ii) an election to purchase
the Warrant Securities ("Election to Purchase"), properly completed and executed
by the Holder on the reverse of the Warrant Certificate [If Warrants are to be
issued in Book-Entry form: or, in the case of a Global Warrant Certificate,
properly executed by the Participant and substantially in the form included on
the reverse of each Warrant Certificate,] and (iii) the Exercise Price for each
Warrant to be exercised in lawful money of the United States of America by
certified or official bank check or by bank wire transfer in immediately
available funds. If any of (a) the Warrant Certificate [If Warrants are to be
issued in Book-Entry form: or the Book-Entry Warrants,] (b) the Election to
Purchase, or (c) the Exercise Price therefor is received by the Warrant Agent
after 5:00 P.M., New York time, on [Unless Warrants may be exercised on only one
date: the specified Exercise Date, the Warrants will be deemed to be received
and exercised on the Business Day next succeeding the Exercise Date. If the date
specified as the Exercise Date is not a Business Day, the Warrants will be
deemed to be received and exercised on the next succeeding day which is a
Business Day. If the Warrants are received or deemed to be received after] the
Expiration Date, the exercise thereof will be null and void and any funds
delivered to the Warrant Agent will be returned to the Holder [If Warrants are
to be issued in Book-Entry form: or Participant, as the case may be,] as soon as
practicable. In no
7
<PAGE>
event will interest accrue on funds deposited with the Warrant Agent in respect
of an exercise or attempted exercise of Warrants. The validity of any exercise
of Warrants will be determined by the Warrant Agent in its sole discretion and
such determination will be final and binding upon the Holder and the Company.
Neither the Company nor the Warrant Agent shall have any obligation to inform a
Holder of the invalidity of any exercise of Warrants. The Warrant Agent shall
deposit all funds received by it in payment of the Exercise Price in the account
of the company maintained with the Warrant Agent for such purpose and shall
advise the Company by telephone at the end of each day on which funds for the
exercise of the Warrants are received of the amount so deposited to its account.
The Warrant Agent shall promptly confirm such telephonic advice to the Company
in writing.
(b) The Warrant Agent shall, by 11:00 A.M. on the Business Day
following the [Unless Warrants may be exercised on only one date: Exercise Date
of any Warrant] [If Warrants may be exercised on only one date: Expiration
Date], advise the Company and the [Trustee under the Indenture applicable to]
[the transfer agent and registrar in respect of] the Warrant Securities issuable
upon such exercise as to the number of Warrants exercised in accordance with the
terms and conditions of this Agreement, the instructions of each Holder [If
Warrants are to be issued in Book-Entry form: or Participant, as the case may
be,] with respect to delivery of the Warrant Securities issuable upon such
exercise, and the delivery of definitive Warrant Certificates [If Warrants are
to be issued in Book-Entry form: or one or more Global Warrant Certificates, as
appropriate,] evidencing the balance, if any, of the Warrants remaining after
such exercise, and such other information as the Company or such [Trustee]
[transfer agent and registrar] shall reasonable require.
(c) The Company shall, by 5:00 P.M., New York time, on the third
Business Day next succeeding the [Unless Warrants may be exercised on only one
date: Exercise Date of any Warrant] [If Warrants may be exercised on only one
date: Expiration Date], execute, issue and deliver to the Warrant Agent,
[pursuant to the Indenture applicable to the Warrant Securities, the Warrant
Securities, duly authenticated by the Trustee of such Indenture and in
authorized denominations] [the Warrant Securities] to which such Holder is
entitled, in fully registered form, registered in such name or names as may be
directed by such Holder [If Warrants are to be issued in Book-Entry form: or the
Participant, as the case may be]. Upon receipt of such Warrant Securities, the
Warrant Agent shall, by 5:00 P.M., new York time, on the fifth business Day next
succeeding [Unless Warrants may be exercised on only one date: such Exercise
Date] [If Warrants may be exercised on only one date: the Expiration Date],
transmit such Warrant Securities, to or upon the order of the Holder [If
warrants are to be issued in Book-Entry form: or Participant, as the case may
be,] together with, or preceded by the prospectus referred to in Section 5.06
hereof. The company agrees that it will provide such information and documents
to the Warrant Agent as may be necessary for the Warrant Agent to fulfill its
obligations hereunder.
(d) The accrual of [interest] [dividends], if any, on the Warrant
Securities issued upon the valid exercise of any Warrant will be governed by the
terms of the applicable [Indenture] [articles of amendment] and such Warrant
Securities. From and after the issuance of such Warrant Securities, the former
Holder of the Warrants exercised will be entitled to the
8
<PAGE>
benefits of the [Indenture] [articles of amendment] under which such Warrant
Securities are issued and such former Holder's right to receive payments of
[principal of (and premium, if any) and interest, if any, on] [dividends and any
other amounts payable in respect of] the Warrant Securities shall be governed
by, and shall be subject to, the terms and provisions of such [Indenture]
[articles of amendment] and the Warrant Securities.
(e) Warrants may be exercised only in whole numbers of Warrants.
[Unless Warrants may be exercised on only one date: If fewer than all of the
Warrants evidenced by a Warrant Certificate are exercised, a new Warrant
Certificate for the number of Warrants remaining unexercised shall be executed
by the Company and countersigned by the Warrant Agent as provided in Section
1.02 hereof, an delivered to the Holder at the address specified on the books of
the Warrant Agent or as otherwise specified by such Holder.]
(f) The Company shall not be required to pay any stamp or other tax or
other governmental charge required to be paid in connection with any transfer
involved in the issue of the Warrant Securities; and in the event that any such
transfer is involved, the Company shall not be required to issue or deliver any
Warrant Securities until such tax or other charge shall have been paid or it has
been established to the Company's satisfaction that no such tax or other charge
is due.
[If Warrants for Common Stock are offered: .SECTION 2.04. Adjustment
----------
Under Certain Circumstances. The Exercise Price and the number of Warrant
- ---------------------------
Securities purchasable upon the exercise of each Warrant shall be subject to
adjustment upon (i) the issuance of a stock dividend to the holders of the
outstanding shares of Warrant Securities or a combination, subdivision or
reclassification of the Warrant Securities; (ii) the issuance of rights,
warrants or options to all holders of the Warrant Securities entitling the
holders thereof to purchase Warrant Securities for an aggregate consideration
per share less than the current market price per share of the Warrant
Securities; or (iii) any distribution by the Company to the holders of the
Warrant Securities of evidences of indebtedness of the Company or of assets
(excluding cash dividends or distributions payable out of consolidated earnings
and earned surplus and dividends or distributions referred to in (i) above);
provided that no such adjustment in the number of Warrant Securities purchasable
upon exercise of the Warrants will be required until cumulative adjustments
require an adjustment of at least 1% of such number. No fractional shares will
be issued upon exercise of Warrants, but the Company will pay the cash value of
any fractional shares otherwise issuable. The adjustments to be made under this
Section 2.03 shall be determined by the Warrant Agent and such determination
shall be final and binding upon the Holders and the Company.]
9
<PAGE>
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS
[If Warrants are to be issued in Book-Entry form:
AND BENEFICIAL OWNERS OF WARRANTS
SECTION 3.01 No Rights as Holders of Warrant Securities Conferred by
------------ -------------------------------------------------------
Warrants or Warrant Certificates. No Warrant Certificate or Warrant evidenced
- --------------------------------
thereby shall entitle the Holder thereof to any of the rights of a holder of any
Warrant Securities, including, without limitation, the right to receive
dividends, if any, or payments upon the liquidation, dissolution or winding up
of the Company or to exercise voting rights if any.
SECTION 3.02 Holder [If Warrants are to be issued in Book-Entry form: and
Beneficial Owner] of Warrant May Enforce Rights. Notwithstanding any of the
provisions of this Agreement, any Holder [If Warrants are to be issued in Book-
Entry form: and any Beneficial Owner] of any Warrant, without the consent of the
Warrant Agent or the Holder of any warrant, may, on such Holder's [If Warrants
are to be issued in Book-Entry form: or Beneficial owner's] own behalf and for
his own benefit, enforce, and may institute and maintain any suit, actin or
proceeding against the Company to enforce, or otherwise in respect of, such
Holder's [If Warrants are to be issued in Book-Entry form: or Beneficial
Owner's] right to exercise the Warrants evidenced by any Warrant Certificate in
the manner provided in this Agreement and such Warrant Certificate.
ARTICLE IV
CONCERNING THE WARRANT AGENT
SECTION 4.01 Warrant Agent. The Company hereby appoints [Name of
------------ -------------
Warrant Agent] as Warrant Agent of the Company in respect of the Warrants upon
the terms and subject to the conditions herein set forth, and [Name of Warrant
Agent] hereby accepts such appointment. The Warrant Agent shall have the powers
and authority granted to and conferred upon it hereby and such further power
sand authority to act on behalf of the Company as the Company may hereafter
grant to or confer upon it.
SECTION 4.02 Limitations on Warrant Agent's Obligations'. The Warrant
------------ -------------------------------------------
Agent accepts its obligation herein set forth upon the terms and conditions
hereof, including the following, to all of which the company agrees and to all
of which the rights hereunder of the Holders from time to time shall be subject.
(a) Compensation and Indemnification. The Company agrees to pay the
--- --------------------------------
Warrant Agent compensation to be agreed upon with the Company for all services
rendered by
10
<PAGE>
the Warrant Agent and to reimburse the Warrant Agent for all reasonable out-of-
pocket expenses(including reasonable counsel fees) incurred by the Warrant Agent
in connection with the services rendered by it hereunder. The Company also
agrees to indemnify the Warrant Agent for, and to hold it harmless against, any
loss, liability or expense incurred without negligence, bad faith or breach of
this Agreement on the part of the Warrant Agent, arising out of or in connection
with its acting as Warrant Agent hereunder.
(b) Agent for the Company. In acting in the capacity of Warrant Agent
--- ---------------------
under this Agreement, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship of agency or trust with any
of the owners or holders of the Warrants except as expressly set forth herein.
(c) Counsel. The Warrant Agent may consult with counsel satisfactory
--- -------
to it (which may be counsel to the Company), and the advice of such counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or committed by it hereunder in good faith and in accordance
with the advice of such counsel.
(d) Documents. The Warrant Agent shall be protected and shall incur no
--- ---------
liability for or in respect of any action taken or thing suffered by it in
reliance upon any notice, direction, consent, certificate, affidavit, statement
or other paper or document reasonably believed by it to be genuine and to have
been presented or signed by the proper parties.
(e) Certain Transactions. The Warrant Agent, and its officers,
--- --------------------
directors and employees, may become the owner of, or acquire any interest in,
any Warrant, with the same rights that it or they would have were it not the
Warrant Agent hereunder, and, to the extent permitted by applicable law, it or
they may engage or be interested in any financial or other transaction with the
Company and may act on, or as a depositary, trustee or agent for, any committee
or body of holders of Warrants [If Securities and Warrants are being offered
together: , Offered Securities] or Warrant Securities, or other securities or
obligations of the Company as freely as if it were not the Warrant Agent
hereunder. Nothing in this Agreement shall be deemed to prevent the Warrant
Agent from acting as trustee under either Indenture.
(f) No Liability for Interest. The Warrant Agent shall not be under any
--- -------------------------
liability for interest on any monies at any time received by its pursuant to any
of the provisions of this Agreement.
(g) No Liability for Invalidity. The Warrant Agent shall not be under
--- ---------------------------
any responsibility with respect to the validity or sufficiency of this Agreement
or the execution and delivery hereof (except the due execution and delivery
hereof by the Warrant Agent) or with respect to the validity or execution of the
Warrant Certificates (except its countersignature thereon).
(h) No Responsibility for Recitals. The recitals contained herein and
--- ------------------------------
in the Warrant Certificates (except as to the Warrant Agent's countersignature
thereon) shall be taken as
11
<PAGE>
the statements of the Company and the Warrant Agent assumes no responsibility
hereby for the correctness of the same.
(i) No Implied Obligations. The Warrant Agent shall be obligated to
--- ----------------------
perform such duties as are specifically set forth herein and no implied duties
or obligations shall be read into this Agreement against the Warrant Agent. The
Warrant Agent shall not be under any obligation to take any action hereunder
which may tend to involve it in any expense or liability, the payment of which
within a reasonable time is not, in its opinion, assured to it. The Warrant
Agent shall not be accountable or under any duty or responsibility for the use
by the Company of any Warrant Certificate authenticated by the Warrant Agent and
delivered by it to the Company pursuant to this Agreement or for the application
by the Company of the proceeds of the issue and sale, or exercise, of the
Warrants. The Warrant Agent shall have no duty or responsibility in case of any
default by the Company in the performance of its covenants or agreements
contained herein or in any Warrant Certificate or in the case of the receipt of
any written demand from a Holder with respect to such default, including,
without limiting the generality of the foregoing, any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise or, except
as provided in Section 5.03 hereof, to make any demand upon the Company.
SECTION 4.03 Compliance With Applicable Laws. The Warrant Agent agrees
------------ -------------------------------
to comply with all applicable federal and state laws imposing obligations on it
in respect of the services rendered by it under this Agreement and in connection
with the Warrants, including (but not limited to) the provisions of United
States federal income tax laws regarding information reporting and backup
withholding. The Warrant Agent expressly assumes all liability for its failure
to comply with any such laws imposing obligations on it, including (but not
limited to) any liability for its failure to comply with any applicable
provisions of United States federal income tax laws regarding information
reporting and backup withholding.
SECTION 4.04 Resignation and Appointment of Successor.
------------ ----------------------------------------
(a) The Company agrees, for the benefit of the Holders from time to
time, that there hall at all times be a Warrant Agent hereunder until all the
Warrants issued hereunder have been exercised or have expired in accordance with
their terms, which Warrant Agent shall be a bank or trust company organized
under the laws of the United States of America or one of the states thereof,
which is authorized under the laws of the jurisdiction of its organization to
exercise corporate trust powers, has a combined capital and surplus of at least
$50,000,000 and has an office or an agent's office in the United States of
America.
(b) The Warrant Agent may at any time resign as such agent by giving
written notice to the Company of such intention on its part, specifying the date
on which it desires such resignation to become effective; provided that such
date shall not be less than three months after the date on which such notice is
given, unless the Company agrees to accept such notice less than three months
prior to such date of effectiveness. The Company may remove the Warrant Agent at
any time by giving written notice to the Warrant Agent of such removal,
specifying the date on which it desires such removal to become effective. Such
resignation or removal shall take effect
12
<PAGE>
upon the appointment by the Company, as hereinafter provided, of a successor
Warrant Agent (which shall be a bank or trust company qualified as set forth in
Section 4.04(a)) and the acceptance of such appointment by such successor
Warrant Agent. The obligation of the Company under Section 4.02(a) shall
continue to the extent set forth therein notwithstanding the resignation or
removal of the Warrant Agent.
(c) If at any time the Warrant Agent shall resign, or shall cease to
be qualified as set forth in Section 4.04(a), or shall be removed, or shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or
shall file a petition seeking relief under any applicable Federal or State
bankruptcy or insolvency law or similar law, or make an assignment for the
benefit of it creditors or consent to the appointment of a receiver, conservator
or custodian of all or any substantial part of its property, or shall admit in
writing its inability to pay or to meet its debts as they mature, or if a
receiver or custodian of it or of all or any substantial part of its property
shall be appointed, or if an order of any court shall be entered for relief
against it under the provisions of any applicable Federal or State bankruptcy or
similar law, or if any public officer shall have taken charge or control of the
Warrant Agent or of its property or affairs, for the purpose of rehabilitation,
conservation or liquidation, a successor Warrant Agent, qualified as set forth
in Section 4.04(a), shall be appointed by the Company by an instrument in
writing, filed with the successor Warrant Agent. Upon the appointment as herein
provided of a successor Warrant Agent and acceptance by the latter of such
appointment, the Warrant Agent so superseded shall cease to be Warrant Agent
under this Agreement.
(d) Any successor Warrant Agent appointed under this Agreement shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested with all
the authority, rights, powers, trusts, immunities, duties and obligation of such
predecessor with like effect as if originally named as Warrant Agent under this
Agreement, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent under this Agreement.
(e) Any corporation into which the Warrant Agent may be merged or
converted or any corporation with which the Warrant Agent may be consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Warrant Agent shall be a party, or any corporation to which the
Warrant Agent shall sell or otherwise transfer all or substantially all the
assets and business of the Warrant Agent, in each case provided that it shall be
qualified as set forth in Section 4.04(a), shall be the successor Warrant Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, including, without
limitation, any successor to the Warrant Agent first named above.
13
<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Amendments.
----------
(a) This Agreement and any Warrant Certificate may be amended by the
parties hereto by executing a supplemental warrant agreement (a "Supplemental
Agreement"), without the consent of the Holder of any Warrant, for the purpose
of (i) curing any ambiguity, or curing, correcting or supplementing any
defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this Agreement that is not
inconsistent with the provisions of this Agreement or the Warrant Certificates,
(ii) evidencing the succession of another corporation to the Company and the
assumption by any such successor of the covenants of the Company contained in
this Warrant Agreement and the Warrants, (iii) evidencing and providing for the
acceptance of appointment by a successor Warrant Agent with respect to the
Warrants, [If Warrants are to be issued in Book-Entry form: (iv) evidencing and
providing for the acceptance of appointment by a successor Depository with
respect to each Global Warrant Certificate, (v) issuing definitive Warrant
Certificates in accordance with paragraph (b) of Section 1.03,] (vi) adding to
the covenant of the Company for the benefit of the Holders or surrendering any
right or power conferred upon the Company under this Agreement, or (vii)
amending this Agreement and the Warrants in any manner that the Company may deem
to be necessary or desirable and that will not adversely affect the interests of
the Holders in any material respect.
(b) The Company and the Warrant Agent may amend this Agreement and the
Warrants by executing a Supplemental Agreement with the consent of the Holders
of not fewer than a majority of the unexercised Warrants affected by such
amendment, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders under this Agreement; provided, however, that,
without the consent of each Holder of Warrants affected thereby, no such
amendment may be made that (i) changes the Warrants so as to reduce the
[principal amount] [number] of Warrant Securities purchasable upon exercise of
the Warrants or so as to increase the exercise price [If Warrants for Common
Stock are offered: (other than as provided by Section 2.03)], (ii) shortens the
period of time during which the Warrants may be exercised, (iii) otherwise
adversely affects the exercise rights of the Holders in any material respect, or
(iv) reduces the number of unexercised Warrants the consent of the Holders of
which is required for amendment of this Agreement or the Warrants.
SECTION 5.02 Merger, Consolidation, Sale, Transfer or Conveyance. The
---------------------------------------------------
company may consolidate or merge with or into any other corporation or sell,
lease, transfer or convey all or substantially all of the assets to any other
corporation, provided that (i) either (x) the company is the continuing
corporation or (y) the corporation (if other than the Company) that is formed by
or results from any such consolidation or merger or that receives such assets is
a corporation organized and existing under the laws of the United States of
America or a state thereof and such
14
<PAGE>
corporation assumes the obligations of the Company with respect to the
performance and observance of all of the covenants and conditions of this
Agreement to be performed or observed by the company and (ii) the Company or
such successor corporation, as the case may be, must not immediately be in
default under this Agreement. If at any time there shall be any consolidation or
merger or any sale, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of the Company, then in any such event the
successor assuming corporation shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein and in the Warrant
Certificates as the Company; the Company shall thereupon be relieved of any
further obligation hereunder or under the Warrants, and, in the event of any
such sale, lease, transfer, conveyance (other than by way of lease) or other
disposition, the Company as the predecessor corporation may thereupon or at any
time thereafter be dissolved, wound up or liquidated. Such successor or assuming
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of the Company, Warrant Certificates evidencing the Warrants
not theretofore exercised, in exchange and substitution for the Warrant
Certificates theretofore issued. Such Warrant Certificates shall in all respects
have the same legal rank and benefit under this Agreement as the Warrant
Certificates evidencing the Warrants theretofore issued in accordance with the
terms of this Agreement as though such new warrant Certificates had been issued
at the date of the execution hereof. In any case of any such merger or
consolidation or sale, lease, transfer, conveyance or other disposition of all
or substantially all of the assets of the Company, such changes in phraseology
and form (but not in substance) may be made in the new Warrant certificates, as
may be appropriate.
SECTION 5.03 Notices and Demands to the Company and Warrant Agent. If
----------------------------------------------------
the Warrant Agent shall receive any notice or demand addressed to the Company by
the Holder [If Warrants are to be issued in book-entry forms: or a Participant,
as the case may be], the Warrant Agent shall promptly forward such notice or
demand to the Company.
SECTION 5.04 Addresses.. Any communications from the company to the
----------
Warrant Agent with respect to this Agreement shall be addressed to
___________________, Attention: _________________________, and any
communications from the Warrant Agent to the Company with respect to this
Agreement shall be addressed to First Security Corporation, 79 South Main
Street, Salt Lake City, Utah 84111, Attention: Executive Vice President and
General Counsel (or such other address as shall be specified in writing by the
Warrant Agent or by the Company as the case may be). The company or the Warrant
Agent shall give notice to the Holders of Warrants by mailing written notice by
first class mail, postage prepaid, to such Holders as their names and addresses
appear in the books and records of the Warrant Agent [or, prior to the
Detachment Date, on the register of the Offered Securities].
SECTION 5.05 GOVERNING LAW.. THIS AGREEMENT AND EACH WARRANT
--------------
CERTIFICATE AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND
THEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO APPLICABLE CONFLICTS OF LAW PROVISIONS).
15
<PAGE>
SECTION 5.06 Delivery of Prospectus.. The company shall furnish to the
-----------------------
Warrant Agent sufficient copies of a prospectus relating to the Warrant
Securities deliverable upon exercise of Warrants and complying in all material
respects with the Securities Act of 1933, as amended (the "Prospectus"), and the
Warrant Agent agrees that upon the exercise of any Warrant, the Warrant Agent
shall deliver a Prospectus to the Holder of such Warrant, prior to or
concurrently with the delivery of the Warrant Securities issued upon such
exercise.
SECTION 5.07 Obtaining of Governmental Approvals.. The Company shall
------------------------------------
from time to time take all actin which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities and securities acts filings under United States Federal and
state laws, which the Company may deem necessary or appropriate in connection
with the issuance, sale, transfer and delivery of the Warrants, the exercise of
the Warrants, the issuance, sale, transfer and delivery of the Warrant
Securities to be issued upon exercise of Warrants or upon the expiration of the
period during which the Warrants are exercisable.
SECTION 5.08 Payment of Taxes.. The Company will pay all stamp and
-----------------
other duties, if any, to which, under the laws of the United Sates of America,
this Agreement or the original issuance of the Warrants may be subject.
SECTION 5.09 Benefits of Warrant Agreement.. Nothing in this Agreement
------------------------------
or any Warrant Certificate expressed or implied and nothing that may be inferred
from any of the provisions hereof or thereof is intended, or shall be construed,
to confer upon, or give to, any person or corporation other than the Company,
the Warrant Agent and their respective successors and assigns, [If Warrants ere
to be issued in book-entry form: the Beneficial Owners] and the Holders any
right, remedy or claim under or by reason of this Agreement or any Warrant
Certificate or of any covenant, condition, stipulation, promise or agreement
hereof or thereof; and all covenants, conditions, stipulations, promises and
agreements contained in this Agreement or any Warrant Certificate shall be for
the sole and exclusive benefit of the company and the Warrant Agent and their
respective successors and assigns and of the [If Warrants are to be issued in
Book-Entry form: Beneficial Owners and] Holders.
SECTION 5.10 Headings.. The descriptive headings of the several
----------
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 5.11 Severability.. If any provision in this Agreement or in an
-------------
Warrant Certificate shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions, or of such provisions I any other jurisdiction, shall not in any way
be affected or impaired thereby.
SECTION 5.12 Counterparts.. This Agreement may be executed in any
-------------
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts
16
<PAGE>
shall together constitute but one and the same instrument.
SECTION 5.13 Inspection of Agreement.. A copy of this Agreement shall
------------------------
be available at all reasonable times at the principal corporate trust office of
the Warrant Agent and at the office of the Company at 79 South Main Street, Salt
Lake City, Utah 84111, for inspection by any Holder. The Warrant Agent may
require any such Holder to submit satisfactory proof of ownership for inspection
by it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FIRST SECURITY CORPORATION
By: _______________________________
Authorized Officer
FIRST SECURITY BANK N. A.
By: _______________________________
Authorized Officer
17
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[Form of legend if Securities with Warrants that are not immediately
detachable or Warrants that are not immediately exercisable are offered: [PRIOR
TO ________________,] THIS WARRANT CERTIFICATE [(i) CANNOT BE TRANSFERRED OR
EXCHANGED UNLESS ATTACHED TO A [TITLE OF OFFERED SECURITY] AND (ii) ] CANNOT BE
EXERCISED IN WHOLE OR IN PART.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN.
Warrant Certificate evidencing
Warrants to Purchase
[title of Warrant Securities]
as described herein.
FIRST SECURITY CORPORATION
No. _____________ CUSIP No. ____________
VOID AFTER [5:00 P.M>], NEW YORK TIME, ON _________ __, _____
This certifies that _______________________ or registered assigns is the
registered holder of [Insert number initially issued] warrants to purchase
certain securities (the "warrants"). Each Warrant entitles the holder thereof,
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from First Security Corporation, a Delaware corporation
(the "Company"), [$______________ principal amount] [________] of the Company's
[title of Securities purchasable upon exercise of Warrants] [If Warrants for
Depositary shares are to be offered: , each representing a 1/__th interest in a
share of [title of securities represented by the Depositary Shares]] (the
"Warrant Securities" [If Warrants for Depositary shares are to be offered: ,
which term shall also refer, as appropriate, to such [title of securities
represented by the Depositary Shares]), [issued or to be issued under the
indenture (as hereinafter defined)], at the Exercise price set forth below. The
exercise price of each Warrant (the "Exercise Price") shall be [modify as
appropriate to reflect the terms of the offered Warrants].
Subject to the terms of the Warrant Agreement, each Warrant evidenced
hereby may be exercised in whole but not in part at any time, as specified
herein, [Unless Warrants may be exercised on only one date: on any business Day
(as defined below) occurring during the period
A-1
<PAGE>
(the "Exercise Period") commencing on [the date of issuance thereof]
[___________ ___, ____] and ending at 5:00 P.M., New York time,] on
_______________ ___, _____ (the "Expiration Date"). Each Warrant remaining
unexercised after 5:00 P.M., New York time, on the Expiration Date shall become
void, and all rights of the holder of this Warrant Certificate evidencing such
Warrant shall cease.
The holder of the Warrants represented by this Warrant Certificate may
exercise any Warrant evidence hereby by delivering, not later than 5:00 P.M.,
New York time, on [Unless warrants may be exercised on only one date: any
Business Day during the Exercise Period (the "Exercise Date")] {If Warrants may
be exercised on only one date: The Expiration date] to [name of Warrant Agent]
(the "Warrant Agent", which term includes any successor warrant agent under the
Warrant Agreement described below) at its corporate trust department at
_______________, (i) this Warrant Certificate [For global Warrant Certificate:
and the Warrants to be exercised (the "Book-Entry Warrants") free on the records
of [The Depository Trust company] (the "Depository") to an account of the
warrant Agent at the Depository designated for such purpose in writing by the
Warrant Agent to the Depository], (ii) an election to purchase ("election to
Purchase"), [For definitive Warrant Certificates: properly executed by the
holder hereof on the reverse of this Warrant Certificate] [For global Warrant
Certificates: properly executed by the institution in whose account the warrant
is recorded on the records of the Depository (the "Participant"), and
substantially I the form included on the reverse of therefor] and (iii) the
Exercise Price for each Warrant to be exercised in lawful money of the United
States of America by certified or official bank check or by bank wire transfer
in immediately available funds. If any of (a) this Warrant Certificate [for
global Warrant Certificates: or the Book-entry Warrants], (b) the Election to
Purchase, or (c) the Exercise Price therefor, is received by the Warrant Agent
after 5:00 P.M., New York time, on [Unless Warrants may be exercised on only one
date: the specified Exercise Date, the Warrants will be deemed to be received
and exercised on the Business Day next succeeding the Exercise Date. If the
date specified as the Exercise Date is not a Business Day, the warrants will be
deemed to be received and exercised on the next succeeding day which is a
business Day. If the warrants to be exercised are received or deemed to be
received after] the Expiration Date, the exercise thereof will be null and void
and any funds delivered to the Warrant Agent will be returned to the holder as
soon as practicable. In no event will interest accrue on funds deposited with
the Warrant Agent in respect of an exercise or attempted exercise of Warrants.
The Validity of any exercise of Warrants will be determined by he Warrant Agent
in its sole discretion and such determination will be final and binding upon the
holder of the Warrants and the Company. Neither the Warrant agent nor the
company shall have any obligation to inform a holder of Warrants of the
invalidity of any exercise of Warrants. As used herein, the term "Business day"
means any date which is not a Saturday or Sunday and is not a legal holiday or a
day on which banking institutions generally are authorized or obligated by law
or regulation to close in ________________________.
Warrants may be exercised only in whole numbers of Warrants. [Unless
Warrants may be exercised on only one date: If fewer than all of the Warrants
evidenced by this Warrant Certificate are exercised, a new Warrant Certificate
for the number of Warrants remaining unexercised shall be executed by the
company and countersigned by the Warrant Agent as
A-2
<PAGE>
provided in Section 1.02 of the Warrant Agreement, and delivered to the holder
of this Warrant Certificate at the address specified on the books of the Warrant
Agent or as otherwise specified by such registered holder.]
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of ____________ __, _____ (the "Warrant Agreement"),
between the Company and the Warrant Agent and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions the holder of this Warrant Certificate [For global Warrant
Certificate: and the beneficial owners of the Warrants represented by this
Warrant Certificate] consent[s] by acceptance hereof. Copies of the Warrant
Agreement are on file and can be inspected at the above-mentioned office of the
Warrant Agent and at the office of the Company at 79 South Main Street, Salt
Lake City, Utah 84111.
[If Warrants for Common Stock are offered: the Exercise Price and the number of
Warrant Securities purchasable upon the exercise of each Warrant shall be
subject to adjustment upon (i) the issuance of a stock dividend to the holders
of the outstanding shares of Warrant Securities or a combination, subdivision or
reclassification of the Warrant Securities; (ii) the issuance of rights,
warrants or options to all holders of the Warrant Securities entitling the
holders thereof to purchase Warrant Securities for an aggregate consideration
per share less than the current market price per share of the Warrant
Securities; or (iii) any distribution by the Company to the holders of the
Warrant Securities of evidences of indebtedness of the Company or of assets
(excluding cash dividends or distributions payable out of consolidated earnings
and earned surplus and dividends or distributions referred to in (i) above);
provided that no such adjustment in the number of Warrant Securities purchasable
upon exercise of the Warrants will be required until cumulative adjustments
require an adjustment of at least 1% of such number. No fractional shares will
be issued upon exercise of Warrants, but the Company will pay the cash value of
any fractional shares otherwise issuable. The adjustments to be made under this
section 2.03 shall be determined by the Warrant Agent and such determination
shall be final and binding upon the holders of the Warrants and the Company.]
[If Securities and Warrants are to be offered together: [If Warrants
are not immediately detachable: Prior to the Detachment date,] The Warrants
represented by this Warrant Certificate may be exchanged or transferred only
together with the [title of Offered Security] (the ""Offered Security") to which
the Warrants are attached, and only for the purpose of effecting, or in
conjunction with, an exchange or transfer of such Offered Security.
Additionally, [If Warrants are not immediately detachable: on or prior to the
Detachment Date,] each transfer of such Offered Security on the register of the
Offered Securities shall operate also to transfer the Warrants to which such
Offered Securities was initially attached. [If Warrants are not immediately
detachable: From and after the Detachment Date, the above provisions shall be
of no further force and effect.]] Upon due presentment for registration of
transfer or exchange of this Warrant Certificate at the corporate trust office
of the warrant Agent, the company shall execute, and the Warrant Agent shall
countersign and deliver, as provided in Section 1.02 of the Warrant Agreement,
in the name of the designated transferee one or more new Warrant Certificates of
any authorized
A-3
<PAGE>
denomination evidencing in he aggregate a like number of unexercised Warrants,
subject to the limitations provided in the Warrant Agreement.
Neither this Warrant Certificate nor the warrants evidenced hereby
shall entitle the holder hereof or thereof to any of the rights of a holder of
the Warrant Securities, including, without limitation, the right to receive
dividends, if any, or payment upon the liquidation, dissolution or winding up of
the Company or to exercise voting rights, if any.
The warrant Agreement and this Warrant Certificate may be amended as
provided in the Warrant Agreement including, under certain circumstances
described therein, without the consent of the holder of this Warrant Certificate
or the Warrants evidenced thereby.
THIS WARRANT CERTIFICATE AND ALL RIGHTS HEREUNDER AND UNDER THE
WARRANT AGREEMENT AND PROVISIONS HEREOF AND THEREOF SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO APPLICABLE CONFLICTS OF LAW PROVISIONS).
This Warrant Certificate shall not be entitled to any benefit under
the Warrant Agreement or be valid or obligatory for any purpose, and no Warrant
evidenced hereby may be exercised, unless this Warrant Certificate has been
countersigned by the manual signature of the Warrant agent.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated as of ______________ ___, ____
FIRST SECURITY CORPORATION
By: - FORM ONLY -
-------------------------------
Authorized officer
FIRST SECURITY BANK, N. A.
as Warrant Agent
By: - FORM ONLY -
---------------------------------
Authorized Officer
A-4
<PAGE>
[REVERSE]
Instructions for Exercise of Warrant
To exercise the Warrants evidenced hereby, the holder [For global
Warrant Certificate: or Participant] must, by 5:00 P.M., New York time, on the
specified Exercise Date, deliver to the Warrant Agent at its corporate trust
department, a certified or official bank check or a wire transfer in immediately
available funds, in each cash payable to the Warrant Agent at Account No. ____,
in an amount equal to the Exercise Price in full for the Warrants exercised. In
addition, the Warrant holder [For Global Warrant Certificates: or Participant]
must provide the information required below and deliver this Warrant Certificate
to the Warrant Agent at the address set forth below [For Global Warrant
Certificates: and the Book-Entry Warrants to the Warrant Agent in its account
with the Depository designated for such purpose]. This Warrant Certificate and
the Election to Purchase must be received by the Warrant Agent by 5:00 P.M., New
York time, on the specified Exercise Date.
ELECTION TO PURCHASE
TO BE EXECUTED IF WARRANT HOLDER DESIRES
TO EXERCISE THE WARRANTS EVIDENCED HEREBY
The undersigned hereby irrevocably elects to exercise, on
____________, ____ (the "Exercise Date"), _____________ Warrants, evidenced by
this Warrant Certificate, to purchase, [$______________ principal amount]
[_______________] of the [title of Securities purchasable upon exercise of
Warrants] [If Warrants for Depositary Shares are to be offered, each
representing a 1/__th interest in a share of [title of securities represented by
the Depositary Shares]] (the "Warrant Securities") of First Security
Corporation, a Delaware corporation (the "Company"), and represents that on or
before the Exercise Date such holder has tendered payment for such Warrant
Securities by certified or official bank check or bank wire transfer in
immediately available funds to the order of the Company c/o [Name and address of
Warrant Agent], in the amount of $_____________ in accordance with the terms
hereof. The undersigned requests that said [principal amount of] [number of]
Warrant Securities be in fully registered form, in the authorized denominations,
registered in such names and delivered, all as specified in accordance with the
instructions set forth below.
[Unless Warrants may be exercised on only one date: If said [principal
amount] [number] of Warrant Securities is less than all of the Warrant
Securities purchasable hereunder, the undersigned requests that a new Warrant
Certificate evidencing the remaining balance of the Warrants evidenced hereby be
issued and delivered to the holder of the Warrant Certificate unless otherwise
specified in the instructions below.]
A-5
<PAGE>
Dated:______________________
Name__________________________________
___________________
(Please Print
(Insert Social Security or Other Identifying
Number of Holder)
Address_____________________
_________________________________
Signature________________________________
This Warrant may only be exercised by presentation to the Warrant Agent at one
of the following locations:
By hand at
By mail at
The method of delivery of this Warrant Certificate is at the option and risk of
the exercising holder and the delivery of this Warrant Certificate will be
deemed to be made only when actually received by the Warrant Agent. If delivery
is by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.
(Instructions as to form and delivery of Warrant Securities and/or Warrant
Certificates)
Name in which Warrant Securities are to be registered if other than in the name
of the registered holder of this Warrant
Certificate:______________________________________________
Address to which Warrant Securities are to be mailed if other than to the
address of the registered holder of this Warrant Certificate as shown on the
books of the Warrant Agent:
_____________________________________
(Street Address)
_____________________________________
(City and State) (Zip Code)
A-6
<PAGE>
(Except for Global Warrant
Certificate: Name in which Warrant
Certificate evidencing unexercised
Warrants, if any, are to be registered
if other than in the name of the
registered holder of this Warrant
Certificate:
_____________________________________
Address to which certificate representing unexercised Warrants, if any, are to
be mailed if other than to the address of the registered holder of this Warrant
Certificate as shown on the books of the Warrant Agent:
_____________________________________
(Street Address)
_____________________________________
(City and State) (Zip Code)
Dated:______________________
____________________________________
Signature
([Except for Global Warrant Certificate: Signature
must conform in all respects to the name of the
holder as specified on the face of this Warrant
Certificate.] If Warrant Securities, or a Warrant
Certificate evidencing unexercised Warrants, are
to be issued in a name other than that of the
registered holder hereof or are to be delivered to
an address other than the address of such holder
as shown on the books of the Warrant Agent, the
above signature must be guaranteed by a member
firm of a registered national stock exchange, a
member of the National Association of Securities
Dealers, Inc., a participant in the Security
Transfer Agents Medallion Program or the Stock
Exchange Medallion Program, or by a commercial
bank or trust company having an office or
correspondent in the United States.
A-7
<PAGE>
SIGNATURE GUARANTEE
Name of Firm______________________
Address___________________________
Area Code
And Number_______________________
Authorized
Signature__________________________
Name_____________________________
Title______________________________
Dated: ______________________, 19__
ASSIGNMENT
(FORM OF ASSIGNMENT TO BE EXECUTED IF WARRANT HOLDER
DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto ____________________________________
______________________________ _______________________________________
(Please print name and address (Please insert social security or other
including zip code) identifying number)
the rights represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint __________________ Attorney, to transfer said
Warrant Certificate on the books of the Warrant Agent with full power of
substitution in the premises.
Dated:______________________
______________________________________
Signature
(Signature must confirm in all respects to the
name of the holder as specified on the face of
this Warrant Certificate and must bear a signature
guarantee by a member firm of a registered
national
A-8
<PAGE>
securities exchange, a member of the
National Association of Securities Dealers, Inc.,
a participant in the Security Transfer Agents
Medallion Program or the Stock Exchange Medallion
Program, or by a commercial bank or trust company
having an office or correspondent in the United
States)
SIGNATURE GUARANTEE
Name of Firm______________________
Address___________________________
Area Code
And Number_______________________
Authorized
Signature__________________________
Name_____________________________
Title______________________________
Dated: ______________________, 19__
A-9
<PAGE>
RAY, QUINNEY & NEBEKER
PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
700 Deseret Building
79 South Main Street
Salt Lake City, Utah 84111
Facsimile: (801) 323-3630
Telephone: (801) 323-3359
A. ROBERT THORUP
July 9, 1998
First Security Corporation
Suite 200
79 South Main Street
Salt Lake City, Utah 84111
Gentlemen:
At your request, we have examined the Registration Statement on Form
S-3 (the "Registration Statement") relating to the registration and sale from
time to time by you of up to an aggregate of $1,500,000,000 of (i) one or more
series of shares of preferred stock, no par value (the "Preferred Stock"), (ii)
depositary shares representing fractional interests in the Preferred Stock (the
"Depositary Shares"), (iii) common stock, $1.25 par value (the "Common Stock"),
(iv) debt securities (the "Debt Securities"), and (v) warrants to purchase
Preferred Stock, Common Stock or Debt Securities (the "Warrants" and
collectively with the Preferred Stock, the Depositary Shares, the Common Stock
and the Debt Securities, the "Securities"). We have examined the proceedings
heretofore taken and are familiar with the procedures proposed to be taken by
you in connection with the authorization, issuance and sale of the Securities.
Capitalized terms used but not otherwise defined herein shall have the same
meanings ascribed to them in the Registration Statement.
Subject to (i) the proposed additional proceedings being taken as now
contemplated by us as your counsel prior to the issuance of any of the
Securities, (ii) the terms of the Securities being otherwise in compliance with
then applicable law, (iii) the effectiveness of the Registration Statement under
the Securities Act of 1933, as amended, (iv) the due authorization, approval and
filing by you of the Certificate of Designation(s) setting forth the terms of
the Preferred Stock, (v) the due authorization, execution and delivery of the
Indenture pursuant to which Debt Securities are to be issued, (vii) the due
execution, registration and delivery of the certificate or certificates
evidencing the Securities, (viii) the appropriate officers and/or directors
having taken all necessary action to approve the specific terms of the
Securities to be issued, we are of the opinion that:
1. The Preferred Stock to be issued by you, including the Preferred
Stock represented by the Depositary Shares and the Preferred Stock issued upon
exercise of any Warrants issued under the Registration Statement, will be, when
issued and paid for in the manner specified by the Registration Statement and
the exhibits thereto, legally issued, fully paid and non-assessable;
<PAGE>
2. The Depositary Shares to be issued by you will be, when issued and
paid for in the manner specified by the Registration Statement and the exhibits
thereto, legally issued, fully paid and non-assessable;
3. The Common Stock to be issued by you, including any Common Stock
that may be issuable pursuant to the conversion of any Preferred Stock or Debt
Securities or upon exercise of any Warrants, will be, when issued and paid for
in the manner specified by the Registration Statement and the exhibits thereto,
legally issued, fully paid and non-assessable;
4. The Debt Securities to be issued by you, including Debt Securities
issued upon exercise of any Warrants issued under the Registration Statement,
will be, when issued and paid for in the manner specified by the Registration
Statement and the exhibits thereto, legally issued and binding obligations upon
you, subject to the effect of (a) applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization or similar laws and court decisions
affecting creditors' rights and remedies generally and (b) the application of
general principles of equity (whether such enforceability is considered in a
proceeding in equity or at law);
5. The Warrants to be issued by you will be, when issued and paid for
in the manner specified by the Registration Statement and the exhibits thereto,
legally issued, fully paid and non-assessable; and
6. The information in the Prospectus under the caption "Certain
Federal Income Tax Considerations," to the extent that it constitutes matters of
law or legal conclusions, is correct with respect to the matters discussed
therein.
You have informed us that you intend to issue the Securities from time
to time on a delayed or continuous basis, and this opinion is limited to the
laws, including the rules and regulations, as in effect on the date hereof. We
understand that prior to issuing any Securities you will advise us in writing of
the terms thereof, will afford us an opportunity to review the operative
documents pursuant to which such Securities are to be issued (including the
applicable Prospectus Supplement) and will file such supplement or amendment to
this opinion (if any) as we may reasonably consider necessary or appropriate by
reason of the terms of such Securities.
We hereby consent to the use of our name in connection with this
opinion in the Registration Statement on Form S-3 being employed to register the
above Securities under the Securities Act of 1933, and we consent to the
attachment of this letter as an exhibit to the Registration Statement.
Very truly yours,
RAY, QUINNEY & NEBEKER
II-2
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
First Security Corporation on Form S-3 of our report dated February 20, 1998,
appearing in the Annual Report on Form 10-K of First Security Corporation for
the year ended December 31, 1997, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Salt Lake City, Utah
July 8, 1998
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312)732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-----------------------------------
FIRST SECURITY CORPORATION
(EXACT NAME OF OBLIGORS AS SPECIFIED IN THEIR TRUST AGREEMENTS)
DELAWARE 87-6118148
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
--------------------
INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C.;
Federal Deposit Insurance Corporation,
Washington, D.C.; The Board of Governors of
the Federal Reserve System, Washington D.C..
(b) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate
trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
------------------------------
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
-----------------
PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
<PAGE>
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago and State of Illinois, on the 3rd day of July, 1998.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ STEVEN M. WAGNER
---------------------
STEVEN M. WAGNER
FIRST VICE PRESIDENT
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING
IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF
CHICAGO, FILED AS EXHIBIT 25 TO THE REGISTRATION STATEMENT ON FORM S-3 OF U S
WEST CAPITAL FUNDING, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MAY 6, 1998 (REGISTRATION NO. 333-51907-01).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
July 3, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of one or more indentures of First Security
Corporation to The First National Bank of Chicago, as Trustee, the undersigned,
in accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, hereby consents that the reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ STEVEN M. WAGNER
--------------------
STEVEN M. WAGNER
FIRST VICE PRESIDENT
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
DOLLAR AMOUNTS IN THOUSANDS C400
----------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin(1)............ 0081 4,141,168 1.a
b. Interest-bearing balances(2)..................................... 0071 5,142,787 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)....... 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)..... 1773 7,819,811 2.b
3. Federal funds sold and securities purchased under agreements to
resell 1350 5,619,157 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RCFD
----
RC-C).............................................................. 2122 26,140,376 4.a
b. LESS: Allowance for loan and lease losses....................... 3123 417,371 4.b
c. LESS: Allocated transfer risk reserve........................... 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and RCFD
----
reserve (item 4.a minus 4.b and 4.c)............................ 2125 25,723,005 4.d
5. Trading assets (from Schedule RD-D) 3545 5,795,159 5.
6. Premises and fixed assets (including capitalized leases) 2145 757,033 6.
7. Other real estate owned (from Schedule RC-M)....................... 2150 6,547 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M) 2130 135,327 8.
9. Customers' liability to this bank on acceptances outstanding 2155 512,763 9.
10. Intangible assets (from Schedule RC-M)............................. 2143 261,456 10.
11. Other assets (from Schedule RC-F).................................. 2160 2,223,495 11.
12. Total assets (sum of items 1 through 11)........................... 2170 58,137,708 12.
</TABLE>
- ------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page
RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
THOUSANDS
-----------------
<S> <C> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
----
from Schedule RC-E, part 1)............................... 2200 21,551,932 13.a
(1) Noninterest-bearing(1)................................ 6631
9,361,049 13.a1
(2) Interest-bearing...................................... 6636 12,190,883 13.a
b. In foreign offices, Edge and Agreement subsidiaries, and RCFN
----
IBFs (from Schedule RC-E, part II)........................ 2200 14,511,110 13.b
(1) Noninterest bearing................................... 6631 604,859 13.b
(2) Interest-bearing...................................... 6636 13,906,251 13.b
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3.887,022 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,092 15.a
b. Trading Liabilities(from Sechedule RC-D)........................ RCFD 3548 5,918,194 15.b
16. Other borrowed money: RCFD
----
a. With original maturity of one year or less............. 2332 3,134,696 16.a
b. With original maturity of more than one year.......... A547 381,681 16.b
c. With original maturity of more than three years........ A548 326,551 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding... 2920 512,763 18.
19. Subordinated notes and debentures......................... 3200 2,000,000 19.
20. Other liabilities (from Schedule RC-G).................... 2930 1,163,747 20.
21. Total liabilities (sum of items 13 through 20)............ 2948 53,450,788 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus............. 3838 0 23.
24. Common stock.............................................. 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock).. 3839 3,107,585 25.
26. a. Undivided profits and capital reserves................. 3632 1,359,598 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities............................................. 8434 18,975 26.b
27. Cumulative foreign currency translation adjustments....... 3284 (96) 27.
28. Total equity capital (sum of items 23 through 27)......... 3210 4,686,920 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)....................... 3300 58,137,708 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external Number ----------
auditors as of any date during 1996 . . . . . . . . . . . . . . . . . . . . . . . . . ...RCFD 6724 .. 2 M.1.
----------
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
6
