<PAGE> 1
As filed with the Securities and Exchange Commission on March 30, 1999
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
FIRST SECURITY CORPORATION DELAWARE 87-6118148
FIRST SECURITY CAPITAL II DELAWARE 87-6243305
FIRST SECURITY CAPITAL III DELAWARE 87-6243306
FIRST SECURITY CAPITAL IV DELAWARE 87-6243307
FIRST SECURITY CAPITAL V DELAWARE 87-6243308
(Exact name of each Registrant as specified (State or other jurisdiction of (I.R.S. Employer
in its charter) incorporation or organization) Identification
Number)
</TABLE>
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79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5976
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
------------------------
BRAD D. HARDY
EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(801) 246-5976
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copies to:
<TABLE>
<S> <C>
A. ROBERT THORUP, ESQ. LEE MEYERSON, ESQ.
RAY, QUINNEY & NEBEKER SIMPSON THACHER & BARTLETT
79 SOUTH MAIN STREET 425 LEXINGTON AVENUE
SALT LAKE CITY, UTAH 84111 NEW YORK, NEW YORK 10017-3954
TELEPHONE: (801) 532-1500 TELEPHONE: (212) 455-2000
FACSIMILE: (801) 532-7543 FACSIMILE: (212) 455-2502
</TABLE>
------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after the Registration Statement becomes effective as determined by market
conditions and other factors.
------------------------
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 statement 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. [ ]
(Continued on following page)
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<PAGE> 2
(Continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum
Title of Each Class of Amount to be Proposed Maximum Aggregate Offering
Securities to be Registered Registered(2)(3) Aggregate Price Per Security Price(2)(3)(4)
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<S> <C> <C> <C>
Capital Securities of the
Trusts(1)
Guarantees of First
Security Corporation of
Capital Securities
issued by the Trusts
and certain back-up
obligations(6)
Junior Subordinated
Debentures of First
Security Corporation(7)
Total................... $500,000,000 (2) $500,000,000
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<CAPTION>
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- --------------------------- -------------------------
Title of Each Class of Amount of
Securities to be Registered Registration Fee(5)
- --------------------------- -------------------------
<S> <C>
Capital Securities of the
Trusts(1)
Guarantees of First
Security Corporation of
Capital Securities
issued by the Trusts
and certain back-up
obligations(6)
Junior Subordinated
Debentures of First
Security Corporation(7)
Total................... $139,000
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</TABLE>
(1) The "Trusts" refers to First Security Capital II, First Security Capital
III, First Security Capital IV and First Security Capital V.
(2) Pursuant to General Instruction II.D to Form S-3, the Amount to be
Registered, Proposed Maximum Aggregate Price Per Security and Proposed
Maximum Aggregate Offering Price has been omitted for each class of
securities but has been listed for the aggregate amount of all securities
registered hereby.
(3) If any securities are issued at an original issue discount, then such
greater amount as shall result in aggregate proceeds of $500,000,000.
(4) The amount in the table has been estimated solely for calculating the
registration fee.
(5) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended (the "Securities Act").
(6) Includes the rights of holders of the Capital Securities under any
Guarantees and certain back-up undertakings, comprised of the obligations of
First Security Corporation to provide certain indemnities in respect of, and
pay and be responsible for certain costs, expenses, debts and liabilities of
each of the Trusts, other than with respect to the Capital Securities and
Common Securities of such Trust, and such obligations of First Security
Corporation as set forth in the Amended and Restated Declaration of Trust of
each Trust and the Indenture, in each case as further described in the
Registration Statement. The Guarantees, when taken together with First
Security Corporation's obligations under the related Junior Subordinated
Debentures, the Indenture and the related Amended and Restated Declaration
of Trust, will provide a full and unconditional guarantee on a subordinated
basis by First Security Corporation of payments due on the Capital
Securities. No separate consideration will be received for any Guarantees or
any such back-up obligations.
(7) The Junior Subordinated Debentures to be issued by First Security
Corporation and which are covered by this Registration Statement will be
purchased by the applicable Trust with the proceeds of the sale of the
corresponding series of Capital Securities. The Junior Subordinated
Debentures may be distributed later, without additional consideration, to
the holders of each applicable series of Capital Securities of each of the
Trusts if the respective Trusts are dissolved and their assets are
distributed to the respective holders of such Capital Securities.
------------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
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 or until this Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
ii
<PAGE> 3
EXPLANATORY NOTE
This Registration Statement contains (1) a prospectus (the "Prospectus")
relating to capital securities (the "Capital Securities") which may be offered
by First Security Capital II, First Security Capital III, First Security Capital
IV and First Security Capital V, the related guarantees (the "Guarantees") by
First Security Corporation of the Capital Securities and the Junior Subordinated
Debentures of First Security Corporation and (2) a supplement to the Prospectus
(the "Prospectus Supplement") relating to the Capital Securities, the Guarantees
and the Junior Subordinated Debentures.
The Prospectus Supplement has been filed as part of this Registration
Statement because First Security Corporation expects that an offering of a
series of Capital Securities and related Guarantee will commence promptly upon
the effectiveness of this Registration Statement. Additional supplements to the
Prospectus will be filed with the Securities and Exchange Commission, pursuant
to Rule 424(b) under the Securities Act, following the effectiveness of this
Registration Statement as required.
iii
<PAGE> 4
SUBJECT TO COMPLETION, DATED , 1999
PRELIMINARY PROSPECTUS SUPPLEMENT
(To prospectus dated , 1999)
$
FIRST SECURITY(R) CAPITAL II
SKIS(SM)
% SUBORDINATED CAPITAL INCOME SECURITIES
(Liquidation amount $25 per Capital Security)
fully and unconditionally guaranteed, to the extent set forth herein, by
[FIRST SECURITY CORPORATION LOGO]
<TABLE>
<S> <C>
MATURITY DATE: , 2029.
DISTRIBUTIONS: Quarterly, beginning
, 1999.
PAYABLE: Distributions may be postponed
for up to five years but not
past the maturity date.
SUBORDINATION: The Capital Securities are
effectively subordinated to
all existing and future senior
debt of First Security
Corporation and all
liabilities of its
subsidiaries.
</TABLE>
<TABLE>
<S> <C>
LISTING: New York Stock Exchange under the
ticker symbol .
ISSUER: First Security Capital II, which is
issuing the Capital Securities,
will have no assets other than
Junior Subordinated Debentures
issued by First Security
Corporation. These debentures will
have essentially the same terms as
the Capital Securities. As a
result, First Security Capital II
can only make payments on the
Capital Securities if First
Security Corporation first makes
payments on the Junior Subordinated
Debentures.
</TABLE>
Investing in the Capital Securities involves risks. Risk Factors begin on page
S-7.
These securities are not deposits or other obligations of a bank. They are not
insured by the FDIC or any other government agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
----------------------------------
<TABLE>
<CAPTION>
PER CAPITAL SECURITY TOTAL
-------------------- -----
<S> <C> <C>
Public offering price....................................... $25 $
Underwriting commissions.................................... see below see below
Proceeds to the Trust....................................... $25 $
</TABLE>
First Security Corporation will pay underwriting commissions of $ per
Capital Security, which total $ or $ if the over-allotment
option, described below, is exercised in full.
Any accrued distributions on the Capital Securities from , 1999
should be added to the Public Offering Price.
First Security Corporation and First Security Capital II have granted the
Underwriters a 30 day option to purchase up to $ additional aggregate
liquidation amount of Capital Securities on the same terms and conditions as set
forth above solely to cover over-allotments, if any. Lehman Brothers expects the
Capital Securities to be ready for delivery in book-entry form only through The
Depository Trust Company on or about , 1999.
----------------------------------
LEHMAN BROTHERS FIRST SECURITY VAN KASPER
, 1999
"SKIS" is a service mark owned by Lehman Brothers Inc.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND
MAY BE CHANGED. THE PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
PAGE
----
<S> <C>
About This Prospectus Supplement.... S-2
Summary Information Q&A............. S-3
Risk Factors........................ S-7
Forward-Looking Statements.......... S-9
First Security...................... S-10
The Trust........................... S-10
Use of Proceeds..................... S-12
Accounting Treatment................ S-12
Regulatory Treatment................ S-12
Capitalization...................... S-13
Selected Consolidated Financial
Data.............................. S-14
Certain Terms of the Capital
Securities........................ S-16
Certain Terms of the Junior
Subordinated Debentures........... S-22
Relationship Among the Capital
Securities, the Junior
Subordinated Debentures and the
Guarantee......................... S-26
Certain United States Federal Income
Tax Consequences.................. S-28
ERISA Considerations................ S-33
Underwriting........................ S-36
PROSPECTUS PAGE
----
About this Prospectus............... 1
Where You Can Find More Information
About First Security.............. 2
Summary............................. 3
First Security...................... 4
The Trusts.......................... 4
Use of Proceeds..................... 6
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock
Dividends......................... 6
Description of the Preferred
Securities........................ 7
Description of the Guarantees....... 14
Description of the Junior
Subordinated Debentures........... 18
Book-Entry Issuance................. 27
ERISA Matters....................... 30
Plan of Distribution................ 30
Legal Opinions...................... 31
Experts............................. 32
</TABLE>
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the attached prospectus contain information
about First Security Corporation, First Security Capital II, the Capital
Securities and certain related matters. They also refer to information contained
in other documents filed by First Security Corporation with the Securities and
Exchange Commission (which we refer to as the "SEC"). References to this
prospectus supplement or the prospectus also mean the information contained in
such other documents filed with the SEC. If this prospectus supplement is
inconsistent with the prospectus, you should rely on this prospectus supplement.
When we refer to "First Security" in this prospectus supplement, we mean
First Security Corporation. When we refer to the "Trust" in this prospectus
supplement, we mean "First Security Capital II". When we use the term "we", we
mean both First Security and the Trust.
You should rely only on the information contained in this document or in
the documents to which we refer you. We and the underwriters have not authorized
anyone else to provide you with different or additional information. We are not
making an offer of these securities in any jurisdiction where the offer is not
permitted. You should not assume that the information in this prospectus
supplement or the prospectus is accurate as of any date other than the date on
the front of these documents.
S-2
<PAGE> 6
SUMMARY INFORMATION Q&A
This summary highlights selected information from this prospectus
supplement and the accompanying prospectus to help you understand the Capital
Securities. It may not contain all the information that is important to you. You
should carefully read this entire prospectus supplement and the accompanying
prospectus to understand fully the terms of the Capital Securities and the
related Guarantees and Junior Subordinated Debentures, as well as the tax and
other considerations that are important to you in making a decision about
whether to invest in the Capital Securities. You should pay special attention to
the "Risk Factors" section of this prospectus supplement to determine whether an
investment in the Capital Securities is appropriate for you.
WHAT IS THE TRUST?
The Trust is a Delaware business trust. It was created for the sole purpose
of issuing the % Subordinated Capital Income Securities (which we refer to
as the "Capital Securities") and engaging in the other transactions described
below.
There will be five Trustees of the Trust. Three of them, the Regular
Trustees, are officers of First Security. The First National Bank of Chicago
will act as the Property Trustee of the Trust (which we refer to as the
"Property Trustee"), and First Chicago Delaware Inc. will act as the Delaware
Trustee of the Trust (which we refer to as the "Delaware Trustee").
WHAT ARE THE CAPITAL SECURITIES?
Each Capital Security will represent an undivided beneficial ownership
interest in the assets of the Trust. Each Capital Security will entitle the
holders to receive quarterly cash distributions as described below.
WHAT ARE THE TRUST'S ASSETS?
The Trust will sell its Capital Securities to the public and its Common
Securities to First Security. The Trust will use the proceeds from these sales
to buy a corresponding principal amount of % Junior Subordinated Debentures
due 2029 (which we refer to as the "Junior Subordinated Debentures") from First
Security. First Security will pay interest on the Junior Subordinated Debentures
at the same rate and at the same times as the Trust makes payments on the
Capital Securities, and the Trust will use the payments it receives on the
Junior Subordinated Debentures to make the corresponding payments on the Capital
Securities. First Security will guarantee payments made on the Capital
Securities to the extent described below. Both the Junior Subordinated
Debentures and the guarantee will be subordinated to existing and future
creditors of First Security and its subsidiaries.
WHEN WILL YOU RECEIVE QUARTERLY DISTRIBUTIONS
AND HOW MUCH WILL YOU BE PAID?
If you purchase the Capital Securities, you will be entitled to receive
cumulative cash distributions at an annual rate of %. Distributions will
accrue from , 1999, and will be paid quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, beginning
, 1999, unless they are deferred as described below.
WHEN CAN PAYMENT OF YOUR DISTRIBUTIONS BE
DEFERRED?
First Security can, on one or more occasions, defer the quarterly interest
payments on the Junior Subordinated Debentures for up to 20 consecutive
quarterly periods. In other words, First Security may declare up to a five year
interest payment moratorium on the Junior Subordinated Debentures and may choose
to do that on more than one occasion. A deferral of interest payments cannot
extend, however, beyond the maturity date of the Junior Subordinated Debentures,
nor can First Security begin a new interest deferral period until it has paid
all accrued interest on the Junior Subordinated
S-3
<PAGE> 7
Debentures from the previous interest deferral period.
If First Security defers interest payments on the Junior Subordinated
Debentures, the Trust will also defer distributions on the Capital Securities.
Any deferred distributions will accrue additional amounts at an annual rate of
%, compounded quarterly. Once First Security pays all deferred interest
payments on the Junior Subordinated Debentures, with accrued interest, it can
again postpone interest payments on the Junior Subordinated Debentures as
described above.
During any period in which First Security defers interest payments on the
Junior Subordinated Debentures, neither First Security nor any of its
subsidiaries will be permitted to do any of the following, with certain limited
exceptions:
- pay a dividend or make any other payment or distribution on First
Security's capital stock;
- redeem, purchase or make a liquidation payment on any of First Security's
capital stock;
- make an interest, principal or premium payment on, or repay, repurchase
or redeem, any of First Security's debt securities that rank equal with
or junior to the Junior Subordinated Debentures; or
- make any guarantee payment regarding debt securities of any of First
Security's subsidiaries, if the guarantee ranks equal with or junior to
the Junior Subordinated Debentures.
If First Security defers payments of interest on the Junior Subordinated
Debentures, the Junior Subordinated Debentures will at that time be treated as
being issued with original issue discount for United States federal income tax
purposes. This means you would be required to accrue interest income in an
amount equal to the deferred distributions on your Capital Securities, even
though you will not be receiving any cash distributions on your Capital
Securities, and include these amounts in your gross income for United States
federal income tax purposes. For more information, see below under the caption
"Certain United States Federal Income Tax Consequences" in this prospectus
supplement.
WHEN CAN THE TRUST REDEEM THE CAPITAL
SECURITIES?
The Trust will redeem all of the outstanding Capital Securities when the
Junior Subordinated Debentures are repaid at maturity. The Junior Subordinated
Debentures are scheduled to mature on , 2029, although First
Security has the right in certain circumstances to shorten the maturity date to
not earlier than , 2014. In addition, if First Security redeems
any Junior Subordinated Debentures before their maturity, the Trust will use the
cash it receives on the redemption of the Junior Subordinated Debentures to
redeem, on a proportionate basis, the Capital Securities and the Common
Securities.
First Security can redeem the Junior Subordinated Debentures before their
maturity at 100% of their principal amount plus accrued and unpaid interest:
- in whole or in part on one or more occasions any time on or after
, 2004; and
- in whole at any time, if certain changes occur in tax or investment
company laws and regulations or in the treatment of the Capital
Securities for bank regulatory purposes. These circumstances are more
fully described below under the caption "Certain Terms of the Capital
Securities -- Redemption" in this prospectus supplement.
First Security will not be permitted to redeem the Junior Subordinated
Debentures, however, unless it obtains the prior approval of the Board of
Governors of the Federal Reserve System (which we refer to as the "Federal
Reserve") to do so, if then required under the Federal Reserve's capital rules.
S-4
<PAGE> 8
HOW ARE THE CAPITAL SECURITIES GUARANTEED?
First Security will fully and unconditionally guarantee, to the extent
described in this prospectus supplement and the accompanying prospectus, the
payments of all amounts due on the Capital Securities to the extent the Trust
has funds available for payment of such distributions (which we refer to as the
"Guarantee").
First Security is also obligated to pay most of the expenses and
obligations of the Trust (other than its obligations to make payments on the
Capital Securities and Common Securities, which are covered only by the
Guarantee).
The Guarantee does not cover payments when the Trust does not have
sufficient funds to make payments on the Capital Securities. In other words, if
First Security does not make a payment on the Junior Subordinated Debentures,
the Trust will not have sufficient funds to make payments on the Capital
Securities, and the Guarantee will not obligate First Security to make those
payments on the Trust's behalf. In addition, First Security's obligations under
the Guarantee are subordinate to its obligations to other creditors to the same
extent as the Junior Subordinated Debentures.
WHEN COULD THE JUNIOR SUBORDINATED
DEBENTURES BE DISTRIBUTED TO YOU?
First Security can dissolve the Trust at any time, subject to obtaining:
- the prior approval of the Federal Reserve to do so, if then required
under the Federal Reserve's capital rules; and
- an opinion of independent counsel stating that the distribution of the
Junior Subordinated Debentures will not be taxable to you.
If First Security dissolves the Trust, or if the Trust dissolves because of
certain other specified events (such as the bankruptcy of First Security), the
Trust will distribute the Junior Subordinated Debentures to holders of the
Capital Securities and the Common Securities on a proportionate basis.
Upon any dissolution, winding-up or liquidation of the Trust involving the
liquidation of the Junior Subordinated Debentures, the holders of the Capital
Securities will be entitled to receive, out of assets held by the Trust, subject
to the rights of any creditors of the Trust, the liquidation distribution in
cash. The Trust will be able to make this distribution of cash only if the
Junior Subordinated Debentures are redeemed by First Security.
CAN THE JUNIOR SUBORDINATED DEBENTURES'
MATURITY BE SHORTENED?
If a change in tax law occurs that would permit First Security to redeem
the Junior Subordinated Debentures, First Security will have the right to
shorten the maturity of the Junior Subordinated Debentures provided that it
receives the prior approval of the Federal Reserve, if then required under the
Federal Reserve's capital rules. First Security may only shorten the maturity
enough so that interest paid on the Junior Subordinated Debentures will continue
to be tax deductible. The shortened term of the Junior Subordinated Debentures
may not, however, be less than 15 years from the date of their original
issuance.
WILL THE CAPITAL SECURITIES BE LISTED ON A
STOCK EXCHANGE?
We expect that the Capital Securities will be approved for listing on the
New York Stock Exchange. If listed, trading is expected to commence within 30
days after the Capital Securities are first issued. You should be aware that the
listing of the Capital Securities will not necessarily ensure that an active
trading market will be available for the Capital Securities or that you will be
able to sell your Capital Securities at the price you originally paid for them.
If the Trust distributes the Junior Subordinated Debentures, First Security
will use its best efforts to list them on the New York Stock
S-5
<PAGE> 9
Exchange or wherever the Capital Securities are then listed.
IN WHAT FORM WILL THE CAPITAL SECURITIES BE
ISSUED?
The Capital Securities will be represented by one or more global securities
that will be deposited with and registered in the name of The Depository Trust
Company, New York, New York (which we refer to as "DTC"). This means that you
will not receive a certificate for your Capital Securities and the Capital
Securities will not be registered in your name. For more details, see the
information under the caption "Book-Entry Issuance" in the accompanying
prospectus.
S-6
<PAGE> 10
RISK FACTORS
Before purchasing any Capital Securities, you should read carefully this
prospectus supplement and the accompanying prospectus and pay special attention
to the following risk factors.
Because the Trust will rely on the payments it receives on the Junior
Subordinated Debentures to fund all payments on the Capital Securities, and
because the Trust may distribute the Junior Subordinated Debentures in exchange
for the Capital Securities, you are making an investment regarding the Junior
Subordinated Debentures as well as the Capital Securities. You should carefully
review the information in this prospectus supplement and the accompanying
prospectus about the Capital Securities, the Guarantee and the Junior
Subordinated Debentures.
SUBORDINATION
First Security's obligations under the Junior Subordinated Debentures will
be subordinate to all existing and future senior debt of First Security. In
addition, the Junior Subordinated Debentures will be effectively subordinated to
all existing and future obligations of First Security's subsidiaries. First
Security's obligations under the Guarantee are subordinated to the same extent
as the Junior Subordinated Securities. This means that First Security cannot
make any payments on the Junior Subordinated Debentures or the Guarantee if
First Security is in default on any of its senior debt.
In addition, in the event of the bankruptcy, liquidation or dissolution of
First Security, its assets must be used to pay off its senior obligations in
full before any payments may be made on the Junior Subordinated Debentures or
the Guarantee. As of December 31, 1998, First Security had outstanding senior
debt of approximately $609 million. The indenture pursuant to which the Junior
Subordinated Debentures will be issued (which we refer to as the "Indenture"),
the Guarantee and the declaration of trust which created the Trust (which we
refer to as the "Declaration of Trust") do not limit First Security's ability to
incur additional senior debt. For more information, see below under the captions
"Description of the Junior Subordinated Debentures -- Ranking" and "Description
of the Guarantees -- Ranking" in the accompanying prospectus.
STATUS OF FIRST SECURITY AS HOLDING COMPANY
First Security is a holding company which
conducts substantially all of its operations though its bank and other
subsidiaries. As a result, its ability to make payments on the Junior
Subordinated Debentures and the Guarantee will depend primarily upon the receipt
of dividends and other distributions from its subsidiaries. First Security's
principal subsidiary is First Security Bank, N.A. (which we refer to as "First
Security Bank"). There are various regulatory restrictions on the ability of
First Security Bank and First Security's other banking subsidiaries to pay
dividends or make other payments to First Security. At December 31, 1998, First
Security's banking subsidiaries could pay a total of approximately $432 million
in dividends to First Security without prior regulatory approval.
In addition, the right of First Security to participate in any distribution
of assets of any subsidiary, including First Security Bank, upon the
subsidiary's liquidation or otherwise, and thus the ability of holders of the
Capital Securities to benefit indirectly from such distribution, will be subject
to the prior claims of creditors of that subsidiary, except to the extent that
any claims of First Security as a creditor of such subsidiary may be recognized.
As a result, the Capital Securities will effectively be subordinated to all
existing and future liabilities and obligations of First Security's
subsidiaries, and holders of the Capital Securities should look only to the
assets of First Security for payments on the Capital Securities. At December 31,
1998, First Security's subsidiaries had outstanding debt and other liabilities,
including deposits, of approximately $19.5 billion.
S-7
<PAGE> 11
DEPENDENCE ON FIRST SECURITY'S PAYMENTS ON
JUNIOR SUBORDINATED DEBENTURES;
LIMITATIONS ON GUARANTEE
The Trust's ability to make timely distribution and redemption payments on
the Capital Securities is completely dependent upon First Security's making
timely corresponding payments on the Junior Subordinated Debentures. The
Guarantee only guarantees that First Security will make distribution and
redemption payments on the Capital Securities if the Trust has the funds to do
so itself but does not.
If First Security defaults on the Junior Subordinated Debentures, the Trust
will lack funds for the payments on the Capital Securities. If this happens,
holders of Capital Securities will not be able to rely upon the Guarantee for
payment of such amounts. Instead, if First Security does not pay any amounts on
the Junior Subordinated Debentures when due, a holder of Capital Securities may
proceed directly against First Security for payment of any amounts due on the
Capital Securities of such holder. For more information, see below under the
caption "Certain Terms of the Capital Securities -- Trust Enforcement Events" in
this prospectus supplement.
FIRST SECURITY'S ABILITY TO DEFER DISTRIBUTIONS MAY AFFECT THE TRADING PRICE OF
THE CAPITAL SECURITIES AND HAS TAX
CONSEQUENCES FOR YOU
As long as the Junior Subordinated Debentures are not in default, First
Security can, on one or more occasions, defer interest payments on the Junior
Subordinated Debentures for up to 20 consecutive quarters, but not beyond the
maturity date of the Junior Subordinated Debentures. Because interest payments
on the Junior Subordinated Debentures fund the distributions on the Capital
Securities, each such deferral would result in a corresponding deferral of
distributions on the Capital Securities.
First Security currently does not intend to defer interest payments on the
Junior Subordinated Debentures. However, if it does so in the future, the
Capital Securities may trade at a price that does not reflect fully the value of
the accrued but unpaid distributions. Even if First Security does not do so, its
right to defer interest payments on the Junior Subordinated Debentures could
mean that the market price for the Capital Securities may be more volatile than
that of other securities without interest deferral rights.
If First Security does defer interest payments on the Junior Subordinated
Debentures, you will be required to accrue interest income for United States
federal income tax purposes in respect of your proportionate share of the
accrued but unpaid interest on the Junior Subordinated Debentures held by the
Trust, even if you normally report income when received. As a result, you will
be required to include the accrued interest in your gross income for United
States federal income tax purposes prior to your receiving any cash
distribution. If you sell your Capital Securities prior to the record date for
the first distribution after a deferral period, you will never receive the cash
from First Security related to the accrued interest that you reported for tax
purposes. For more information regarding the tax consequences of purchasing the
Capital Securities, see below under the caption "Certain United States Federal
Income Tax Consequences -- Interest Income and Original Issue Discount" and
"-- Sales of Capital Securities or Redemption of Junior Subordinated Debentures"
in this prospectus supplement.
THE CAPITAL SECURITIES MAY BE REDEEMED AT ANY TIME IF A SPECIAL EVENT OCCURS
Generally, the Junior Subordinated Debentures (and therefore the Capital
Securities) may not be redeemed prior to , 2004. However, if
certain special events occur relating to changes in tax law, the Investment
Company Act of 1940 or the treatment of the Capital Securities for bank
regulatory capital purposes, then First Security will be able, subject to
receipt of any necessary Federal Reserve approval, to redeem all of the Junior
Subordinated Debentures at a price equal to 100% of their principal amount plus
any accrued and unpaid interest. If such a redemption happens, the Trust must
use the redemp-
S-8
<PAGE> 12
tion price it receives to redeem all of the Capital Securities.
SHORTENING OF THE MATURITY OF THE JUNIOR
SUBORDINATED DEBENTURES
Upon the occurrence and continuation of adverse tax events, as described
under below under the caption "Certain Terms of the Junior Subordinated
Debentures -- Option to Shorten Maturity Date" in this prospectus supplement,
First Security may, instead of redeeming the Junior Subordinated Debentures,
shorten the stated maturity of the Junior Subordinated Debentures to fifteen
years from their date of original issuance. In that event, the mandatory
redemption date for the Capital Securities will be shortened correspondingly.
First Security will only exercise its right to shorten the maturity date of the
Junior Subordinated Debentures upon receiving the prior approval of the Federal
Reserve to do so, if then required under the Federal Reserve's capital rules.
Under current United States federal income tax law, the redemption of the
Capital Securities would be a taxable event to you.
In addition, you may not be able to reinvest the money that you receive in
the redemption at a rate that is equal to or higher than the rate of return on
the Capital Securities.
LIMITED VOTING RIGHTS
You will only have limited voting rights. In particular, only First
Security can elect and remove Trustees, except when there is a default under the
Junior Subordinated Debentures. If such a default occurs, a majority in
liquidation amount of the holders of the Capital Securities would be entitled to
remove or appoint the Property Trustee and the Delaware Trustee. For more
information, see below under the caption "The Trust" in this prospectus
supplement.
BANK REGULATORY RESTRICTIONS ON OPERATIONS OF
THE TRUST
Because the Trust is a subsidiary of First Security, federal banking
authorities will have the right to examine the Trust and its activities. Under
certain circumstances, including any determination that First Security's
relationship to the Trust would result in an unsafe and unsound banking
practice, these banking authorities will have the authority to issue orders
which could restrict the ability of the Trust to make distributions on or to
redeem the Capital Securities.
STOCK EXCHANGE LISTING
We expect that the Capital Securities will be approved for listing on the
New York Stock Exchange within 30 days after issuance. The listing of the
Capital Securities on an exchange does not guarantee that an active market will
be available for the Capital Securities or that you will be able to sell your
Capital Securities at the price you originally paid for them. If the Capital
Securities are not approved for listing on the New York Stock Exchange, the
Underwriters have indicated that they expect to continue market-making
activities in the Capital Securities. They are not obligated to do so, however,
and could discontinue those activities at any time.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the information
incorporated by reference in them include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements relate to expectations
concerning matters that are not historical facts. Some of the forward-looking
statements can be identified by the use of forward-looking words such as
"believes", "expects", "may", "will", "should", "seeks", "approximately",
"intends", "plans", "estimates", "anticipates" or the negative version of those
words or other comparable terminology. Forward-looking statements involve
inherent risks and uncertainties. A number of important factors could cause the
actual results of First Security to differ materially from those
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<PAGE> 13
in the forward-looking statements. Some factors include fluctuations in
interest rates, inflation, government regulations, and economic conditions and
competition in the geographic and business areas in which First Security
conducts its operations. For a discussion of factors that could cause actual
results to differ, see the information contained in the publicly available
filings of First Security with the SEC. These filings are described under the
caption "Where You Can Find More Information About First Can Find More
Information About First Security" in the accompanying prospectus.
FIRST SECURITY
First Security is a regional bank holding company headquartered in Salt
Lake City, Utah. It owns and operates five banks, with offices in the seven
western states of California, Idaho, New Mexico, Nevada, Oregon, Utah and
Wyoming, and several other financial services companies, some of which have a
national presence. Through its subsidiaries, First Security provides commercial
and agricultural loans, consumer banking, trust services, capital markets advice
and municipal underwriting services, treasury management, investment management,
data processing, leasing and securities brokerage services. At December 31,
1998, First Security and its subsidiaries had total consolidated assets of
approximately $21.7 billion, deposits of $12.7 billion and shareholders' equity
of $1.6 billion. First Security's common shares are traded on the NASDAQ
National Market System, and First Security files regular reports with the SEC.
First Security has paid dividends regularly on its common stock since 1928.
First Security's principal subsidiaries are First Security Bank, the
largest bank in Utah with branches in Idaho, Oregon and Wyoming; First Security
Bank of New Mexico, N.A., the third largest bank in New Mexico and the second
largest bank in the Albuquerque market; and First Security Van Kasper, Inc., a
registered investment advisor and broker dealer, and an Underwriter of this
offering. First Security also owns banks in Nevada, California and southern New
Mexico.
First Security recently announced the pending acquisitions of XEON
Financial Corporation and it subsidiary, Nevada Banking Company, and Comstock
Bancorp and its subsidiary, Comstock Bank. XEON Financial Corporation will give
First Security Bank of Nevada a presence in the Stateline, Nevada market, and
Comstock will give it a presence in the Reno/Carson City, Nevada market.
First Security's executive offices are located at 79 South Main Street,
Salt Lake City, Utah 84111, and its telephone number is (801) 246-6000.
THE TRUST
PURPOSE AND OWNERSHIP OF THE TRUST
The Trust is a business trust recently organized under Delaware law by
First Security and the Trustees. The Trust is being established solely for the
following purposes:
- to issue and sell the Capital Securities, which represent undivided
beneficial ownership interests in the assets of the Trust;
- to issue and sell the Common Securities to First Security in a total
liquidation amount equal to 3% of the total capital of the Trust;
- to use the proceeds from the sale of the Common Securities and the
Capital Securities to acquire the Junior Subordinated Debentures from
First Security; and
- to engage in other activities that are directly related to the activities
described
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<PAGE> 14
above, such as registering the transfer of the Capital Securities.
Because the Trust is being established only for the purposes listed above, the
Junior Subordinated Debentures will be the sole assets of the Trust, and
payments on the Junior Subordinated Debentures will be the sole source of income
to the Trust.
First Security, as issuer of the Junior Subordinated Debentures, will pay
all fees, expenses and taxes related to the Trust and the offering of the
Capital Securities. First Security will also pay, in this capacity, all ongoing
costs, expenses and liabilities of the Trust, except obligations to make
distributions and other payments on the Common Securities and the Capital
Securities.
For so long as the Capital Securities remain outstanding, First Security
will:
- own, directly or indirectly, all of the Common Securities;
- cause the Trust to remain a business trust and not to voluntarily
dissolve, wind-up, liquidate or be terminated, except as permitted by the
Declaration of Trust;
- use its commercially reasonable efforts to ensure that the Trust will not
be an "investment company" for purposes of the Investment Company Act of
1940; and
- take no action that would be reasonably likely to cause the Trust to be
classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.
THE TRUSTEES
The Trust's business and affairs will be conducted by its five Trustees.
Three of the Trustees, the Regular Trustees, will be individuals who are
employees of First Security. The fourth Trustee, The First National Bank of
Chicago, as Property Trustee, will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Capital Securities and will
have the power to exercise all the rights and powers of a registered holder of
the Junior Subordinated Debentures. The fifth Trustee, First Chicago Delaware
Inc., as Delaware Trustee, maintains its principal place of business in Delaware
and meets the requirements of Delaware law for Delaware business trusts. In
addition, The First National Bank of Chicago, as Guarantee Trustee, will hold
the Guarantee for the benefit of the holders of the Capital Securities. First
Security has the sole right to appoint, remove and replace the Trustees of the
Trust, unless an event of default occurs with respect to the Junior Subordinated
Debentures. In that case, the holders of a majority in liquidation amount of the
Capital Securities will have the right to remove and appoint the Property
Trustee and the Delaware Trustee.
ADDITIONAL INFORMATION
For additional information concerning the Trust, see below under the
caption "The Trust" in the accompanying prospectus. We anticipate that the Trust
will not be required to file any reports with the SEC after the issuance of the
Capital Securities. As discussed below under the caption "Accounting Treatment"
in this prospectus supplement, First Security will provide certain information
concerning the Trust and the Capital Securities in the financial statements
included in its own periodic reports to the SEC.
OFFICE OF THE TRUST
The executive office of the Trust is c/o First Security Corporation, 79
South Main Street, Salt Lake City, Utah 84111, Street, Salt Lake City, Utah
84111, and its telephone number is (801) 246-6000.
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<PAGE> 15
USE OF PROCEEDS
The Trust will invest all the proceeds from the sale of the Capital
Securities in the Junior Subordinated Debentures.
First Security expects to use the proceeds from the sale of the Junior
Subordinated Debentures for general corporate purposes, which may include the
repayment of debt, investments in or extensions of credit to its subsidiaries
and the financing of possible acquisitions. First Security engages on a regular
basis in discussions regarding the potential acquisition of branches, deposits
and other financial institutions.
Except for the pending acquisitions of XEON Financial Corporation and
Comstock Bancorp, which are described above under the caption "First Security"
in this prospectus supplement, First Security currently has no agreements,
arrangements or understandings regarding other possible material acquisitions.
Pending such use, the net proceeds may be temporarily invested in short-term
obligations. The precise amounts and timing of the application of the proceeds
will depend upon the funding requirements of First Security and the availability
of other funds.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of First Security, and its accounts will be included in First Security's
consolidated financial statements. In its future financial reports, First
Security will:
- present the Junior Subordinated Debentures as part of a separate line
item on its consolidated balance sheets, as a component of long-term
debt;
- record distributions payable on the Capital Securities as an expense; and
- include a footnote in its consolidated financial statements stating that
the sole assets of the Trust are Junior Subordinated Debentures issued by
First Security and providing information about the Capital Securities,
the Junior Subordinated Debentures and the Guarantee.
REGULATORY TREATMENT
First Security is required by the Federal Reserve to maintain certain
levels of capital for bank regulatory purposes. First Security expects that the
Capital Securities will be treated as Tier 1 capital of First Security for these
purposes.
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<PAGE> 16
CAPITALIZATION
We provide in the table below the audited historical consolidated
capitalization of First Security and its subsidiaries at December 31, 1998 and
as adjusted to give effect to the issuance of the Capital Securities.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------------------
ACTUAL AS ADJUSTED
-------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C>
SHORT-TERM DEBT:
Federal funds purchased and securities sold under
agreements to repurchase of subsidiaries........... $3,747,084 $3,747,084
Other short-term borrowings of subsidiaries.......... 25,081 25,081
---------- ----------
Total short-term debt........................... $3,772,165 $3,772,165
---------- ----------
LONG-TERM DEBT:
Long-term debt of First Security..................... $ 809,470 $ 809,470
Long-term debt of subsidiaries(1):
Guaranteed preferred beneficial interests(2).... 150,000
Other long-term debt............................ 2,143,512 2,143,512
---------- ----------
Total long-term debt....................... $3,102,982 $
---------- ----------
STOCKHOLDERS' EQUITY:
Series "A", $3.15 Cumulative Convertible Preferred
Stock (9,208 shares issued)........................ $ 484 $ 484
Common Stock (par value $1.25, 600,000,000 shares
authorized 191,008,099 shares issued and
outstanding)....................................... 238,760 238,760
Paid-in surplus...................................... 181,906 181,906
Retained earnings.................................... 1,233,264 1,233,264
Accumulated other comprehensive income(3)............ 30,377 30,377
Common treasury stock, at cost (4,295,975 shares).... (89,296) (89,296)
---------- ----------
Total stockholders' equity...................... 1,595,495 1,595,495
---------- ----------
Total capitalization............................ $8,470,642 $
========== ==========
CAPITAL RATIOS:
Tier 1 Capital....................................... 9.10% %
Total Capital........................................ 11.31% %
Tier 1 Leverage Ratio................................ 6.90% %
</TABLE>
- -------------------------
(1) The obligations of First Security's subsidiaries are direct obligations of
these subsidiaries and, as such, constitute claims against these
subsidiaries ranking prior to First Security's equity interest in them.
(2) Includes (i) the net proceeds from the issuance of $150 million liquidation
amount of capital securities by First Security Capital I, which were
invested, together with the amount paid by First Security for the related
common securities, in $154.6 million aggregate principal amount of 8.41%
Junior Subordinated Debentures due December 15, 2026 and (ii) in the "as
adjusted" column, the net proceeds from the issuance of the Capital
Securities offered by this prospectus supplement, which will be invested,
together with the amount paid by First Security for the corresponding Common
Securities, in $ million aggregate principal amount of the
corresponding Junior Subordinated Debentures.
(3) Accumulated other comprehensive income consists entirely of net unrealized
gains on securities available for sale, net of tax.
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<PAGE> 17
SELECTED CONSOLIDATED FINANCIAL DATA(1)
We provide in the table below selected consolidated financial data
regarding First Security. We derived the data from First Security's audited
consolidated financial statements for the years ended December 31, 1994, 1995,
1996, 1997 and 1998. We have restated the results for the relevant periods to
reflect First Security's significant acquisitions, which were accounted for
using the pooling of interests method, as previously announced, and to reflect
stock splits effected by means of 50% stock dividends on February 15, 1996, May
15, 1997 and February 24, 1998. In addition, the data below and the financial
statements of First Security reflect the adoption, in 1997, of Statement of
Financial Accounting Standards No. 128 ("Earnings Per Share"). You should read
the data below with the more detailed information, consolidated financial
statements and the notes to the consolidated financial statements that are
incorporated by reference in the accompanying prospectus under the caption
"Where You Can Find More Information About First Security".
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Interest Income................. $ 801,659 $ 974,015 $ 1,039,391 $ 1,213,378 $ 1,420,660
Interest Expense................ 322,035 469,812 485,328 587,439 716,961
Net Interest Income............. 479,624 504,203 554,063 625,939 703,699
Provision for Possible Loan
Losses........................ 1,545 22,682 41,300 63,386 71,923
Non-interest Income............. 202,043 270,638 306,444 357,157 474,390
Non-interest Expenses........... 455,322 555,192 531,219 588,904 723,088
Income Before Taxes............. 224,800 196,967 287,988 330,806 383,078
Applicable Income Taxes......... 81,098 72,336 103,516 115,532 135,398
----------- ----------- ----------- ----------- -----------
Net Income.................... $ 143,702 $ 124,631 $ 184,472 $ 215,274 $ 247,680
=========== =========== =========== =========== ===========
BALANCE SHEET ITEMS -- PERIOD
END:
Loans, Net of Unearned Income... $ 8,442,282 $ 8,616,763 $ 9,697,351 $11,230,766 $14,013,417
Reserve for Possible Loan
Losses........................ 138,107 135,011 142,693 157,525 173,350
Total Assets.................... 12,602,149 13,529,699 15,456,649 18,151,783 21,689,088
Deposits........................ 8,442,035 9,202,844 10,103,007 11,417,634 12,658,574
Long-Term Debt.................. 685,426 720,521 944,055 1,304,463 2,609,558
Shareholders' Equity............ 937,368 1,082,995 1,217,840 1,400,846 1,595,495
PROFITABILITY RATIOS:
Return on Average Assets........ 1.25% 0.98% 1.35% 1.35% 1.28%
Return on Average Stockholders'
Equity........................ 15.69 12.02 16.23 16.60 16.21
Net Interest Margin
(FTE)(2)...................... 4.69 4.48 4.59 4.47 4.15
Net Interest Spread
(FTE)(2)...................... 4.08 3.73 3.85 3.75 3.53
Operating Expense Ratio(3)...... 66.03 70.89 61.18 59.27 60.84
Productivity Ratio(4)........... 3.95 4.37 3.87 3.68 3.75
(Table continued and footnotes on following page)
</TABLE>
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<PAGE> 18
(Table continued from previous page)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
CAPITAL RATIOS:
Shareholders' Equity to
Assets........................ 7.44% 8.00% 7.88% 7.72% 7.36%
Tangible Common Equity Ratio.... 6.16 6.95 6.74 6.24 5.57
ASSET QUALITY RATIOS:
Reserve for Loan Losses at End
of Period to:
Total Loans................ 1.64% 1.57% 1.47% 1.40% 1.24%
Nonaccruing and
Renegotiated Loans....... 529.08 547.49 399.14 427.17 378.39
Nonperforming Assets at End of
Period to:
Total Loans and Other Real
Estate................... 0.42 0.43 0.48 0.40 0.35
Total Assets............... 0.28 0.27 0.30 0.25 0.23
Total Equity............... 3.81 3.40 3.81 3.20 3.10
Total Equity plus Loan Loss
Reserve.................. 3.32 3.03 3.41 2.88 2.79
Net Loans Charged Off to Average
Loans......................... 0.11 0.30 0.41 0.51 0.49
</TABLE>
- -------------------------
(1) Historical data has been restated, where appropriate, to reflect two
separate 3-for-2 common stock splits in the form of 50% stock dividends paid
in May 1997 and February 1998 and also for the May 1998 acquisition of
California State Bank which was accounted for by the pooling of interests
method.
(2) "FTE", or "fully taxable equivalent," represents an adjustment made to
interest income to facilitate the comparison of interest income earned on
tax-exempt and tax-favored loans, leases and securities with interest income
that is fully taxable.
(3) The Operating Expense Ratio is computed by dividing non-interest expenses by
the sum of (a) fully taxable net interest income plus (b) non-interest
income.
(4) The Productivity Ratio is computed by dividing non-interest expenses by
average assets for the period in question.
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<PAGE> 19
CERTAIN TERMS OF THE CAPITAL SECURITIES
We have summarized below certain terms of the Capital Securities. This
summary supplements the general description of the Capital Securities in the
accompanying prospectus. To the extent that this summary is inconsistent with
the description in the accompanying prospectus, you should rely on the summary
below. This summary is not a complete description of all of the terms and
provisions of the Capital Securities. For more information, we refer you to the
Declaration of Trust, the form of the amended and restated declaration of trust
and the form of preferred securities (which will be substantially similar to the
form of the Capital Securities), which we filed as exhibits to the registration
statement of which the prospectus is a part.
The Capital Securities represent undivided beneficial ownership interests
in the assets of the Trust. The only assets of the Trust will be the Junior
Subordinated Debentures. The Capital Securities will rank equally with the
Common Securities except as described below under the caption "-- Subordination
of Common Securities" in this section.
DISTRIBUTIONS
Distributions on the Capital Securities are cumulative and will accrue from
, 1999 at the annual rate of % of the liquidation amount of $25
for each Capital Security. Distributions will be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, beginning
, 1999. The amount of distributions payable for any period will
be computed on the basis of a 360 day year comprised of twelve 30 day months.
The amount of distributions payable for any period shorter than a full quarterly
period will be computed on the basis of a 30 day month and, for periods of less
than a month, the actual number of days elapsed per 30 day month.
Distributions not paid when due will accrue additional distributions at the
annual rate of % on the amount of unpaid distributions, compounded quarterly.
When we refer to any payment of distributions, the term "distributions" includes
any such additional accrued distributions.
If distributions are payable on a date that is not a "business day",
payment will be made on the next business day and without any interest or other
payment as a result of such delay. However, if the next business day is in the
next calendar year, payment of distributions will be made on the preceding
business day. A "business day" means each day except Saturday, Sunday and any
day on which banking institutions in The City of New York are authorized or
required by law to close or on which the corporate trust office of the Property
Trustee or the indenture trustee is closed for business.
Distributions on the Capital Securities will only be paid if the Trust has
sufficient funds available to make such payments. The income of the Trust
available for the payment of distributions will be limited to payments made by
First Security on the Junior Subordinated Debentures. As a result, if First
Security does not make interest payments on the Junior Subordinated Debentures,
then the Trust will not have funds to make distributions on the Capital
Securities.
DEFERRAL OF DISTRIBUTIONS
If the Junior Subordinated Debentures are not in default, First Security
can, on one or more occasions, defer interest payments on the Junior
Subordinated Debentures for up to 20 consecutive quarterly periods. A deferral
of interest payments cannot extend, however, beyond the maturity date of the
Junior Subordinated Debentures. If First Security defers interest payments on
the Junior Subordinated Debentures, the Trust will also defer distributions on
the Capital Securities. During a deferral period, interest on the Junior
Subordinated Debentures will accrue and compound quarterly at the annual rate of
% and, as a result, distributions otherwise due to you would continue to
accrue, to the extent permitted by applicable law, from the date that these
distributions were due.
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<PAGE> 20
Once First Security makes all deferred interest payments on the Junior
Subordinated Debentures, it can again defer interest payments on the Junior
Subordinated Debentures as discussed above. As a result, there could be multiple
periods of varying length during which you would not receive cash distributions
from the Trust.
First Security does not currently intend to defer interest payments on the
Junior Subordinated Debentures. If First Security does defer such interest
payments, however, it and its subsidiaries will generally not be permitted to
pay dividends on or repurchase shares of First Security's capital stock or make
payments on debt securities or guarantees that rank on a par with or junior to
the Junior Subordinated Debentures and the Guarantee. These limitations are
described in greater detail below under the caption "Certain Terms of the Junior
Subordinated Debentures -- Option to Defer Interest Payments" in this prospectus
supplement.
If First Security chooses to defer payments of interest on the Junior
Subordinated Debentures, then the Junior Subordinated Debentures would at that
time be treated as being issued with original issue discount for United States
federal income tax purposes. This means you will be required to include your
share of the accrued but unpaid interest on the Junior Subordinated Debentures
in your gross income for United States federal income tax purposes before you
receive cash distributions from the Trust. This treatment will apply as long as
you own Capital Securities. For more information, see below under the caption
"Certain United States Federal Income Tax Consequences -- Interest Income and
Original Issue Discount" in this prospectus supplement.
PAYMENT OF DISTRIBUTIONS
Distributions on the Capital Securities will be payable to holders on the
relevant record date. As long as the Capital Securities are only in book-entry
form, the record date for the payment of distributions will be one business day
before the distribution date. If the Capital Securities are ever issued in
certificated form, the record date for the payment of distributions will be
determined by the Regular Trustees and will be at least one business day before
the relevant payment date. Distributions payable on any Capital Securities that
are not paid on the scheduled distribution date will cease to be payable to the
person in whose name such Capital Securities are registered on the relevant
record date, and such defaulted distribution will instead be payable to the
person in whose name such Capital Securities are registered on a special record
date set for this purpose.
Payments on the Capital Securities while they are in book-entry form will
be made in immediately available funds to DTC, the depositary for the Capital
Securities.
REDEMPTION
First Security may redeem the Junior Subordinated Debentures before their
maturity:
- in whole or in part on one or more occasions any time on or after
, 2004; and
- in whole at any time, if certain changes occur in tax or investment
company laws and regulations, or in the treatment of the Capital
Securities for bank regulatory capital purposes. These events, which we
refer to as "Special Events", are described in detail below under the
caption "-- Redemption Upon a Special Event".
First Security may not exercise its right to redeem the Junior Subordinated
Debentures unless it receives the prior approval of the Federal Reserve to do
so, if that approval is then required under the Federal Reserve's capital rules.
The redemption price for the Junior Subordinated Debentures is 100% of their
principal amount plus accrued and unpaid interest.
GENERAL
When First Security repays the Junior Subordinated Debentures, either at
maturity on , 2029 (or any earlier maturity date that may be set
by First Security in certain circumstances, as described below) or upon
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<PAGE> 21
early redemption (as discussed above), the Trust will use the cash it receives
from the repayment or redemption of the Junior Subordinated Debentures to redeem
a corresponding amount of the Capital Securities and Common Securities.
If less than all the Capital Securities and the Common Securities are
redeemed, the total amount of the Capital Securities and the Common Securities
to be redeemed will be allocated proportionately among the Capital Securities
and Common Securities, unless an event of default under the Junior Subordinated
Debentures or similar event has occurred, as described below under the caption
"-- Subordination of Common Securities" in this section.
REDEMPTION UPON A SPECIAL EVENT
If a Special Event has occurred and is continuing, and First Security
cannot cure that event by some reasonable action, then First Security may redeem
the Junior Subordinated Debentures within 90 days following the occurrence of
the Special Event. A "Special Event" means, for these purposes, the occurrence
of a "Tax Event", a "Regulatory Capital Event" or an "Investment Company Event".
We summarize each of these events below.
A "Tax Event" means the receipt by the Trust of an opinion of independent
tax counsel experienced in such matters, to the effect that, as a result of
- any amendment to, change in or announced proposed change in the laws or
regulations interpreting such laws of the United States or any political
subdivision or taxing authority; or
- any official administrative pronouncement, action or judicial decision
interpreting or applying such laws or regulations;
which amendment or change becomes effective, or proposed change, pronouncement,
action or decision is announced, on or after the date of this prospectus
supplement, there is more than an insubstantial risk currently or within the 90
days following such opinion that:
- the Trust will be subject to United States federal income tax regarding
income received or accrued on the Junior Subordinated Debentures;
- interest payable by First Security on the Junior Subordinated Debentures
will not be deductible by First Security, in whole or in part, for United
States federal income tax purposes; or
- the Trust will be subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that First Security shall have received
an opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of:
- any amendment to or change (including any announced prospective change)
in the laws (or any regulations thereunder) of the United States or any
rules, guidelines or policies of the Federal Reserve; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or pronouncement or decision is announced
on or after the date of original issuance of the Capital Securities, the Capital
Securities do not constitute, or within 90 days following the date of such
opinion, will not constitute Tier 1 capital or its equivalent at the time.
An "Investment Company Event" means the receipt by the Trust of an opinion
of a nationally recognized independent counsel to the effect that, as a result
of:
- a change in law or regulation; or
- a written change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority,
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there is more than an insubstantial risk that the Trust will be considered an
"investment company" under the Investment Company Act of 1940 that is required
to be registered under this law on or after the date of the issuance of the
Capital Securities.
If First Security does not elect to redeem the Junior Subordinated
Debentures following a Special Event, then the Capital Securities will remain
outstanding until the repayment of the Junior Subordinated Debentures, unless
First Security liquidates the Trust and distributes the Junior Subordinated
Debentures to you. For more information, see "-- Optional Liquidation of the
Trust and Distribution of Junior Subordinated Debentures" in this section.
REDEMPTION PROCEDURES
The Trust will give you at least 30 days' but not more than 60 days' notice
before any redemption of Capital Securities. To the extent funds are available
for payment, the Trust will irrevocably deposit with DTC sufficient funds to pay
the redemption amount for the Capital Securities being redeemed. The Trust will
also give DTC irrevocable instructions and authority to pay the redemption
amount to its participants. Any distribution to be paid on or before a
redemption date for any Capital Securities called for redemption will be payable
to the registered holders on the record date for the distribution.
Once notice of redemption is given and the Trust irrevocably deposits the
redemption amount, additional distributions on the Capital Securities will cease
to accrue from and after the redemption date. In addition, all rights of the
holders of the Capital Securities called for redemption will cease, except for
the right to receive distributions payable prior to the redemption date and the
redemption amount.
If any redemption date is not a business day, the redemption amount will be
payable on the next business day, without any interest or other payment in
respect of any such delay. However, if the next business day is in the next
calendar year, the redemption amount will be payable on the preceding business
day.
If payment of the redemption amount for any Capital Securities called for
redemption is improperly withheld or refused and not paid either by the Trust or
by First Security pursuant to the Guarantee, distributions on the Capital
Securities will continue to accrue at the applicable rate from the originally
scheduled redemption date to the actual date of payment. In this case, the
actual payment date will be the redemption date for purposes of calculating the
redemption amount.
In addition, First Security and its affiliates may, at any time, purchase
outstanding Capital Securities by tender, in the open market or by private
agreement.
OPTIONAL LIQUIDATION OF THE TRUST AND
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
First Security may dissolve the Trust at any time, and after satisfying the
creditors of the Trust, may cause the Junior Subordinated Debentures to be
distributed to the holders of the Capital Securities. First Security may not
exercise its right to dissolve the Trust, however, unless it first receives:
- the approval of the Federal Reserve to do so, if that approval is then
required under the Federal Reserve's capital rules; and
- an opinion of independent counsel to the effect that the distribution of
the Junior Subordinated Debentures will not be taxable to you.
See below under the caption "Certain Terms of the Junior Subordinated
Debentures -- Distribution of Junior Subordinated Debentures" in this prospectus
supplement.
If First Security elects to dissolve the Trust, thus causing the Junior
Subordinated Debentures to be distributed to the holders of the Capital
Securities, First Security will continue to have the right to redeem the Junior
Subordinated Debentures in certain circumstances as described above.
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SUBORDINATION OF COMMON SECURITIES
Payment of distributions or any redemption or liquidation amounts by the
Trust regarding the Capital Securities and the Common Securities will be made
proportionately based on the total liquidation amounts of the securities.
However, if First Security is in default under the Junior Subordinated
Debentures, the Trust will make no payments on the Common Securities until all
unpaid amounts on the Capital Securities have been provided for or paid in full.
TRUST ENFORCEMENT EVENTS
An event of default under the Indenture constitutes an event of default
under the Declaration of Trust. We refer to such an event as a "Trust
Enforcement Event". For more information on events of default under the
Indenture, see below under the caption "Description of the Junior Subordinated
Debentures -- Events of Default" in the accompanying prospectus. Upon the
occurrence and continuance of a Trust Enforcement Event, the Property Trustee,
as the sole holder of the Junior Subordinated Debentures, will have the right
under the Indenture to declare the principal amount of the Junior Subordinated
Debentures due and payable.
If the Property Trustee fails to enforce its rights under the Junior
Subordinated Debentures, any holder of Capital Securities may, to the extent
permitted by applicable law, institute a legal proceeding against First Security
to enforce the Property Trustee's rights under the Junior Subordinated
Debentures and the Indenture without first instituting legal proceedings against
the Property Trustee or any other person. In addition, if the Trust Enforcement
Event is due to the failure of First Security to pay interest or principal on
the Junior Subordinated Debentures when due, then the registered holder of
Capital Securities may institute a direct action on or after the due date
directly against First Security for enforcement of payment to that holder of the
principal of or interest on the Junior Subordinated Debentures having a
principal equal to the total liquidation amount of that holder's Capital
Securities. In connection with such a direct action, First Security will have
the right under the Indenture to set off any payment made to that holder by
First Security. The holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Junior Subordinated
Debentures.
Pursuant to the Declaration of Trust, the holder of the Common Securities
will be deemed to have waived any Trust Enforcement Event regarding the Common
Securities until all Trust Enforcement Events have been cured, waived or
otherwise eliminated. Until all Trust Enforcement Events have been so cured,
waived or otherwise eliminated, the Property Trustee will act solely on behalf
of the holders of the Capital Securities and only the holders of the Capital
Securities will have the right to direct the enforcement actions of the Property
Trustee.
VOTING RIGHTS
Except as provided below under the caption "Description of the
Guarantees -- Amendments" in the accompanying prospectus and as otherwise
required by law, the holders of the Capital Securities will have no voting
rights.
REMEDIES
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the holders of a majority of all outstanding Capital Securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or to direct the exercise of
any power conferred upon the Property Trustee under the Declaration of Trust,
including the right to direct the Property Trustee, as holder of the Junior
Subordinated Debentures, to:
- exercise the remedies available to it under the Indenture as a holder of
the Junior Subordinated Debentures, including the right to rescind or
annul a declaration that the principal of all the Junior Subordinated
Indentures will be due and payable;
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- consent to any amendment, modification or termination of the Indenture or
the Junior Subordinated Debentures; or
- waive any past default that is waivable under the Indenture.
However, where a consent or action under the Indenture would require the
consent or action of the holders of more than a majority of the total principal
amount of Junior Subordinated Debentures affected by it, only the holders of
that greater percentage of the Capital Securities may direct the Property
Trustee to give the consent or to take such action. See below under the caption
"Description of the Junior Subordinated Debentures -- Meetings, Modification and
Waiver" in the accompanying prospectus.
If an event of default under the Indenture has occurred and is continuing,
the holders of 25% of the total liquidation amount of the Capital Securities may
direct the Property Trustee to declare the principal and interest on the Junior
Subordinated Debentures due and payable.
MEETINGS
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote to be given to each
holder of record of
Capital Securities in the manner described in the Declaration of Trust.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel its Capital Securities in accordance with the
Declaration of Trust.
GLOBAL SECURITIES; BOOK-ENTRY ISSUE
We expect that the Capital Securities will be issued in the form of global
securities held by The Depository Trust company as described under the captions
"Description of the Capital Securities -- Global Securities" and "Book-Entry
Issuance" in the accompanying prospectus.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only the duties that are
specifically described in the Declaration of Trust and, after a Trust
Enforcement Event which has not been cured or waived, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his own affairs. Subject to this provision, the Property Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration of Trust at the request of any holder of Capital Securities unless
it is offered reasonable security and indemnity against the costs, expenses and
liabilities that might be incurred in connection with taking that action.
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CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
We have summarized below certain terms of the Junior Subordinated
Debentures. This summary supplements the general description of these securities
in the accompanying prospectus. To the extent that this summary is inconsistent
with the description in the accompanying prospectus, you should rely on the
summary below. This summary is not a complete description of all of the terms
and provisions of the Junior Subordinated Debentures. For more information, we
refer you to the Indenture and the form of the Junior Subordinated Debentures,
which we filed as exhibits to the registration statement of which the
accompanying prospectus is a part.
The Junior Subordinated Debentures will be issued pursuant to an Indenture
to be entered into between First Security and The First National Bank of
Chicago, as trustee (which we refer to as the "Indenture Trustee").
INTEREST RATE AND MATURITY
The Junior Subordinated Debentures will bear interest at the annual rate of
%, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, beginning , 1999. Interest payments not paid
when due will themselves accrue additional interest at the annual rate of %
on the amount of unpaid interest, to the extent permitted by law, compounded
quarterly. The amount of interest payable for any period will be computed based
on a 360 day year comprised of twelve 30 day months. The amount of interest
payable for any period shorter than a full quarterly period will be computed on
the basis of a 30 day month and, for periods of less than a month, the actual
number of days elapsed per 30 day month. The interest payment provisions for the
Junior Subordinated Debentures correspond to the distribution provisions of the
Capital Securities.
The Junior Subordinated Debentures do not have a sinking fund. This means
that First Security is not required to make any principal payments prior to
maturity.
The Junior Subordinated Debentures will mature on , 2029. In
certain circumstances, however, First Security will have the right to shorten
the maturity of the Junior Subordinated Debentures to not earlier than
, 2014. See below under the caption "-- Option to Shorten Maturity
Date" in this section.
RANKING
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all senior debt of First Security.
As a holding company, First Security's assets primarily consist of the
equity securities of its subsidiaries. As a result, the ability of holders of
the Junior Subordinated Debentures to benefit from any distribution of assets of
any subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to the prior claims of present and future creditors of that
subsidiary.
The Capital Securities, the Junior Subordinated Debentures and the
Guarantee do not limit the ability of First Security and its subsidiaries to
incur additional debt, including debt that ranks senior in priority of payment
to the Junior Subordinated Debentures and the Guarantee. At December 31, 1998,
approximately $609 million of senior debt of First Security was outstanding. In
addition, the Junior Subordinated Debentures will be effectively subordinated to
all existing and future obligations of First Security's subsidiaries. At
December 31, 1998, approximately $6 billion of debt of First Security's
subsidiaries was outstanding.
REDEMPTION
First Security has the option to redeem some or all of the Junior
Subordinated Debentures before their maturity. For more information, see above
under the caption "Certain Terms of the Capital Securities -- Redemption" in
this prospectus supplement.
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OPTION TO SHORTEN MATURITY DATE
If a Tax Event, as described above under the caption "Certain Terms of the
Capital Securities -- Redemption -- Redemption Upon a Special Event" in this
prospectus supplement occurs, First Security will have the right to shorten the
stated maturity of the Junior Subordinated Debentures to the minimum extent
required so that interest on the Junior Subordinated Debentures will be
deductible by First Capital for United States federal income tax purposes. In no
event, however, may the resulting maturity of the Junior Subordinated Debentures
be less than 15 years from the date of original issuance.
First Security may only shorten the stated maturity if it has received:
- an opinion of nationally recognized independent counsel experienced in
such matters to the effect that:
- after the shortening of maturity, interest paid on the Junior
Subordinated Debentures will be deductible by First Security for
United States federal income tax purposes;
- the holders of Capital Securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of
the shortening of maturity, and will be taxed under United States
federal income tax law in the same amount, in the manner and at the
same times as would have been the case if the shortening of maturity
had not occurred; and
- the shortening of maturity will not cause the Trust to be classified
as other than a grantor trust for United States federal income tax
purposes; and
- the prior approval of the Federal Reserve, if then required to do so
under the Federal Reserve's capital rules.
DISTRIBUTION OF JUNIOR SUBORDINATED
DEBENTURES
If the Property Trustee distributes the Junior Subordinated Debentures to
the holders of the Capital Securities and the Common Securities upon the
liquidation of the Trust, First Security will cause the Junior Subordinated
Debentures to be issued in denominations of $25 principal amount and integral
multiples thereof. First Security anticipates that the Junior Subordinated
Debentures would be distributed in the form of one or more global securities and
that DTC, would act as depositary for the Junior Subordinated Debentures. The
depositary arrangements for the Junior Subordinated Debentures would be
substantially the same as those in effect for the Capital Securities.
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemption and other notices and
other matters, see "Book-Entry Issuance" in the accompanying prospectus.
OPTION TO DEFER INTEREST PAYMENTS
First Security can defer interest payments on the Junior Subordinated
Debentures for up to 20 consecutive quarterly interest payment periods if the
Junior Subordinated Debentures are not in default. A deferral of interest
payments cannot extend, however, beyond the maturity date of the Junior
Subordinated Debentures. During the deferral period, interest will continue to
accrue on the Junior Subordinated Debentures, compounded quarterly, and deferred
interest payments will accrue additional interest at %. No interest will be
due and payable on the Junior Subordinated Debentures until the end of the
deferral period except upon a redemption of the Junior Subordinated Debentures
during a deferral period.
First Security may pay at any time all or any portion of the interest
accrued to that point during a deferral period. At the end of the deferral
period or on any redemption date, First Security will be obligated to pay all
accrued and unpaid interest.
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Once First Security pays all accrued and unpaid interest on the Junior
Subordinated Debentures, it can again defer interest payments on the Junior
Subordinated Debentures as described above.
CERTAIN LIMITATIONS DURING A DEFERRAL PERIOD
During any deferral period, neither First Security or any of its
subsidiaries will be permitted to:
- pay a dividend or make any other payment or distribution on First
Security's capital stock;
- redeem, purchase or make a liquidation payment on any of First Security's
capital stock;
- make an interest, principal or premium payment, or repay, repurchase or
redeem, any of First Security's debt securities that rank equal with or
junior to the Junior Subordinated Debentures; or
- make any guarantee payment regarding any guarantee by First Security of
debt securities of any of its subsidiaries, if the guarantee ranks equal
with or junior to the Junior Subordinated Debentures.
However, at any time, including during any deferral period, First Security
will be permitted to:
- pay dividends or distributions in additional shares of its capital stock;
- make payments under the guarantee in respect of the Capital Securities
and Common Securities;
- declare or pay a dividend in connection with the implementation of a
shareholders' rights plan, issue stock under such a plan or repurchase
such rights; and
- purchase common stock for reissuance pursuant to an employee benefit,
dividend reinvestment or stock repurchase plan or for issuance in an
acquisition transaction that was entered into prior to the commencement
of that deferral period.
NOTICE
If the Property Trustee is the sole holder of the Junior Subordinated
Debentures, then First Security will give the Trust, the Regular Trustees and
the Property Trustee notice if it decides to defer interest payments on the
Junior Subordinated Debentures. First Security will give that notice one
business day before the earlier of:
- the next date distributions on the Capital Securities are payable; or
- the date the Trust is required to give notice to the New York Stock
Exchange (or any other applicable self-regulatory organization) or to
holders of the Capital Securities of the record date or the date any
distribution is payable, but in any event at least one business day
before the record date.
The Regular Trustees will give notice to the holders of Capital Securities
if First Security decides to defer interest payments on the Junior Subordinated
Debentures.
If the Property Trustee is not the sole holder of the Junior Subordinated
Debentures, First Security will give the holders notice of any deferral period
ten business days prior to the earlier of:
- the next interest payment date; or
- the date First Security is required to give notice to the New York Stock
Exchange (or any other applicable self-regulatory organization) or to
holders of the Junior Subordinated Debentures of the record date or
payment date of any related interest payment, but in any event at least
two business days prior to the record date.
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MISCELLANEOUS
The Indenture requires First Security, as issuer of the Junior Subordinated
Securities, to pay all fees and expenses related to:
- the issuance and exchange of the Capital Securities and the Junior
Subordinated Debentures;
- the organization, maintenance and dissolution of the Trust;
- the retention of the Trustees; and
- the enforcement by the Property Trustee of the rights of the holders of
the Capital Securities.
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RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the Capital Securities
are irrevocably guaranteed by First Security, to the extent the Trust has funds
available for the payment of such distributions, as described under "Description
of the Guarantees" in the accompanying prospectus. If First Security does not
make payments under the Junior Subordinated Debentures, the Trust will not have
sufficient funds to pay distributions or other amounts due on the Capital
Securities.
The Guarantee does not cover payment of distributions when the Trust does
not have sufficient funds to pay such distributions. In that event, a holder of
Capital Securities may institute a legal proceeding directly against First
Security to enforce payment of the Junior Subordinated Debentures to such holder
in accordance with their terms, including First Security's right to defer
interest payments.
Taken together, First Security's obligations under the Declaration of
Trust, the Junior Subordinated Debentures, the Indenture and the Guarantee
provide a full and unconditional guarantee of payments of distributions and
other amounts due on the Capital Securities.
SUFFICIENCY OF PAYMENTS
As long as payments of interest, principal and other payments are made when
due on the Junior Subordinated Debentures, those payments will be sufficient to
cover distributions and other payments due on the Capital Securities because of
the following factors:
- the total principal amount of the Junior Subordinated Debentures will be
equal to the sum of the total stated liquidation amount of the Capital
Securities and the Common Securities;
- the interest rate and payment dates on the Junior Subordinated Debentures
will match the distribution rate and payment dates for the Capital
Securities;
- First Security, as borrower, will pay, and the Trust will not be
obligated to pay, all costs, expenses and liabilities of the Trust except
the Trust's obligations under the Capital Securities and Common
Securities; and
- the Declaration of Trust further provides that the Trust will not engage
in any activity that is not consistent with the limited purposes of the
Trust.
First Security has the right to set-off any payment it is otherwise
required to make under the Indenture with and to the extent First Security makes
a related payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL
SECURITIES
If a Trust Enforcement Event occurs, the holders of Capital Securities
would rely on the enforcement by the Property Trustee of its rights as
registered holder of the Junior Subordinated Debentures against First Security.
In addition, the holders of a majority in liquidation amount of the Capital
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration of Trust, including the right to direct the Property
Trustee to exercise the remedies available to it as the holder of the Junior
Subordinated Debentures. The Indenture provides that the Indenture Trustee will
give holders of Junior Subordinated Debentures notice of all events of default
within 30 days after their occurrence.
If the Property Trustee fails to enforce its rights under the Junior
Subordinated Debentures in respect of an event of default under the Indenture
after a holder of Capital Securities has made a written request, such holder
may, to the extent permitted by applicable law, institute a legal proceeding
against First Security to
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enforce the Property Trustee's rights under the Junior Subordinated Debentures.
In addition, if First Security fails to pay interest or principal on the Junior
Subordinated Debentures, a holder of Capital Securities may institute a
proceeding directly against First Security for enforcement of payment to that
holder of the principal of or interest on Junior Subordinated Debentures having
a principal amount equal to the total liquidation amount of that holder's
Capital Securities (which we refer to as a "direct action"). In connection with
such a direct action, First Security will have the right under the Indenture to
set off any payment made to such holder by First Security. The holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures.
LIMITED PURPOSE OF TRUST
The Capital Securities evidence undivided beneficial ownership interests in
the assets of the Trust, and the Trust exists for the sole purpose of issuing
the Common Securities and Capital Securities and investing the proceeds thereof
in Junior Subordinated Debentures. A principal difference between the rights of
a holder of Capital Securities and a holder of Junior Subordinated Debentures is
that a holder of Junior Subordinated Debentures is entitled to receive from
First Security the principal of and interest accrued on Junior Subordinated
Debentures held, while a holder of Capital Securities is entitled to receive
distributions to the extent the Trust has funds available for the payment of
such distributions.
RIGHTS UPON TERMINATION
Upon any dissolution, winding-up or liquidation of the Trust involving the
liquidation of the Junior Subordinated Debentures, the holders of the Capital
Securities will be entitled to receive, out of assets held by the Trust, subject
to the rights of any creditors of the Trust, the liquidation distribution in
cash. Upon any voluntary or involuntary liquidation or bankruptcy of First
Security, the Property Trustee, as holder of the Junior Subordinated Debentures,
would be a subordinated creditor of First Security, subordinated in right of
payment to all senior debt as described in the Indenture, but entitled to
receive payment in full of principal and interest before any stockholders of
First Security receive payments or distributions. Because First Security is the
guarantor under the Guarantee and, under the Indenture, has agreed to pay for
all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of the Capital Securities), the positions of a holder
of Capital Securities and a holder of the Junior Subordinated Debentures
relative to other creditors and to stockholders of First Security in the event
of liquidation or bankruptcy of First Security would be substantially the same.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a description of the material United States federal income
tax consequences of the purchase, ownership and disposition of the Capital
Securities. Where noted, it constitutes the opinion of Ray, Quinney & Nebeker,
special United States federal income tax counsel to First Security and the
Trust.
Except where we state otherwise, this summary deals only with Capital
Securities held as capital assets by a holder who:
- is a United States person (as defined below), and
- purchases the Capital Securities upon original issuance at their original
issue price.
A "United States person" is a holder who is one of the following:
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision of the
United States;
- an estate the income of which is subject to United States federal income
taxation regardless of its source;
- any trust if:
- a court within the United States is able to exercise primary
supervision over the administration of such trust; and
- one or more United States persons have the authority to control all
the substantial decisions of such trust; or
- a trust that has a valid election in effect under applicable Treasury
regulations to be treated as a United States person.
Your tax treatment may vary depending on your particular situation. This
summary does not address all the tax consequences that may be relevant to
holders that are subject to special tax treatment, such as:
- banks;
- real estate investment trusts;
- regulated investment companies;
- insurance companies;
- dealers in securities or currencies;
- tax-exempt investors;
- persons holding Capital Securities as part of a hedging, conversion or
constructive sale transaction;
- persons holding Capital Securities as part of a straddle; or
- foreign investors.
In addition, this summary does not include any description of the
following, either of which may be applicable to you:
- any alternative minimum tax consequences; or
- the tax laws of any state, local or foreign government.
This summary is based on the Internal Revenue Code of 1986, as amended
(which we refer to as the "Code"), the Treasury regulations promulgated under
the Code and administrative and judicial interpretations. These income tax laws,
regulations and interpretations, however, may change at any time. Any change
could be retroactive to the issuance date of the Capital Securities.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Ray, Quinney & Nebeker are not binding on
the Internal Revenue Service (which we refer to as "IRS") or the courts. Either
the IRS or the courts could disagree with the explanations or conclusions
contained in this summary. Nevertheless, Ray, Quinney & Nebeker has advised us
that they believe that the opinions expressed in this summary, if challenged,
would be sustained by a court with jurisdiction in a properly presented case.
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You should consult your own tax advisor regarding the tax consequences to
you of the purchase, ownership and disposition of the Capital Securities,
including the tax consequences under state, local, foreign, and other tax laws.
For a discussion of the possible redemption of the Capital Securities upon the
occurrence of a tax event, see "Certain Terms of the Capital
Securities -- Special Event Redemption" in this prospectus supplement.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Capital Securities, Ray, Quinney &
Nebeker is of the opinion that under current law and assuming full compliance
with the terms of the Declaration of Trust, and based upon certain facts and
assumptions contained in such opinion, the Trust will be classified as a grantor
trust for United States federal income tax purposes and not as an association
taxable as a corporation. As a result, for United States federal income tax
purposes, you generally will be treated as owning an undivided beneficial
ownership interest in the Junior Subordinated Debentures. Thus, you will be
required to include in your gross income your proportionate share of the
interest income or original issue discount that is paid or accrued on the Junior
Subordinated Debentures. See below under the caption "-- Interest Income and
Original Issue Discount" in this section.
CLASSIFICATION OF THE JUNIOR SUBORDINATED
DEBENTURES
First Security, the Trust and you (by your acceptance of a beneficial
ownership interest in a Capital Security) agree to treat the Junior Subordinated
Debentures as debt for all United States tax purposes. In connection with the
issuance of the Junior Subordinated Debentures, Ray, Quinney & Nebeker is of the
opinion that, under current law and based on certain representations, facts and
assumptions set forth in such opinion, the Junior Subordinated Debentures will
be classified as debt for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
You will generally be taxed on the stated interest on the Junior
Subordinated Debentures as ordinary income at the time it is paid or accrued in
accordance with your regular method of tax accounting. We anticipate that the
Junior Subordinated Debentures will not be issued with an issue price that is
less than their stated redemption price at maturity and that the Junior
Subordinated Debentures will therefore not be subject to the special original
issue discount (which we refer to as "OID") rules, at least upon initial
issuance.
If, however, First Security exercises its right to defer payments of
interest on the Junior Subordinated Debentures, the Junior Subordinated
Debentures will become OID instruments at such time. In such case, you will be
subject to the special OID rules described below. Once the Junior Subordinated
Debentures become OID instruments, they will be taxed as OID instruments for as
long as they remain outstanding.
Under the OID economic accrual rules, the following occur:
- you would accrue an amount of interest income each year that approximates
the stated interest payments called for under the terms of the Junior
Subordinated Debentures using the constant-yield-to-maturity method of
accrual described in section 1272 of the Code;
- any amount of OID included in your gross income (whether or not during a
deferral period) regarding the Capital Securities would increase your tax
basis in such Capital Securities; and
- the actual cash payments of interest you receive on the Junior
Subordinated Debentures in respect of such accrued OID would reduce your
tax basis in such Capital Securities.
The Treasury regulations dealing with OID have not yet been addressed in
any rulings or other interpretations by the IRS. It is possible, though
unlikely, that the IRS might assert that the Junior Subordinated Debentures were
issued
S-29
<PAGE> 33
initially with OID. If the IRS were successful, regardless of whether First
Security exercises its option to defer payments of interest on such Junior
Subordinated Debentures, you would be subject to the special OID rules described
above.
If you are a corporate holder of Capital Securities, you will not be
entitled to a dividends-received deduction regarding any income you recognize
regarding the Capital Securities.
DISTRIBUTION OF JUNIOR SUBORDINATED
DEBENTURES OR CASH UPON LIQUIDATION
OF THE TRUST
As described under the caption "Certain Terms of the Capital
Securities -- Optional Liquidation of the Trust and Distribution of Junior
Subordinated Debentures" in this prospectus supplement, the Junior Subordinated
Debentures held by the Trust may be distributed to you in exchange for your
Capital Securities if the Trust is liquidated before the maturity of the Junior
Subordinated Debentures, as long as it first receives:
- the approval of the Federal Reserve to do so, if that approval is then
required under the Federal Reserve's capital rules; and
- an opinion of an independent counsel to the effect that the distribution
of the Junior Subordinated Debentures will not be taxable to you.
Upon such a distribution, you will receive your proportionate share of the
Junior Subordinated Debentures previously held indirectly through the Trust.
Your holding period and total tax basis in the Junior Subordinated Debentures
will equal the holding period and total tax basis that you had in your Capital
Securities before the distribution.
In certain circumstances described above under the captions "Certain Terms
of the Capital Securities -- Special Event Redemption" and "-- Redemption" in
this prospectus supplement, First Security may redeem the Junior Subordinated
Debentures and distribute cash in liquidation of the Trust. This distribution of
cash would be taxable as described below under "-- Sales of Capital Securities
or Redemption of Junior Subordinated Debentures" in this section.
If you receive Junior Subordinated Debentures in exchange for your Capital
Securities, you would accrue interest in respect of the Junior Subordinated
Debentures received from the Trust in the manner described above under the
caption "-- Interest Income and Original Issue Discount" in this prospectus
supplement.
SALES OF CAPITAL SECURITIES OR REDEMPTION OF
JUNIOR SUBORDINATED DEBENTURES
If you sell your Capital Securities or receive cash upon redemption of the
Junior Subordinated Debentures, you will recognize gain or loss equal to the
difference between:
- the amount realized on the sale or redemption; and
- your adjusted tax basis in your Capital Securities or Junior Subordinated
Debentures.
Your gain or loss will be a capital gain or loss, provided that you held
the Capital Securities as a capital asset, except to the extent any amount
realized is treated as payment of accrued but unpaid interest (other than OID).
The gain or loss will generally be a long-term capital gain or loss if you have
held your Capital Securities for more than one year. Long-term capital gains of
individuals are taxed at a maximum rate of 20%. The deductibility of capital
losses is subject to limitations.
NON-UNITED STATES HOLDERS
The following discussion only applies to you if you are not a United States
person. As discussed above, the Capital Securities will be treated as evidence
of indirect beneficial ownership interests in the Junior Subordinated
Debentures. See above under the caption "-- Classification of the Trust" in this
section. Thus, under present United States federal
S-30
<PAGE> 34
income tax law, and subject to the discussion below concerning backup
withholding:
(1) no withholding of United States federal income tax will be required
regarding the payment by First Security or any paying agent of
principal or interest (which for purposes of this discussion includes
any OID) to you on the Capital Securities (or the Junior Subordinated
Debentures) if you meet all of the following requirements:
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of First Security
entitled to vote within the meaning of section 871(h)(3) of the Code
and the regulations thereunder;
- you are not a controlled foreign corporation that is related to
First Security through stock ownership;
- you are not a bank whose receipt of interest on the Junior
Subordinated Debentures is described in section 881(c)(3)(A) of the
Code; and
- you satisfy the statement requirement (described generally below)
set forth in section 871(h) and section 881(c) of the Code and the
regulations thereunder; and
(2) no withholding of United States federal income tax generally will be
required regarding any gain you realize upon the sale or other
disposition of the Capital Securities (or the Junior Subordinated
Debentures).
To satisfy the requirement referred to in (1) above, you, or a financial
institution holding the Capital Securities on your behalf, must provide, in
accordance with specified procedures, to the Trust or its paying agent, a
statement to the effect that you are not a United States person. Currently, you
can meet this requirement if one of the following occurs:
- you provide your name and address, and certify, under penalties of
perjury, that you are not a United States person (this certification may
be made on an IRS Form W-8 (or successor form)); or
- a financial institution holding the Capital Securities on your behalf
certifies, under penalties of perjury, that:
- you provided it with a statement described above; and
- the financial institution furnishes a paying agent with a copy of
the statement.
Under final Treasury regulations (which we refer to as the "Final
Regulations"), the statement requirement referred to in (1) above may also be
satisfied with other documentary evidence for interest paid after December 31,
1999 regarding an offshore account or through certain foreign intermediaries.
If you cannot satisfy the requirements of the "portfolio interest"
exception described in (1) above, payments of premium, if any, and interest
(including any OID) made to you, will be subject to a 30% United States
withholding tax unless you provide First Security or its paying agent, as the
case may be, with one of the following properly executed forms:
- IRS Form 1001 (or successor form) claiming an exemption from, or a
reduction of, this withholding tax under the benefit of a tax treaty; or
- IRS Form 4224 (or successor form) stating that interest paid on the
Capital Securities (or the Junior Subordinated Debentures) is not subject
to this withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.
Under the Final Regulations, you will generally be required to provide IRS
Form W-8 in lieu of IRS Form 1001 and IRS Form 4224, although alternative
documentation may be applicable in certain situations.
S-31
<PAGE> 35
If you are engaged in a trade or business in the United States and interest
on the Capital Securities (or Junior Subordinated Debentures) is effectively
connected with the conduct of your trade or business, you will be subject to
United States federal income tax on such interest on a net income basis in the
same manner as if you were a United States person. However, you will not be
subject to withholding described above.
In addition, if you are a foreign corporation, you may be subject to a
branch profits tax equal to 30% (or lesser rate under an applicable tax treaty)
of your effectively connected earnings and profits for the taxable year, subject
to adjustments. For this purpose, such interest would be included in your
earnings and profits.
You will generally not be subject to United States federal income tax on
any gain you realize upon the sale or other disposition of the Capital
Securities (or the Junior Subordinated Debentures) unless:
- the gain is effectively connected with your trade or business in the
United States;
- you are an individual and you are present in the United States for 183
days or more in the taxable year of such sale, exchange or retirement and
certain other conditions are met; or
- the gain represents accrued interest on the Junior Subordinated
Debentures and you did not satisfy the requirements for the "portfolio
interest" exception described in (1) above.
INFORMATION REPORTING AND BACKUP
WITHHOLDING
Income on the Capital Securities held of record by United States persons
(other than corporations and other exempt holders) will be reported annually to
such holders and to the IRS. Such income will be reported to you on IRS Form
1099, which should be mailed to the holders of record prior to January 31
following each calendar year.
"Backup withholding" at a rate of 31% will apply to payments of interest to
non-exempt United States persons unless you:
- furnish your taxpayer identification number in the manner prescribed in
applicable Treasury regulations;
- certify that such number is correct;
- certify as to no loss of exemption from backup withholding; and
- meet certain other conditions.
In general, no information reporting or backup withholding will be required
regarding payments made by the Trust or any paying agent to non-United States
persons if a statement described in (1) under "Non-United States Holders" has
been received and the payor does not have actual knowledge that you are a United
States person.
In addition, backup withholding and information reporting may apply to the
proceeds from disposition of Capital Securities (or Junior Subordinated
Debentures) within the United States or conducted through certain United States
related financial intermediaries unless the statement described in (1) under
"Non-United States Holders" has been received (and the payor does not have
actual knowledge that you are a United States person) or you otherwise establish
an exemption.
Any amounts withheld from you under the backup withholding rules generally
will be allowed as a refund or a credit against your United States federal
income tax liability, provided the required information is furnished to the IRS.
S-32
<PAGE> 36
ERISA CONSIDERATIONS
Each fiduciary of an employee benefit plan subject to Title I of ERISA, a
plan described in Section 4975 of the Code, including an individual retirement
arrangement or a Keogh plan, and any entity whose underlying assets include
"plan assets" by reason of any such employee benefit plan's or plan's investment
in such entity (each of which we refer to as a "Plan") should consider the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code in the context of the Plan's particular circumstances
before authorizing an investment in the Capital Securities. Accordingly, such a
fiduciary should consider, among other factors, that each Plan investing in the
Capital Securities will be deemed to have represented that the Plan's purchase
of the Capital Securities is covered by one or more specified prohibited
transaction class exemptions. Plan fiduciaries should also consider whether the
Plan's investment in the Capital Securities would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing their Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with persons who are
"parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") regarding such a Plan. A violation of these "prohibited
transaction" rules may result in an excise tax, penalty or other liabilities
under ERISA and/or Section 4975 of the Code for such persons or, in the case of
an individual retirement account, the occurrence of a prohibited transaction
involving the individual who established the individual retirement account, or
his or her beneficiaries, would cause the individual retirement account to lose
its tax-exempt status, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church plans
(as defined in Section 3(33) of ERISA or Section 4975(g)(2) of the Code) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
Under a regulation (which we refer to as the "Plan Assets Regulation")
issued by the United States Department of Labor (the "DOL"), the assets of the
Trust would be deemed to be "plan assets" of a Plan for purposes of ERISA and
Section 4975 of the Code if assets of a Plan were used to acquire an equity
interest in the Trust and no exception were applicable under the Plan Assets
Regulation. An "equity interest" is defined under the Plan Assets Regulation as
any interest in an entity other than an instrument which is treated as debt
under applicable local law and which has no substantial equity features. Under
one such exception contained in the Plan Assets Regulation, the assets of the
Trust would not be deemed to be "plan assets" of investing Plans if, immediately
after the most recent acquisition of any equity interest in the Trust, less than
25% of the value of each class of equity interests in the Trust were held by
Plans, other employee benefit plans not subject to ERISA or Section 4975 of the
Code (such as governmental, church or foreign plans), and entities holding
assets deemed to be "plan assets" of any Plan (which we refer to collectively,
as "Benefit Plan Investors"). No assurance can be given that the value of the
Capital Securities held by Benefit Plan Investors will be less than 25% of the
total value of such Capital Securities at the completion of the initial offering
of the Capital Securities or thereafter, and no monitoring or other measures
will be taken regarding the satisfaction of the conditions to this exception.
All of the common securities will be purchased and held by First Security.
It is possible that the Capital Securities may qualify as "publicly-offered
securities" under the Plan Assets Regulation. "Publicly-offered securities"
within the meaning of the Plan Assets Regulation are:
- widely held (i.e., owned by more than 100 investors independent of First
Security and of each other);
S-33
<PAGE> 37
- freely transferable; and
- sold as part of an offering pursuant to an effective registration
statement under the Securities Act of 1933 and then timely registered
under Section 12(b) or 12(g) of the Securities Exchange Act of 1934.
If the Capital Securities are "publicly offered securities", the underlying
assets of the Trust would not be deemed to be "plan assets" of investing Plans.
The Underwriters expect:
- that the Capital Securities will be held by at least 100 independent
investors at the conclusion of the offering of the Capital Securities;
- that there will be no restrictions imposed on the transfer of the Capital
Securities; and
- that the Capital Securities will be sold as part of an offering pursuant
to an effective registration statement under the Securities Act of 1933
and then will be timely registered under the Securities Exchange Act of
1934.
There can be no assurance that this or any of the other exceptions set
forth in the Plan Assets Regulation will apply to the Capital Securities, and,
as a result, under the terms of the Plan Assets Regulation, an investing Plan's
assets could be considered to include an undivided interest in the assets held
by the Trust (including the Junior Subordinated Debentures), and transactions by
the Trust could be subject to the fiduciary responsibility provision of Title I
of ERISA.
Regardless of whether the assets of the Trust are deemed to be "plan
assets" of Plans investing in the Trust, as discussed above, the acquisition and
holding of the Capital Securities with "plan assets" of a Plan could itself
result in a prohibited transaction. The DOL has issued five prohibited
transaction class exemptions ("PTCEs") that may provide exemptive relief for
direct or indirect prohibited transactions resulting from the purchase and/or
holding of the Capital Securities by a Plan. These class exemptions are:
- PTCE 96-23 (for certain transactions determined by "in-house asset
managers");
- PTCE 95-60 (for certain transactions involving insurance company general
accounts);
- PTCE 91-38 (for certain transactions involving bank collective investment
funds);
- PTCE 90-1 (for certain transactions involving insurance company pooled
separate accounts); and
- PTCE 84-14 (for certain transactions determined by independent "qualified
professional asset managers").
Such class exemptions may not, however, apply to all of the transactions
that could be deemed prohibited transactions in connection with a Plan's
investment in the Capital Securities.
Any purchaser of the Capital Securities that is an insurance company using
assets of its general account should note that, based on the reasoning of the
United States Supreme Court set forth in John Hancock Mutual Life Insurance
Company v. Harris Trust & Savings Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of Plans investing in
such general account (e.g., through the purchase of an annuity contract).
On December 22, 1997, the DOL issued a proposed regulation (64 F.R. 66908)
under Section 401(c) of ERISA intended to provide guidance on which assets held
by an insurance company in its general account constitute "plan assets" in cases
where such insurer has issued, on or before December 31, 1998, policies or
contracts to or for the benefit of a Plan that are supported by assets of such
insurer's general account and when the underlying general account assets will
not be deemed to be assets of such Plan if the insurer satisfies the require-
S-34
<PAGE> 38
ments of such regulation (if adopted as proposed).
Section 401(c) of ERISA also provides for certain other temporary and
transitional rules concerning the application of the fiduciary responsibility
and prohibited transaction provisions of ERISA and Section 4975 of the Code to
assets of an insurer's general account that support insurance policies or
contracts issued by the insurer. The plan asset status of insurance company
separate accounts is unaffected by Section 401(c) of ERISA and the proposed
regulations thereunder. Any insurance company considering the use of its general
account assets to purchase Capital Securities should consult with its counsel
concerning these and other matters affecting its purchase decision.
Because of ERISA's prohibitions and those of Section 4975 of the Code,
discussed above, the Capital Securities, or any interest therein, should not be
purchased or held by any Plan or any person investing "plan assets" of any Plan,
unless such purchase and holding is covered by the exemptive relief available
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable class or
individual exemption). Accordingly, each purchaser or holder of the Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that either:
- it is not a Plan and no part of the assets to be used by it to purchase
and/or hold such Capital Securities or any interest therein constitutes
"plan assets" of any Plan; or
- it is itself a Plan, or is purchasing or holding the Capital Securities
or an interest therein on behalf of or with "plan assets" of one or more
Plans, and each such purchase and holding of such securities satisfies
the requirements of, and is entitled to full exemptive relief under, PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable class or
individual exemption).
Although, as noted above, governmental plans are not subject to ERISA,
including the prohibited transaction provisions thereof, or of Section 4975 of
the Code, state laws or regulations governing the investment and management of
the assets of such plans may contain fiduciary and prohibited transaction
provisions similar to those under ERISA and Section 4975 of the Code discussed
above. Similarly, fiduciaries of other plans not subject to ERISA may be subject
to other legal restrictions under applicable laws that are similar to ERISA.
Accordingly, fiduciaries of governmental plans or other plans not subject to
ERISA, in consultation with their advisors, should consider the impact of their
respective state laws on their investment in Capital Securities, and the
considerations discussed above, to the extent applicable.
Due to the complexity of the fiduciary responsibility and prohibited
transaction rules described above and the penalties that may be imposed upon
persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel, prior to any such purchase, regarding the potential applicability of
ERISA and Section 4975 of the Code to such investment and whether any exemption
would be applicable and determine on their own whether all conditions of such
exemption or exemptions have been satisfied such that the acquisition and
holding of Capital Securities by the purchaser Plan are entitled to full
exemption relief thereunder.
S-35
<PAGE> 39
UNDERWRITING
Based on the terms and conditions of an underwriting agreement (which we
refer to as the "Underwriting Agreement"), the Trust has agreed to sell to each
of the underwriters named below (which we refer to as the "Underwriters") and
each of the Underwriters has severally agreed to purchase from the Trust the
liquidation amount of Capital Securities set forth opposite its name below:
<TABLE>
<CAPTION>
LIQUIDATION
AMOUNT OF
UNDERWRITERS CAPITAL SECURITIES
------------ ------------------
<S> <C>
Lehman Brothers Inc. ..... $
First Security Van Kasper,
Inc. ...................
--------
Total................. $
========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase the Capital Securities are subject to the satisfaction
of certain conditions, including the approval of certain legal matters by their
counsel. The Underwriters are obligated to purchase all of the Capital
Securities if they purchase any of them.
In addition, First Security and the Trust have granted the Underwriters an
option to purchase up to a total of $ additional aggregate liquidation
amount of Capital Securities solely to cover over-allotments. Any or all of that
option may be exercised at any time until 30 days after the date of the
Underwriting Agreement. To the extent that the Underwriters exercise the option,
they will be committed, subject to certain conditions, to purchase the aggregate
liquidation amount of additional Capital Securities proportionate to each of
their initial commitments as indicated in the table above.
First Security and the Trust have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribute regarding payments which the Underwriters may be required
to make.
COMMISSIONS AND DISCOUNTS
The Underwriters will offer the Capital
Securities directly to the public at $25 per Capital Security plus accrued and
unpaid distributions, if any. The Underwriters may also offer the Capital
Securities to certain selected securities dealers at the above mentioned
offering price less a concession of $ per Capital Security. The Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ per
Capital Security to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
Since the proceeds from the sale of the Capital Securities will be used to
purchase the Junior Subordinated Debentures, First Security has agreed to pay to
the Underwriters an underwriting commission of $ per Capital Security.
First Security will pay certain expenses, which it expects to be
approximately $ , in connection with the offer and sale of the Capital
Securities.
NEW YORK STOCK EXCHANGE LISTING
Before this offering, there has been no established public trading market
for the Capital Securities. First Security expects that the Capital Securities
will be approved for listing on the New York Stock Exchange within 30 days of
their issuance. If listed, trading of the Capital Securities is expected to
begin within 30 days of the issuance of the Capital Securities. In order to meet
all of the requirements for listing the Capital Securities on the New York Stock
Exchange, the Underwriters have agreed to sell the Capital Securities to a
minimum of 400 beneficial holders. The Underwriters have advised First Security
that they intend to make a market in the Capital Securities prior to the
commencement of trading on the New York Stock Exchange. The Underwriters are
not, however, obligated to do so and may discontinue market making at any time
without notice. We cannot assure you that an active trading market will be
available for the Capital Securities, whether or not they are listed on the New
York Stock Exchange, or
S-36
<PAGE> 40
that you will be able to sell Capital Securities at the price you originally
paid for them.
NO SALES OF SIMILAR SECURITIES
First Security and the Trust have agreed that for 30 business days after
the date of this prospectus supplement they will not directly or indirectly
offer, sell, offer to sell, or grant any option for the sale of any Capital
Securities or Junior Subordinated Debentures or any securities convertible or
exchangeable into, or exercisable for, Capital Securities or Junior Subordinated
Debentures, or any debt securities substantially similar to Junior Subordinated
Debentures or any equity securities substantially similar to the Capital
Securities, except for the Capital Securities and Junior Subordinated Debentures
described in this prospectus supplement, without the prior written consent of
Lehman Brothers Inc.
CONFIRMATION TO DISCRETIONARY ACCOUNTS NOT
PERMITTED
The Underwriters may not confirm sales to any accounts over which they
exercise discretionary authority without the prior approval of the customer.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the sale of the Capital Securities, SEC rules permit the
Underwriters to engage in transactions that stabilize the price of the Capital
Securities. These transactions may include purchases for the purpose of fixing
or maintaining the price of the Capital Securities. The Underwriters may create
a short position in the Capital Securities in connection with the offering. That
means they may sell a larger number of the Capital Securities than is shown on
the cover page of this prospectus supplement. If they create a short position,
the Underwriters may purchase Capital Securities in the open market to reduce
the short position. If the Underwriters purchase the Capital Securities to
stabilize the price or to reduce their short position, the price of the Capital
Securities could be higher than it might be if they had not made such purchases.
The Underwriters make no representation or prediction about any effect that
these purchases may have on the price of the Capital Securities. The
Underwriters may suspend any of these activities at any time.
The Underwriters may also impose a penalty bid on certain dealers and
selling group members. This means that if the representatives of the
Underwriters purchase Capital Securities in the open market to reduce the
Underwriters' short position or to stabilize the price of the Capital
Securities, they may reclaim the amount of the selling concession from the
Underwriters or selling group members who sold those securities as part of this
offering.
NASD REQUIREMENTS
The underwriting and agency arrangements for the offering of the Capital
Securities will comply with the requirements of Rule 2720 of the National
Association of Securities Dealers, Inc. (which we refer to as the "NASD")
regarding an NASD member firm's participating in distributing the securities of
its affiliate.
AFFILIATIONS
The Underwriters have in the past and expect that they may in the future
engage in transactions with and perform services for First Security and its
subsidiaries in the ordinary course of their businesses, for which they
received, and in the future expect that they will receive, customary fees. In
addition, one of the Underwriters, First Security Van Kasper, Inc., is a wholly
owned subsidiary of First Security.
S-37
<PAGE> 41
$
FIRST SECURITY(R) CAPITAL II
SKIS(SM)
% SUBORDINATED CAPITAL INCOME SECURITIES
(Liquidation amount $25 per Capital Security)
fully and unconditionally guaranteed, to the extent set forth herein, by
[FIRST SECURITY CORPORATION LOGO]
----------------------------------------------------------------------
PRELIMINARY PROSPECTUS SUPPLEMENT
, 1999
----------------------------------------------------------------------
LEHMAN BROTHERS
FIRST SECURITY VAN KASPER
"SKIS" is a service mark of Lehman Brothers Inc.
<PAGE> 42
PROSPECTUS
$500,000,000
FIRST SECURITY(R) CAPITAL II
FIRST SECURITY(R) CAPITAL III
FIRST SECURITY(R) CAPITAL IV
FIRST SECURITY(R) CAPITAL V
PREFERRED SECURITIES
fully and unconditionally guaranteed, to the extent
set forth herein, by
[FIRST SECURITY CORPORATION LOGO]
---------------------------------------------
79 South Main Street
Salt Lake City, Utah 84130
(801) 246-5706
-------------------------------------------
These securities may be offered from time to time, in amounts, on terms and at
prices that will be determined at the time they are offered for sale. These
terms and prices will be described in more detail in one or more supplements to
this prospectus, which will be distributed at the time the securities are
offered.
-------------------------------------------
YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT CAREFULLY BEFORE YOU INVEST.
-------------------------------------------
THIS PROSPECTUS MAY NOT BE USED TO SELL ANY OF THE SECURITIES UNLESS IT IS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
-------------------------------------------
The securities may be sold to or through underwriters, through dealers or
agents, directly to purchasers or through a combination of these methods. If an
offering of securities involves any underwriters, dealers or agents, then the
applicable prospectus supplement will name the underwriters, dealers or agents
and will provide information regarding any fee, commission or discount
arrangements made with those underwriters, dealers or agents.
-------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
This prospectus is dated , 1999
<PAGE> 43
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this prospectus................. 1
Where You Can Find More Information
about First Security................ 2
Summary............................... 3
First Security........................ 4
The Trusts............................ 4
Use of Proceeds....................... 6
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................... 6
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of the Preferred
Securities.......................... 7
Description of the Guarantees......... 14
Description of the Junior Subordinated
Debentures.......................... 18
Book-Entry Issuance................... 27
ERISA Matters......................... 30
Plan of Distribution.................. 30
Legal Opinions........................ 31
Experts............................... 32
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that First Security
Corporation, First Security Capital II, First Security Capital III, First
Security Capital IV and First Security Capital V have filed with the Securities
and Exchange Commission (which we refer to as the "SEC") using a "shelf"
registration process. Under this shelf process, each of First Security Capital
II, First Security Capital III, First Security Capital IV and First Security
Capital V (which we refer to as the "Trusts") may sell its own Preferred
Securities, guaranteed by the related Guarantees of First Security, as described
in this prospectus, in one or more offerings up to a total dollar amount of
$500,000,000 and invest the proceeds in Junior Subordinated Debentures issued by
First Security. This prospectus provides you with a general description of the
Capital Securities of each Trust and the related Guarantees and Junior
Subordinated Debentures. Each time that one of the Trusts sells its Capital
Securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with any additional
information that we refer you to as discussed under "Where You Can Find More
Information About First Security".
When we refer to "First Security" in this prospectus, we mean First
Security Corporation. When we use the term "we", we mean First Security and the
Trusts collectively.
1
<PAGE> 44
WHERE YOU CAN FIND MORE
INFORMATION ABOUT FIRST SECURITY
First Security files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
document which First Security files at the SEC's public reference rooms in
Washington, D.C., New York, New York, Chicago, Illinois and Denver, Colorado.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. First Security's SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov.
The SEC allows First Security to "incorporate by reference" in this
prospectus the information that First Security files with them, which means that
First Security can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be a
part of this prospectus, and information that First Security files later with
the SEC will automatically update and supersede this information. First Security
incorporates by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the Preferred Securities:
- Annual Report on Form 10-K for the year ended December 31, 1998; and
- Current Reports on Form 8-K filed on January 22, 1999, January 29, 1999
and February 9, 1999.
You may request a copy of these filings at no cost, by writing or
telephoning First Security Corporation, Attention: Corporate Communications, 79
South Main Street, Salt Lake City, Utah 84111, telephone (801) 246-6000.
This prospectus does not contain or incorporate by reference any separate
financial statements of the Trusts. First Security does not believe that these
financial statements are material to prospective holders of the Preferred
Securities because:
- all of the voting securities of the Trusts will be owned, directly or
indirectly, by First Security, a reporting company under the Securities
Exchange Act of 1934;
- the Trusts have no independent operations but exist for the sole purpose
of issuing securities representing undivided beneficial ownership
interests in their respective assets and investing these proceeds in the
Junior Subordinated Debentures issued by First Security; and
- the obligations of the Trusts under the Preferred Securities are
guaranteed by First Security to the extent described in this prospectus.
The Trusts are not currently subject to the informational reporting
requirements of the Securities Exchange Act of 1934. The Trusts will become
subject to such requirements upon the effectiveness of the registration
statement, although First Security and the Trusts intend to seek and expect to
receive exemptions from those reporting requirements.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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<PAGE> 45
SUMMARY
Each of the Trusts is a business trust recently organized under Delaware
law by First Security. They may each offer, at prices and on terms to be
determined at the time of sale, one series of their Preferred Securities. Each
Trust will issue only one series of Preferred Securities. The Preferred
Securities will represent undivided beneficial ownership interests in the assets
of the applicable Trust. Unless the applicable prospectus supplement states
otherwise, holders of Preferred Securities will receive cash distributions on a
periodic basis and payments on liquidation, redemption or otherwise of the
Preferred Securities as described in the applicable prospectus supplement.
The Preferred Securities will be guaranteed on a subordinated basis by
First Security to the extent described in this prospectus and the applicable
prospectus supplement. First Security's obligations under the Guarantees will be
subordinated to the same extent as its obligations under the Junior Subordinated
Debentures.
When a Trust issues a series of its Preferred Securities, it will also
issue and sell to
First Security a series of Common Securities. The Trust will use the proceeds
from the issuances of the Preferred Securities and Common Securities to purchase
a corresponding series of Junior Subordinated Debentures from First Security.
The Junior Subordinated Debentures purchased by the applicable Trust may be
distributed subsequently on a proportionate basis to holders of Preferred
Securities and Common Securities if that Trust were to be dissolved. The Trust
may be dissolved subject to certain conditions that will be described in an
accompanying prospectus supplement.
Each Guarantee, when taken together with First Security's obligations under
the corresponding series of Junior Subordinated Debentures, the Indenture under
which the Junior Subordinated Debentures will be issued and the relevant
declaration of trust, including First Security's obligations to pay the costs,
expenses, debts and liabilities of each Trust (other than regarding the
Preferred Securities and the Common Securities of the Trust), will constitute a
full and unconditional guarantee on a subordinated basis by First Security of
all payments due on the Preferred Securities.
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<PAGE> 46
FIRST SECURITY
First Security is a regional bank holding company headquartered in Salt
Lake City, Utah. It owns and operates five banks, with offices in the seven
western States of California, Idaho, New Mexico, Nevada, Oregon, Utah and
Wyoming and several other financial services companies, some having a national
presence. Through its subsidiaries, First Security provides commercial and
agricultural loans, consumer banking, trust services, capital markets advice and
municipal underwriting services, treasury management, investment management,
data processing, leasing and securities brokerage services. At December 31,
1998, First Security and its subsidiaries had total consolidated assets of
approximately $21.7 billion, deposits of $12.7 billion and shareholders' equity
of $1.6 billion. First Security common shares are traded on the NASDAQ National
Market System, and First Security files regular reports with the SEC. First
Security has paid dividends regularly on its common stock since 1928.
First Security's principal subsidiaries are First Security Bank, N.A., the
largest bank in Utah with branches in Idaho, Oregon and Wyoming; First Security
Bank of New Mexico, N.A., the third largest bank in New Mexico and the second
largest bank in the Albuquerque market; and First Security Van Kasper, Inc., a
registered investment advisor and broker dealer. First Security also owns banks
in Nevada, California and southern New Mexico.
First Security's executive offices are located at 79 South Main Street,
Salt Lake City, Utah 84111 and its telephone number is (801) 246-6000.
THE TRUSTS
PURPOSE AND OWNERSHIP OF THE TRUSTS
Each of the Trusts is a business trust recently organized under Delaware
law by First Security and the Trustees. The Trusts are being established solely
for the following purposes:
- to issue and sell the Preferred Securities, which represent undivided
beneficial ownership interests in the assets of each Trust;
- to issue and sell the Common Securities to First Security in a total
liquidation amount equal to 3% of the total capital of each Trust;
- to use the proceeds from the sale of the Common Securities and the
Preferred Securities to acquire the Junior Subordinated Debentures from
First Security; and
- to engage in other activities that are directly related to the activities
described above, such as registering the transfer of the Preferred
Securities.
Because each Trust is being established only for the purposes listed above, the
applicable series of Junior Subordinated Debentures will be the sole assets of
the applicable Trust, and payments under the Junior Subordinated Debentures will
be the sole source of income to that Trust.
First Security, as issuer of the Junior Subordinated Debentures, will pay
all fees, expenses and taxes related to each Trust and the offering of each
Trust's Preferred Securities. First Security will also pay, in this capacity,
all ongoing costs, expenses and liabilities of the Trusts, except obligations to
make distributions and other payments on the Common Securities and the Preferred
Securities.
For so long as the Preferred Securities remain outstanding, First Security
will covenant to:
- own directly or indirectly all of the Common Securities;
- cause each Trust to remain a business trust and not to voluntarily
dissolve, wind-up, liquidate or be terminated, except as permitted by the
relevant declaration of trust;
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<PAGE> 47
- use its commercially reasonable efforts to ensure that each Trust will
not be an "investment company" for purposes of the Investment Company Act
of 1940; and
- take no action that would be reasonably likely to cause each Trust to be
classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.
THE TRUSTEES
Each of the Trust's business and affairs will be conducted by its five
Trustees. In each case, three of the Trustees, the Regular Trustees of each
Trust (which we refer to as the "Regular Trustees" with respect to each Trust),
will be individuals who are employees of First Security. The fourth Trustee, the
Property Trustee of each Trust (which we refer to as the "Property Trustee" with
respect to each Trust), will hold title to the Junior Subordinated Debentures
for the benefit of the holders of the Preferred Securities of each Trust and
will have the power to execute all rights and powers of a registered holder of
Junior Subordinated Debentures under the Indenture. The fifth Trustee of each
Trust will be the Delaware Trustee (which we refer to as the "Delaware Trustee"
with respect to each Trust), which will maintain its principal place of business
in Delaware and meet the requirements of Delaware law for Delaware business
trusts. First Security has the right to appoint, remove and replace any of the
Trustees of each Trust unless an event of default occurs under the Indenture. In
that event, the holders of a majority in liquidation amount of the applicable
Preferred Securities will have the right to remove and appoint the Property
Trustee and the Delaware Trustee.
ADDITIONAL INFORMATION
For additional information concerning the particular Trust issuing a series
of Preferred Securities, see "The Trust" in the applicable prospectus
supplement. We anticipate that the Trusts will not be required to file any
reports with the SEC after the issuance of the Preferred Securities. As
discussed below under the caption "Accounting Treatment", First Security will
provide certain information concerning each of the Trusts and the Preferred
Securities in the financial statements included in its own periodic reports to
the SEC.
OFFICES OF THE TRUSTS
The executive office of each Trust is c/o First Security Corporation, 79
South Main Street, Salt Lake City, Utah 84111, and its telephone number is (801)
246-6000.
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<PAGE> 48
USE OF PROCEEDS
Each Trust will invest all of the net proceeds from the sale of any
Preferred Securities in Junior Subordinated Debentures.
Except as otherwise may be described in a prospectus supplement
accompanying this prospectus, First Security expects to use the proceeds from
the sale of the Junior Subordinated Debentures for general corporate purposes,
which may include the repayment of debt, investments in or extensions of credit
to its subsidiaries and the financing of possible acquisitions.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
First Security's consolidated ratios of earnings to fixed charges and
consolidated ratios of earnings to combined fixed charges and preferred stock
dividend requirements for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits................. 3.04x 2.23x 2.82x 2.41x 2.22x
Including Interest on Deposits................. 1.70x 1.42x 1.59x 1.56x 1.53x
Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements:
Excluding Interest on Deposits................. 3.04x 2.23x 2.82x 2.41x 2.22x
Including Interest on Deposits................. 1.70x 1.42x 1.59x 1.56x 1.53x
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except interest on deposits), capitalized interest, and the interest factor
included in rents. Fixed charges, including interest on deposits, represent all
interest expense, capitalized interest, and the interest factor included in
rents. Combined fixed charges and preferred stock dividend requirements,
excluding interest on deposits, represent interest expense (except interest paid
on deposits), capitalized interest, an amount equal to the pre-tax earnings
required to meet applicable preferred stock dividend requirements, and the
interest factor included in rents. Combined fixed charges and preferred stock
dividend requirements, including interest on deposits, represent all interest
expense, capitalized interest, an amount equal to the pre-tax earnings required
to meet applicable preferred stock dividend requirements, and the interest
factor included in rents.
First Security restated its ratio of earnings to fixed charges for 1994,
for the calculation excluding interest on deposits, and 1995, for the
calculations excluding and including interest on deposits, to give effect to its
acquisition of California State Bank on May 30, 1998, which was accounted for by
the pooling of interests method. For more information regarding the impact of
this transaction on First Security's historical financial statements, see First
Security's Current Report on Form 8-K dated October 1, 1998.
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<PAGE> 49
DESCRIPTION OF THE PREFERRED SECURITIES
The following description of the terms and provisions of Preferred
Securities summarizes certain general terms that will apply to each series of
Preferred Securities. This description is not complete, and we refer you to the
certificate of trust and the declaration of trust for each Trust and the form of
the amended and restated declaration of trust, copies of which we filed as
exhibits to the registration statement of which this prospectus is a part.
DECLARATION OF TRUSTS
When a Trust issues a series of Preferred Securities, the declaration of
trust relating to that Trust will contain, and the prospectus supplement
relating to that series will summarize, the terms and other provisions relating
to that series of Preferred Securities. Each Trust will issue only one series of
Preferred Securities.
The declaration of trust of each Trust will be qualified as an indenture
under the Trust Indenture Act of 1939. Unless the applicable prospectus
supplement states otherwise, The First National Bank of Chicago will act as
Indenture Trustee under each relevant declaration of trust (which we refer to as
the "Indenture Trustee" with respect to each Trust).
Each series of Preferred Securities will represent undivided beneficial
ownership interests in the assets of the applicable Trust. The holders of the
Preferred Securities will be entitled to a preference in certain circumstances
regarding distributions from the applicable Trust and amounts payable on
redemption or liquidation over the corresponding series of Common Securities, as
well as other benefits as described in the relevant declaration of trust.
SPECIFIC TERMS OF EACH SERIES
Each time that a Trust issues a series of Preferred Securities, the
prospectus supplement relating to that new series will summarize the particular
amount, price and other terms and provisions of these Preferred Securities.
These terms may include the following:
- the distinctive designation of the Preferred Securities;
- the number of Preferred Securities issued by the applicable Trust;
- the annual distribution rate (or method of determining such rate) for
Preferred Securities issued by the applicable Trust and the date or dates
upon which such distributions will be payable;
- whether distributions on Preferred Securities issued by the applicable
Trust may be deferred and, if so, what the maximum number of
distributions that may be deferred and the terms and conditions of such
deferrals will be;
- whether distributions on Preferred Securities issued by the applicable
Trust will be cumulative, and, in the case of Preferred Securities having
such cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on Preferred
Securities issued by each Trust will be cumulative;
- the amount or amounts which will be paid out of the assets of the
applicable Trust to the holders of Preferred Securities of the Trust upon
voluntary or involuntary dissolution, winding up or termination of the
applicable Trust;
- the obligation, if any, of the applicable Trust to purchase or redeem
Preferred Securities issued by the applicable Trust and the price or
prices at which, the period or periods within which and the terms and
conditions upon which Preferred Securities issued by the applicable Trust
will be purchased or redeemed, in whole or in part, pursuant to such
obligation;
- the voting rights, if any, of Preferred Securities issued by the
applicable Trust in addition to those required by law, including the
number of votes per Preferred Security and any requirement for the
approval by the holders of
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<PAGE> 50
Preferred Securities as a condition to specified action or amendments to
the relevant declaration of trust; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of Preferred Securities issued by the applicable Trust,
consistent with the declaration of the trust and with applicable law.
All Preferred Securities that a Trust offers will be guaranteed by First
Security to the extent set forth below under the caption "Description of the
Guarantees" in this prospectus. The applicable prospectus supplement will also
describe the United States federal income tax considerations applicable to each
offering of Preferred Securities.
ISSUANCE OF COMMON SECURITIES
In connection with the issuance of Preferred Securities, each Trust will
issue a new series of Common Securities to First Security. Except as described
below under the caption "-- Subordination" in this prospectus, the terms of the
Common Securities issued by the applicable Trust will be substantially identical
to the terms of the Preferred Securities. These terms will be defined in the
relevant declaration of trust and will be summarized in the applicable
prospectus supplement. These terms will specify the following:
- the annual distribution rate (or method of determining that rate) and the
date or dates upon which the distributions will be payable;
- the rights of the applicable Trust to redeem the Common Securities and
related provisions;
- the voting rights of holders of the Common Securities;
- any liquidation rights or similar restrictions;
- and other specific terms of the Common Securities (not inconsistent with
the relevant declaration of trust).
SUBORDINATION
The Common Securities will rank on a par with, and payments will be made on
them on a proportionate basis with, the Preferred Securities issued by the
applicable Trust, except that upon a "Trust Enforcement Event" (as defined
below), the rights of the holders of the Common Securities to payments of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities.
HOLDER OF COMMON SECURITIES
Except in certain limited circumstances, the holder of the Common
Securities of the applicable Trust will have sole power to appoint, remove or
replace any of the trustees of the applicable Trust. All of the Common
Securities of the applicable Trust will be directly or indirectly owned by First
Security.
TRUST ENFORCEMENT EVENTS
An event of default under the Indenture that has occurred and is continuing
constitutes a "Trust Enforcement Event" under the relevant declaration of trust.
REMEDIES OF HOLDERS OF PREFERRED SECURITIES AND THE PROPERTY TRUSTEE
If a Trust Enforcement Event occurs and is continuing, then the holders of
Preferred Securities of the applicable Trust would rely on the enforcement by
the Property Trustee of its rights as a holder of the Junior Subordinated
Debentures against First Security. In addition, the holders of a majority in
liquidation amount of the Preferred Securities of the applicable Trust will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee or to direct the exercise of any
trust or power conferred upon the Property Trustee under the relevant
declaration of trust, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Junior Subordinated
Debentures.
Upon the occurrence of a Trust Enforcement Event, the Property Trustee, as
the holder
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<PAGE> 51
of the Junior Subordinated Debentures, will have the right under the Indenture
to declare the principal of and premium, if any, and interest on the Junior
Subordinated Debentures held by the applicable Trust to be immediately due and
payable.
If the Property Trustee fails to enforce its rights regarding the Junior
Subordinated Debentures held by the applicable Trust, any holder of Preferred
Securities may, to the extent permitted by applicable law, institute a legal
proceeding directly against First Security to enforce the Property Trustee's
rights under these Junior Subordinated Debentures without first instituting any
legal proceeding against the Property Trustee or any other person or entity. In
addition, if a Trust Enforcement Event has occurred and is continuing and such
event is attributable to the failure of First Security to make any required
payments on the Junior Subordinated Debentures when due, then a holder of
Preferred Securities may, on or after the date that such payment was due,
institute a proceeding directly against First Security for enforcement of
payment on the Junior Subordinated Debentures having a principal amount equal to
the total liquidation amount of the Preferred Securities held by that holder (we
refer to such proceeding as a "Direct Action"). In connection with a Direct
Action, First Security will have the right under the Indenture to set off any
payment made to that holder by First Security. The holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of Junior Subordinated Debentures.
REMEDIES OF HOLDERS OF COMMON SECURITIES
The holder of the Common Securities will be deemed to have waived any Trust
Enforcement Event regarding the Common Securities until all Trust Enforcement
Events regarding the Preferred Securities have been cured, waived or otherwise
eliminated. Until such a Trust Enforcement Event has been cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the holders of the Preferred Securities and only the holders of the
Preferred Securities will have the right to direct the Property Trustee
regarding remedies under the relevant declaration of trust, and, therefore, the
Indenture.
LIMITATION ON CONSOLIDATIONS, MERGERS AND
SALE OF ASSETS
Each of the Trusts may not consolidate, merge with or into, or sell or
lease substantially all of its properties and assets to any corporation or other
entity, unless:
- a majority of the Regular Trustees consent to such a transaction;
- the successor assumes all of the obligations of the Trust regarding the
Preferred Securities, or substitutes other securities for the Preferred
Securities with the same terms and other provisions as the Preferred
Securities (which we refer to as "Successor Securities"), and regarding
the Trustees;
- if Successor Securities are issued, these securities are listed on the
same national securities exchange on which the Preferred Securities were
listed;
- the transaction does not cause the Preferred Securities or the Successor
Securities to be downgraded by a national ratings organization;
- such transaction does not adversely affect the rights of the holders of
the Preferred Securities in any material respect;
- following the transaction, the Trust would not have to register as an
"investment company" under the Investment Company Act of 1940;
- First Security, or a successor which will own all of the Common
Securities of the Trust or its successor, will guarantee the Preferred
Securities, or the Successor Securities, to the same extent as the
Preferred Securities are guaranteed by the Guarantee;
- the Trust would continue to be classified as a grantor trust for United
States federal income tax purposes, unless each
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<PAGE> 52
holder of Preferred Securities consents to such a change; and
- the holders of the Preferred Securities would continue to be treated as
owning an undivided beneficial interest in the assets of the Trust,
unless each holder of the Preferred Securities consents to such a change.
PAYING AGENT
Unless the applicable prospectus supplement states otherwise, in the event
that any Preferred Securities are not in the form of Global Securities, as
described under "Book-Entry Issuance", each Trust will maintain in the Borough
of Manhattan, The City of New York, an office or agency where the Preferred
Securities may be presented for payment by a Paying Agent.
Each Trust may appoint a Paying Agent and may appoint one or more
additional paying agents in such other locations as it may determine and change
any Paying Agent without prior notice to the holders of Preferred Securities.
Each Trust, or any of its affiliates, may act as Paying Agent regarding any
series of Preferred Securities. Unless the applicable prospectus supplement
states otherwise, the Property Trustee will act as Paying Agent for each series
of Preferred Securities. In the event that the Property Trustee will no longer
act as the Paying Agent, the Regular Trustees may appoint a successor, which
will be a bank or trust company acceptable to First Security, to act as Paying
Agent.
TRANSFER OF PREFERRED SECURITIES
For each issue of Preferred Securities, the Property Trustee will keep a
security register to provide for the transfer and registration of transfer of
Preferred Securities. The following provisions apply to the transfer of
Preferred Securities which are not issued in book-entry form:
- Holders of any issue of Preferred Securities may exchange their
securities for an equal principal amount of other Preferred Securities of
different authorized denominations of the same issue and with the same
terms.
- No service charge will be made for any registration of transfer or
exchange of Securities, but the Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities.
- If the Preferred Securities are to be redeemed in part, the Trust will
not be required:
- to issue, register the transfer of or exchange any Securities during
a period beginning at the opening of business 15 days before the day
of the mailing of a notice of redemption of any such Securities
selected for redemption and ending at the close of business on the
day of such mailing; or
- to register the transfer or exchange of any Preferred Security so
selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
GLOBAL SECURITIES
The Preferred Securities of any issue may be issued in the form of one or
more Global Securities. Preferred Securities of any issue will no longer be
eligible to be represented in the form of a Global Security and will be
registered in definitive form if one of the following events occurs:
- if at any time the depositary notifies the applicable Trust that it is
unwilling or unable under the Securities Exchange Act of 1934 and other
applicable law to continue as depositary or if at any time it will no
longer be eligible, in each case if a successor depositary is not
appointed within 90 days after the applicable Trust receives notice or
becomes aware of this ineligibility; or
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<PAGE> 53
- the applicable Trust, in its sole discretion, may determine that the
Preferred Securities issued in the form of one or more Global Securities
will no longer be represented by a Global Security.
For more information regarding the issuance of global securities and the
depositary arrangements for them, see below under the caption "Book-Entry
Issuance" in this prospectus.
REGISTRATION OF GLOBAL SECURITIES
If the Preferred Securities are to be issued in the form of one or more
Global Securities, then a Regular Trustee on behalf of the applicable Trust will
execute and the Property Trustee will cause the Global Securities to be
registered in the name of the depositary for these Global Securities or its
nominee.
REGISTRATION OF PREFERRED SECURITIES IN DEFINITIVE FORM
Preferred Securities not represented by a Global Security which are issued
in exchange for all or a part of a Global Security will be registered in such
names and in such authorized denominations as the depositary, pursuant to
instructions from its direct or indirect participants or otherwise, will
instruct the Property Trustee. Upon execution and authentication, the Property
Trustee will deliver the Preferred Securities not represented by a Global
Security to the persons in whose names such definitive Preferred Securities are
so registered. The Preferred Securities that are not initially represented by a
Global Security may be exchanged or transferred for part of a Global Security
pursuant to the instructions and procedures of the depositary.
RELIANCE ON THE DEPOSITARY BY THE TRUSTS AND PROPERTY TRUSTEE
In connection with each issue of Preferred Securities, the applicable Trust
and Property Trustee may for all purposes, including the making of payments due
on these Preferred Securities, deal with the depositary as the authorized
representative of the holders of these Preferred Securities for the purpose of
exercising the rights of these holders. The rights of the owner of any
beneficial interest in a Global Security will be limited to those established by
law and agreements between such owners and depository participants or Euroclear
and Cedel; provided that no such agreement will give any rights to any Person
against the applicable Trust or Property Trustee without the written consent of
these parties.
TRANSFER OF BENEFICIAL INTERESTS IN GLOBAL SECURITIES
Global Securities may not be transferred as a whole except under the
following circumstances:
- by the depositary to a nominee of the depositary;
- by a nominee of the depositary to the depositary or another nominee of
the depositary; or
- by the depositary or any such nominee to a successor depositary or a
nominee of such successor depositary.
Interests of beneficial owners in a Global Security may be transferred or
exchanged for Preferred Securities not represented by a Global Security and
Preferred Securities not represented by a Global Security may be transferred or
exchanged for Global Securities in accordance with rules of the depositary.
AMENDMENTS
AMENDMENTS WITHOUT CONSENT OF HOLDERS OF PREFERRED SECURITIES
Each declaration of trust may be amended without the consent of the holders
of the Preferred Securities:
- to cure any ambiguity;
- to correct or supplement any provisions in the declaration of trust that
may be defective or inconsistent with any other provision in the relevant
declaration of trust;
- to add to the covenants, restrictions or obligations of First Security,
as sponsor of the Trusts;
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<PAGE> 54
- to conform to any change in Rule 3a-5 under the Investment Company Act of
1940 or written change in interpretation or application of Rule 3a-5
under the Investment Company Act of 1940 by any legislative body, court,
government agency or regulatory authority; or
- to modify, eliminate or add to any provisions as necessary to the
relevant declaration of trust to ensure that the Trust will be classified
for United States federal income tax purposes as a grantor trust at all
times that any Preferred Securities or Common Securities are outstanding
or to ensure that the Trust will not be required to register as an
"investment company" under the Investment Company Act of 1940;
provided that any action described in this sentence may be taken only if it does
not adversely affect in any material respect the rights of the holders of
Preferred Securities or Common Securities.
AMENDMENT WITH CONSENT OF HOLDERS OF PREFERRED SECURITIES AND COMMON
SECURITIES
Without the consent of each holder of the Preferred Securities and the
Common Securities, the relevant declaration of trust may not be amended to:
- change the amount or timing of any distribution of the Preferred
Securities and the Common Securities or otherwise adversely affect the
amount of any distribution required to be made on the Preferred
Securities and the Common Securities;
- restrict the right of a holder of Preferred Securities to institute suit
for the enforcement of any payment owed on these securities; or
- change the voting requirements and other provisions relating to
amendments.
Without the consent of 66 2/3% of the holders of outstanding Preferred
Securities and Common Securities voting as a single class, the relevant
declaration of trust may not be amended to:
(1) adversely affect the powers, preferences or special rights of the
Preferred Securities and the Common Securities; or
(2) result in the dissolution, winding-up or termination of the applicable
Trust other than pursuant to the terms of the relevant declaration of
trust;
provided that, if any amendment or proposal referred to in clause (1) above
would adversely affect only the Preferred Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal.
AMENDMENTS WITH CONSENT OF HOLDERS OF COMMON SECURITIES
Without the consent of the holders of a majority in liquidation amount of
the Common Securities, the relevant declaration of trust may not be amended:
- to change the provisions of each declaration of trust regarding the
responsibilities of First Security, as sponsor of the Trusts, and its
obligation under the Indenture, as borrower, to indemnify the Property
Trustee and the Delaware Trustee and to pay the fees and expenses of the
Trustees; or
- to change the rights of the holders of the Common Securities to increase
or decrease the number of, and appoint and remove Trustees.
PROVISIONS THAT MAY NOT BE AMENDED
Under no circumstances may the following provisions of the relevant
declaration of trust be amended:
- to cause the applicable Trust to be classified other than as a grantor
trust for United States federal income tax purposes;
- to reduce or otherwise adversely affect the powers of the Property
Trustee in
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contravention of the Trust Indenture Act of 1939; and
- to cause the applicable Trust to be deemed to be an "investment company"
required to be registered under the Investment Company Act of 1940.
MEETINGS OF THE HOLDERS OF SECURITIES
MEETINGS
The Regular Trustees of any issue of Preferred Securities may call a
meeting of the holders of the securities on any matter on which these securities
are entitled to act under the relevant declaration of trust. In addition, the
holders of at least 10% in liquidation amount of issue of Preferred Securities
may direct the Regular Trustees to call such a meeting. The Regular Trustees are
required to give notice of any such meeting at least 7 days but not more than 60
days before the date of that meeting. The Regular Trustees, in their sole
discretion, will establish all other provisions relating to meetings of holders
of Preferred Securities not stated below.
ACTION BY WRITTEN CONSENT
Whenever a vote, consent or approval of the holders of Preferred Securities
is permitted or required, that vote, consent or approval may be given at the
meeting. Any action that may be taken at a meeting of these holders may be taken
without a meeting and without prior notice if a consent in writing setting forth
the action so taken is signed by the holders owning not less than the minimum
amount of Preferred Securities in liquidation amount that would be necessary to
authorize or take such action at the meeting itself.
PROXIES
Each holder of a Preferred Security may authorize any person to act for it
by proxy on all matters but proxies will not be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every proxy
will be revocable at the pleasure of the holder of Preferred Securities
executing the proxy. Except as otherwise provided herein, all matters relating
to the giving, voting or validity of proxies will be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the applicable Trust were a Delaware
corporation and the holders of the Preferred Securities were stockholders of a
Delaware corporation.
GOVERNING LAW
Each declaration of trust and the related Preferred Securities will be
governed by and construed in accordance with the laws of the State of Delaware.
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DESCRIPTION OF THE GUARANTEES
The following description of the terms and provisions of the Guarantees
summarizes certain general terms that will apply to each Guarantee that First
Security delivers in connection with a series of Preferred Securities. This
description is not complete, and we refer you to the form of the guarantee
agreement, a copy of which we filed as an exhibit to the registration statement
of which this prospectus is a part.
When a Trust sells a series of its Preferred Securities, First Security
will execute and deliver a guarantee of that series of Preferred Securities (we
refer to each guarantee as a "Guarantee") under a Guarantee Agreement for the
benefit of the holders of these Preferred Securities. Only one guarantee will be
issued by First Security in connection with the issuance of Preferred Securities
by the applicable Trust. Each Guarantee Agreement will be qualified as an
indenture under the Trust Indenture Act of 1939. Unless the applicable
prospectus supplement states otherwise, The First National Bank of Chicago will
act as indenture trustee (which we refer to as the "Guarantee Trustee") under
each Guarantee Agreement. The Guarantee Trustee will hold each Guarantee for the
benefit of the holders of the Preferred Securities of the applicable Trust.
SPECIFIC TERMS OF THE GUARANTEES
Except as stated in the applicable prospectus supplement, First Security
will irrevocably and unconditionally agree to pay in full the following payments
or distributions on each corresponding series of Preferred Securities, to the
extent that they are not paid by, or on behalf of, the applicable Trust:
- any accumulated and unpaid distributions required to be paid on the
Preferred Securities, to the extent that the applicable Trust has
sufficient funds available for those payments at the time;
- the redemption price regarding any Preferred Securities called for
redemption, to the extent that the applicable Trust has sufficient funds
available for those redemption payments at such time; and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
the applicable Trust, unless the corresponding series of Junior
Subordinated Debentures are distributed to holders of the Preferred
Securities, the lesser of:
- the total liquidation amount of the Preferred Securities and all
accumulated and unpaid distributions on them to the date of payment;
and
- the amount of assets of the applicable Trust remaining available for
distribution to holders of the Preferred Securities.
First Security's obligation to make the payments described above under the
Guarantee may be satisfied by direct payment of the required amounts by First
Security to the holders of the applicable Preferred Securities or by causing the
applicable Trust to pay such amounts to these holders. In addition, First
Security's obligation to make the payments described above will exist regardless
of any defense, right of setoff or counterclaim that the applicable Trust may
have or assert.
Each Guarantee will apply only to the extent that the applicable Trust has
sufficient funds available to make the required payments. If First Security does
not make interest payments on the Junior Subordinated Debentures held by the
applicable Trust, then the Trust will not be able to pay distributions on the
Preferred Securities issued by the Trust and will not have funds legally
available for these payments.
NATURE OF THE GUARANTEE
First Security will, through the relevant declaration of trust, the
Guarantee, the Junior Subordinated Debentures and the Indenture, taken together,
fully and unconditionally guarantee the applicable Trust's obligations under the
Preferred Securities. No single document
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standing alone or operating in conjunction with fewer than all of the other
documents constitutes this guarantee. It is only the combined operation of these
documents that has the effect of providing a full and unconditional guarantee of
the applicable Trust's obligations under the Preferred Securities.
Each Guarantee will constitute a guarantee of payment and not of
collection. This means that the guaranteed party may institute a legal
proceeding directly against First Security to enforce its rights under a
Guarantee without first instituting a legal proceeding against any other person
or entity. In addition, each Guarantee will not be discharged except by payment
of the amounts due under it in full to the extent they have not been paid by the
applicable Trust or upon distribution of Junior Subordinated Debentures to the
holders of the Preferred Securities in exchange for all of these Preferred
Securities.
SUBORDINATION OF COMMON SECURITIES
First Security will also irrevocably and unconditionally guarantee the
obligations of the applicable Trust regarding that Trust's Common Securities to
the same extent as its guarantee of the applicable Preferred Securities, except
that upon the occurrence and the continuation of a Trust Enforcement Event
regarding the applicable Trust, holders of these Preferred Securities will have
priority over holders of the Common Securities regarding distributions and
payments on liquidation, redemption or otherwise.
RANKING
Each Guarantee will constitute an unsecured obligation of First Security
and will rank subordinate and junior in right of payment to all other
liabilities of First Security to the same extent as the Junior Subordinated
Debentures.
The Guarantees will not place a limitation on the amount of additional
senior debt that may be incurred by First Security.
CERTAIN COVENANTS OF FIRST SECURITY
In general, First Security will covenant in each Guarantee that, so long as
any Preferred Securities issued by a Trust remain outstanding, if
- there shall have occurred any event of default under the Indenture
regarding the applicable series of Junior Subordinated Debentures;
- First Security shall be in default regarding its payment of any
obligations under the related Guarantee; or
- First Security shall have given notice of its election to defer interest
payments on the Junior Subordinated Debentures, as described below under
the caption "Description of the Junior Subordinated Debentures -- Option
to Defer Interest" and First Security shall not have rescinded that
notice or begun making such payments,
then First Security will not, and will not permit any subsidiary to, do the
following:
- to declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment regarding, any of First Security's
capital stock; or
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of First Security that rank on a
par with or junior to the Junior Subordinated Debentures or make any
payments regarding any guarantee by First Security of the debt securities
of any subsidiary of First Security if such guarantee ranks on a par with
or junior to these Junior Subordinated Debentures.
At any time, however, First Security may do the following:
- pay dividends or make distributions on common stock of First Security;
- make payments under the applicable Guarantee made by First Security
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regarding Preferred Securities of the applicable Trust;
- declare a dividend in connection with the implementation of a
shareholders' rights plan, or issue stock under any such plan in the
future, or redeem or repurchase any rights issued pursuant to such a
plan; and
- purchase common stock related to the issuance of common stock or rights
under any of First Security's benefit plans.
AMENDMENTS
Unless otherwise specified in the applicable prospectus supplement, each
Guarantee may be amended under the following two circumstances:
- regarding changes to the Guarantee that do not materially adversely
affect the rights of holders of the applicable Preferred Securities, no
consent of such holders will be required; and
- all other amendments to the Guarantee may not be made without the prior
approval of the holders of not less than a majority of the total
liquidation amount of the outstanding Preferred Securities to which the
Guarantee relates.
The manner of obtaining the necessary approvals to amend a Guarantee are
the same as for holders of the Preferred Securities, which are described above
under "Description of the Preferred Securities -- Meetings of the Holders of
Securities".
ASSIGNMENT
All guarantees and agreements contained in a Guarantee will bind the
successors, assigns, receivers, trustees and representatives of First Security
and will inure to the benefit of the holders of the related Preferred Securities
then outstanding.
EVENTS OF DEFAULT AND REMEDIES
An event of default under a Guarantee will occur upon the failure of First
Security to perform any of its payment or other obligations under it.
The holders of not less than a majority in total liquidation amount of the
Preferred Securities to which a Guarantee relates have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee regarding the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under such Guarantee.
If the Guarantee Trustee fails to enforce a Guarantee, then any holder of
the corresponding series of Preferred Securities may institute a legal
proceeding directly against First Security to enforce the Guarantee Trustee's
rights under that Guarantee, without first instituting a legal proceeding
against the applicable Trust that issued the Preferred Securities, the Guarantee
Trustee or any other person or entity.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by First Security in performance of a Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee. After a default
under the Guarantee, which has not been cured or waived, that is actually known
to a responsible officer of the Guarantee Trustee, the Guarantee Trustee must
exercise the same degree of care and skill as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs. Subject to this
provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by a Guarantee at the request of any holder of Preferred
Securities to which the Guarantee relates unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred by
such action.
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TERMINATION OF THE GUARANTEES
Each Guarantee will terminate upon any of the following events:
- the full payment of the redemption price of all Preferred Securities of
the applicable Trust;
- the full payment of the amounts payable upon liquidation of the
applicable Trust; or
- the distribution of the Junior Subordinated Debentures held by the
applicable Trust to the holders of the Preferred Securities of the Trust
in exchange for all of the Preferred Securities of the Trust.
Each Guarantee will continue to be effective or will be reinstated, if at any
time any holder of related Preferred Securities issued by the applicable Trust
is required to restore payment of any sums paid under the applicable Preferred
Securities or the Guarantee.
GOVERNING LAW
The Guarantees will be governed by the laws of the State of New York,
including any matters of interpretation under them.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
The following summary of the terms and provisions of the Junior
Subordinated Debentures of First Security that will be issued and sold by First
Security and purchased by the applicable Trust that issues a series of Preferred
Securities. It is not complete, and we refer you to the Indenture and the form
of the Junior Subordinated Debentures, which we filed as exhibits to the
registration statement of which this prospectus is a part.
Unless otherwise specified in the applicable prospectus supplement, each
time that First Security issues a new series of Junior Subordinated Debentures
that series will be issued under an Indenture between First Security and The
First National Bank of Chicago, as Indenture Trustee (which we refer to as the
"Indenture Trustee"). The Indenture provides for the issuance from time to time
of Junior Subordinated Debentures in an unlimited dollar amount and an unlimited
number of series. Only one series of the Junior Subordinated Debentures will be
issued by each Trust in connection with the issuance of Preferred Securities by
that Trust.
Unless the applicable prospectus supplement states otherwise, First
Security will issue each new series of Junior Subordinated Debentures in a total
principal amount equal to the total liquidation amount of the Preferred
Securities that the applicable Trust sells to the public plus the total amount
of Common Securities that the applicable Trust sells to First Security.
Concurrently with the issuance of the Preferred Securities, the applicable Trust
will invest the proceeds from that issuance and the consideration paid by First
Security for the Common Securities in the corresponding series of Junior
Subordinated Debentures issued by First Security. Unless the applicable
prospectus supplement states otherwise, the interest payment provisions for the
Junior Subordinated Debentures will correspond to the distribution provisions of
the corresponding series of Preferred Securities.
SPECIFIC TERMS OF EACH SERIES
Each time that First Security issues and sells a new series of Junior
Subordinated Debentures to the applicable Trust, the prospectus supplement
relating to that new series will specify the particular amount, price and other
terms of these securities. These terms will include:
- the title of the Junior Subordinated Debentures of the series, which will
distinguish the Junior Subordinated Debentures of the series from all
other Junior Subordinated Debentures;
- the limit, if any, upon the total principal amount of the Junior
Subordinated Debentures of the series which may be issued;
- the maturity or the method of determining the maturity;
- the rate or rates, if any, at which the Junior Subordinated Debentures of
the series will bear interest, if any, the rate or rates and extent to
which interest on overdue amounts, if any, will be payable in respect of
any Junior Subordinated Debentures of the series;
- the interest payment dates and the record dates for the interest payable
on any interest payment date or the method by which any of the foregoing
will be determined;
- the place or places where the principal of and premium, if any, and
interest on the Junior Subordinated Debentures of the series will be
payable, the place or places where the Junior Subordinated Debentures of
the series may be presented for registration of transfer or exchange and
the place or places where notices and demands to or upon First Security
regarding the Junior Subordinated Debentures of the series may be made;
- the period or periods within which, or the date or dates on which, if
any, the price or prices at which and the terms
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and conditions upon which the Junior Subordinated Debentures of the
series may be redeemed, in whole or in part, at the option of First
Security;
- the obligation or the right, if any, of First Security to redeem, repay
or purchase the Junior Subordinated Debentures of the series pursuant to
any sinking fund, amortization or analogous provisions or upon the
happening of a specified event, or at the option of a holder of that
security, and the period or periods within which, the price or prices at
which, the currency or currencies (including currency unit or units) in
which and the other terms and conditions upon which Junior Subordinated
Debentures of the series will be redeemed, repaid or purchased, in whole
or in part, pursuant to that obligation;
- the denominations in which any Junior Subordinated Debentures of the
series will be issuable, if other than denominations of $25 and any
integral multiple thereof;
- if other than U.S. dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if any)
and interest, if any, on the Junior Subordinated Debentures of the series
will be payable, or in which the Junior Subordinated Debentures of the
series will be denominated;
- the additions, modifications or deletions, if any, in the events of
default described under the caption "-- Events of Default" below or
covenants of First Security described in this prospectus or the
applicable prospectus supplement regarding the Junior Subordinated
Debentures of the series;
- if other than the principal amount thereof, the portion of the principal
amount of Junior Subordinated Debentures of the series that will be
payable upon declaration of acceleration of the maturity of the Junior
Subordinated Debentures;
- the additions or changes, if any, to the Indenture regarding the Junior
Subordinated Debentures of the series as will be necessary to permit or
facilitate the issuance of the Junior Subordinated Debentures of the
series in bearer form, registrable or not registrable as to principal,
and with or without interest coupons;
- any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Junior Subordinated Debentures
of the series or the manner in which the amounts will be determined;
- whether the Junior Subordinated Debentures of the series, or any portion
thereof, will initially be issuable in the form of a temporary global
security representing all or the portion of the Junior Subordinated
Debentures of the series and provisions for the exchange of the temporary
global security for definitive Junior Subordinated Debentures of the
series;
- whether any Junior Subordinated Debentures of the series will be issuable
in whole or in part in the form of one or more global securities and, in
the case, the respective depositaries for the global securities, the form
of any legend or legends which will be borne by any global security, if
applicable;
- the appointment of any Paying Agent or Agents for the Junior Subordinated
Debentures of the series;
- the terms of any right to convert or exchange Junior Subordinated
Debentures of the series into any other Junior Subordinated Debentures or
other securities or property of First Security, and the additions or
changes, if any, to the Indenture regarding the Junior Subordinated
Debentures of the series to permit or facilitate the conversion or
exchange;
- the relative degree, if any, to which the Junior Subordinated Debentures
of the
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series will be senior to or be subordinated to other series of Junior
Subordinated Debentures in right of payment, whether the other series of Junior
Subordinated Debentures are outstanding or not; and
- any other terms of the Junior Subordinated Debentures of the series
(which terms will not be inconsistent with the provisions of the
Indenture).
RANKING
Unless otherwise stated in the applicable prospectus supplement, each
series of Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all senior debt of First Security.
SUBORDINATION
First Security's obligations under the Junior Subordinated Debentures will
be subordinate to all existing and future senior debt of First Security. In
addition, the Junior Subordinated Debentures will be effectively subordinated to
all existing and future obligations of First Security's subsidiaries. First
Security's obligations under the Guarantees are subordinated to the same extent
as the Junior Subordinated Securities. This means that First Security cannot
make any payments on the Junior Subordinated Debentures or the Guarantees if
First Security is in default on any of its senior debt.
In addition, in the event of the bankruptcy, liquidation or dissolution of
First Security, its assets must be used to pay off its senior obligations in
full before any payments may be made on the Junior Subordinated Debentures or
the Guarantees. As of December 31, 1998, First Security had outstanding senior
debt of approximately $609 million. The Indenture, the Guarantees and the
declaration of trusts do not limit First Security's ability to incur additional
senior debt. For more information, see above under the caption "-- Ranking" in
this section and below under the caption "Description of the
Guarantees -- Ranking" in this prospectus.
As a holding company, First Security's assets primarily consist of the
equity securities of its subsidiaries. As a result, its cash flow and consequent
ability to service its debt, including the Junior Subordinated Debentures, are
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to First Security, or upon loans or other payments of funds by those
subsidiaries to First Security. First Security's subsidiaries are separate and
distinct legal entities and will have no obligation, contingent or otherwise, to
pay any interest or principal on the Junior Subordinated Debentures or to make
any funds available therefor, whether by dividends, loans or other payments. The
payment of dividends by First Security's subsidiaries is contingent upon the
earnings of those subsidiaries and is subject to various business considerations
in addition to the requirements of federal bank and other regulators and
contractual restrictions.
In addition, since the Junior Subordinated Debentures will be obligations
of a holding company, the ability of holders of the Junior Subordinated
Debentures to benefit from any distribution of assets of any subsidiary upon the
liquidation or reorganization of such subsidiary is subordinate to the prior
claims of present and future creditors of that subsidiary.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Unless stated otherwise in the applicable prospectus supplement, First
Security may dissolve and liquidate a Trust and, thereafter, the Property
Trustee would distribute to holders of the corresponding Preferred Securities
and Common Securities the Junior Subordinated Debentures of the series that that
Trust had held as its sole asset. If the Property Trustee distributes the Junior
Subordinated Debentures to the holders of the Preferred Securities and the
Common Securities upon the dissolution and liquidation of that Trust, then the
Junior Subordinated Debentures will be issued in denominations of $25 principal
amount and integral multiples thereof. First Security anticipates that the
Junior Subordinated Debentures would be distributed in the form of one or more
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global securities and that DTC, or any successor depositary for the Preferred
Securities, would act as depositary for the Junior Subordinated Debentures. The
depositary arrangements for the Junior Subordinated Debentures would be
substantially the same as those in effect for the Preferred Securities. For a
description of DTC and the terms of the depositary arrangements relating to
payments, transfers, voting rights, redemption and other notices and other
matters for the Preferred Securities, see the caption below under "Book-Entry
Issuance" in this prospectus.
OPTION TO DEFER INTEREST PAYMENTS
OPTION TO DEFER INTEREST PAYMENTS
Unless otherwise stated in the applicable prospectus supplement, First
Security will have the right to defer interest payments on the Junior
Subordinated Debentures for up to five years of consecutive interest payment
periods if the Junior Subordinated Debentures are not in default, but the
deferral of interest payments cannot extend beyond the maturity date of the
series of Junior Subordinated Debentures. During the deferral period, interest
will continue to accrue on the Junior Subordinated Debentures, compounded on the
same periodic basis upon which interest otherwise accrues and deferred interest
payments will accrue additional interest. No interest will be due and payable on
the Junior Subordinated Debentures until the end of the deferral period except
upon a redemption of the Junior Subordinated Debentures during a deferral
period.
First Security may pay at any time all or any portion of the interest
accrued to that point during a deferral period. At the end of the deferral
period, or on any redemption date, First Security will be obligated to pay all
accrued and unpaid interest. Once First Security pays accrued and unpaid
interest on the Junior Subordinated Debentures, it will again be able to defer
interest payments on the Junior Subordinated Debentures as described above.
CERTAIN LIMITATIONS DURING A DEFERRAL PERIOD
During any deferral period, neither First
Security or any of its subsidiaries will be permitted to:
- pay a cash dividend or make any other payment or distribution on First
Security's capital stock;
- redeem, purchase or make a liquidation payment on any of First Security's
capital stock;
- make an interest, principal or premium payment, or repay, repurchase or
redeem, any of First Security's Junior Subordinated Debentures that rank
equal with or junior to the Junior Subordinated Debentures; or
- make any guarantee payment regarding any guarantee by First Security of
Junior Subordinated Debentures of any of its subsidiaries, if the
guarantee ranks equal with or junior to the Junior Subordinated
Debentures.
However, at any time, including during a deferral period, First Security
will be permitted to:
- pay dividends or distributions in additional shares of its capital stock;
- make payments under the Guarantee of the series of the Preferred
Securities and the Common Securities;
- declare or pay a dividend in connection with the implementation of a
shareholders' rights plan, or issue stock under such a plan or repurchase
such rights; and
- purchase common stock for reissuance pursuant to an employee benefit,
dividend reinvestment or stock repurchase plan, or for issuance in an
acquisition transaction that was entered into prior to the commencement
of that deferral period.
NOTICE PROVISIONS
If the Property Trustee is the sole holder of the Junior Subordinated
Debentures, First Security will give the applicable Trust, the applicable
Regular Trustees and Property
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Trustee notice if it decides to defer interest payments on the Junior
Subordinated Debentures. First Security will give that notice one business day
before the earlier of:
- the next date distributions on the Preferred Securities are payable; or
- the date the applicable Trust is required to give notice to the New York
Stock Exchange (or any other applicable self-regulatory organization) or
to holders of the corresponding series of Preferred Securities of the
record date or the date any distribution is payable, but in any event at
least one business day before the record date.
The Regular Trustees will give notice to the holders of Preferred
Securities if First Security decides to defer interest payments on the Junior
Subordinated Debentures.
If the Property Trustee is not the sole holder of the Junior Subordinated
Debentures, First Security will give the holders notice of any deferral period
ten business days prior to the earlier of:
- the next interest payment date; or
- the date First Security is required to give notice to the New York Stock
Exchange (or any other applicable self-regulatory organization) or to
holders of the Junior Subordinated Debentures of the record date or
payment, date of any related interest payment, but in any event at least
two business days prior to the record date.
COVENANTS
LIMITATION ON CERTAIN PAYMENTS
First Security will covenant that, so long as any Preferred Securities
issued by a Trust
remain outstanding, if
- there will have occurred any event of default under the Indenture;
- First Security will be in default regarding its payment of any
obligations under its Guarantee regarding the Trust; or
- First Security will have given notice of its election of to defer
interest payments, as described above under "-- Option to Defer Interest
and Notices", or such deferral period or any extension of it will be
continuing;
then First Security will not, and will not permit any subsidiary to:
- declare or pay any cash dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment regarding, any of First
Security's capital stock; or
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any Junior Subordinated Debentures of First Security
that rank on a par with or junior in interest to such Junior Subordinated
Debentures;
- or make any guarantee payments regarding any guarantee by First Security
of the Junior Subordinated Debentures of any subsidiary of First Security
if such guarantee ranks on a par with or junior in interest to such
Junior Subordinated Debentures.
However, at any time, including during a deferral period, First Security
may do the following:
- pay dividends or distributions in common stock of First Security;
- make payments under the applicable Guarantee made by First Security in
respect of the Preferred Securities of the applicable Trust;
- make any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such
plan in the future, or the redemption or repurchase of any such rights
pursuant thereto; and
- purchase common stock related to the issuance of common stock or rights
under any of First Security's benefit plans.
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CERTAIN AFFIRMATIVE COVENANTS
First Security will covenant to:
- maintain directly or indirectly 100% ownership of the Common Securities
of the applicable Trust;
- cause the applicable Trust to remain a Delaware business trust and not to
voluntarily dissolve, windup, liquidate or be terminated, except as
permitted by the relevant declaration of trust;
- use its commercially reasonable efforts to ensure that the trust will not
be an "investment company" for purposes of the Investment Company Act of
1940; and
- take no action that would be reasonably likely to cause the trust to be
classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.
LIMITATION ON CONSOLIDATION, MERGER AND CERTAIN SALES
First Security may not consolidate with or merge into any other entity or
sell or lease its properties and assets substantially as an entirety to any
entity, unless:
- the resulting entity shall be a corporation, partnership or trust
organized under U.S. law;
- the resulting entity assumes First Security's obligations under the
Junior Subordinated Debentures and the Indenture;
- there would be no event of default under the Indenture immediately after
giving effect to the transaction; and
- in the case of the Junior Subordinated Debentures of a series held by a
Trust, the consolidation, merger, conveyance, transfer or lease is
permitted under the relevant declaration of trust and the Guarantee and
does not give rise to any breach or violation of these documents.
NO EVENT RISK COVENANT
In addition, the Indenture does not contain any covenants that provide
holders of Junior Subordinated Debentures protection in the event of a highly
leveraged transaction, reorganization, restructuring, merger or other similar
transaction involving First Security, which may adversely affect holders of
Junior Subordinated Debentures.
DENOMINATIONS
The Junior Subordinated Debentures will be issuable only in registered
form, without coupons, and only in denominations of $25 and any integral
multiples thereof, unless the applicable prospectus supplement states otherwise.
EVENTS OF DEFAULT, ACCELERATION, RESCISSION OF ACCELERATION AND WAIVERS
EVENTS OF DEFAULT
An event of default regarding any series of Junior Subordinated Debentures
under the Indenture is any one of the following events:
- default in the payment of interest, including interest on overdue
amounts, for a period of 30 days, subject to First Security's right to
defer interest payments as described above under the caption "-- Option
to Defer Interest Payments" in this section;
- default in the payment of the principal of or premium, if any;
- default in the performance, or breach, in any material respect, of any
covenant or warranty of First Security for a period of 90 days after
notice to First Security by the Indenture Trustee or to First Security
and the Indenture Trustee by holders of at least 25% in principal amount
of the outstanding Junior Subordinated Debentures of that series;
- certain events of bankruptcy, insolvency and reorganization of First
Security; or
- any other event of default pertaining to the particular series of Junior
Subordinated Debentures.
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ACCELERATION
If an event of default of the Junior Subordinated Debentures occurs and is
continuing, then the Indenture Trustee or the holders of at least 25% in total
principal amount of the outstanding Junior Subordinated Debentures will have the
right to declare the principal and the interest due on these securities to be
due and payable immediately. If, upon such an event of default, the Indenture
Trustee or holders of at least 25% of the total principal amount of the
outstanding Junior Subordinated Debentures fail to declare the payment of all
amounts on these securities to be due and payable immediately, then the holders
of at least 25% in total liquidation amount of the Preferred Securities then
outstanding will have the right to declare these amounts due and payable
immediately.
RESCISSION OF ACCELERATION
At any time after a declaration of acceleration, as described in the
preceding paragraph, has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee, then the holders of
a majority in total principal amount of the outstanding Junior Subordinated
Debentures may rescind the declaration of acceleration if both of the following
events have occurred:
- First Security has paid or deposited with the Indenture Trustee amounts
sufficient to pay the sum of:
(1) all overdue interest;
(2) the principal that has become due, other than by acceleration, and
interest on it at the rate borne by the Junior Subordinated
Debentures;
(3) interest on overdue interest at the rate borne by the Junior
Subordinated Debentures, to the extent that that rate of interest
is lawful; and
(4) all amounts paid or advanced by the Indenture Trustee and its and
its counsel's reasonable fees and expenses; and
- all events of default regarding that series of Junior Subordinated
Debentures have been cured or waived as described below under the caption
"-- Waiver".
If the holders of the Junior Subordinated Debentures fail to rescind the
declaration of acceleration, then the holders of a majority in total liquidation
amount of the Preferred Securities will have that right.
WAIVERS
In certain cases, the holders of a majority in principal amount of the
outstanding series of Junior Subordinated Debentures may, on behalf of the
holders of all Junior Subordinated Debentures of that series, waive any past
default or event of default regarding that series or compliance with certain
provisions of the Indenture. The following defaults may not, however, be waived:
- default in the payment of the principal of and premium or interest on any
of that series which has not been cured until that time; or
- a default regarding a covenant or provision of the Indenture which cannot
be modified or amended,
without the consent of the holder of each outstanding Debt Security of the
series affected.
Notwithstanding the rights of the holders the Junior Subordinated
Debentures to waive certain events of default, covenants and other provisions,
as described above, the holders of at least a majority of the total liquidation
amount of the outstanding Preferred Securities will be required to waive any
event of default or compliance with any covenant under the Indenture.
AGREEMENT BY PURCHASERS OF CERTAIN TAX
TREATMENT
Each Junior Subordinated Debenture will provide that First Security and, by
its acceptance of the Junior Subordinated Debenture, or a beneficial interest
therein, the other holders of
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<PAGE> 67
that Junior Subordinated Debenture intend that the security constitutes debt and
agrees to treat it as debt for United States federal, local and state tax
purposes.
SATISFACTION AND DISCHARGE
At First Security's request, the Indenture will terminate as to the Junior
Subordinated Debentures of any series (except as to any surviving rights of
registration of transfer or exchange of Junior Subordinated Debentures) when
either:
- all the Junior Subordinated Debentures of that series have been delivered
to the Indenture Trustee for cancellation; or
- all the Junior Subordinated Debentures of that series have become due and
payable, will become due and payable at their maturity within one year or
are to be called for redemption within one year and First Security has
deposited with the Indenture Trustee funds sufficient to make all
remaining interest and principal payments on the Junior Subordinated
Debentures of that series.
AMENDMENTS
AMENDMENTS WITHOUT CONSENT OF HOLDERS
Without the consent of each holder of the Junior Subordinated Debentures,
First Security and the Indenture Trustee may enter into one or more supplemental
indentures to do the following:
- to evidence the succession of another party to First Security and the
assumption by that party of the covenants of First Security under the
Indenture;
- to add to the covenants of First Security for the benefit of the holders
of the Junior Subordinated Debentures;
- to cure any ambiguity, to correct or supplement any provision of the
Indenture which may be inconsistent with any other or to make any other
provision which regarding matters or questions under the Indenture;
provided that any such supplemental indenture may not materially
adversely affect the interests of the holders of the Junior Subordinated
Debentures or the related Preferred Securities; or
- to comply with the requirements of the SEC to effect or maintain the
qualification of the Indenture under the Trust Indenture Act of 1939.
AMENDMENTS WITH CONSENT OF HOLDERS
Without the consent of each holder of an outstanding Junior Subordinated
Debenture, First Security and the Indenture Trustee may not amend the Indenture
to effect the following changes to the terms and provisions of the Junior
Subordinated Debentures:
- to change their maturity;
- to change or reduce the principal amount due;
- to change the interest rate on or any installment of interest due;
- to change the place of payment or the currency in which payment is due;
- to impair the right to sue for enforcement of any such payment on or
after the maturity or redemption date of the Junior Subordinated
Debentures;
- to modify the subordination provisions in a manner adverse to the holders
of the Junior Subordinated Debentures;
- to reduce the outstanding principal amount of Junior Subordinated
Debentures that is required for any supplemental indenture or the waiver
of defaults or Events of Default; or
- to modify this section regarding amendments or the provisions regarding
the waiver of past defaults;
provided that no such modifications may be made that adversely affects the
holders of the Preferred Securities.
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AMENDMENTS WITHOUT CONSENT OF HOLDERS
OF PREFERRED SECURITIES
Without the consent of each of the holders of Preferred Securities, no
amendment may be made to the Indenture that adversely affects the rights of
these holders to directly institute a proceeding against First Security for the
enforcement of the payment of interest of or principal on the Junior
Subordinated Debentures in the amount of such holders' total liquidation amount
of Preferred Securities.
PAYMENTS AND PAYING AGENTS
At the option of First Security, interest on any series of Junior
Subordinated Debentures may be paid:
- by check mailed to the address of the Person entitled thereto as it will
appear on the Junior Subordinated Debentures Register of the series or
- by wire transfer in immediately available funds at the place and to the
account as designated by the person entitled to such payment.
Initially, the Paying Agent will be The First National Bank of Chicago.
First Security may change the Paying Agent and may perform that role or have one
of its subsidiaries act as Paying Agent.
REGISTRATION, TRANSFER AND EXCHANGE
The Indenture Trustee will keep a security register to register the Junior
Subordinated Debentures and to register the transfer and exchanges of Junior
Subordinated Debentures for each Trust. Holders of Junior Subordinated
Debentures may register the transfer of a security upon surrender of the
security thus exchanged or transferred. Holders of Junior Subordinated
Debentures of any series may exchange their securities for an equal principal
amount of other Junior Subordinated Debentures of different authorized
denominations of the same series and with the same terms. First Security will
not charge a fee to holders of Junior Subordinated Debentures for any transfer
or exchange of these securities, but First Security may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Securities.
MUTILATED, DESTROYED, LOST AND STOLEN
SECURITIES
First Security will replace any mutilated, destroyed, lost or stolen Junior
Subordinated Debenture in exchange for a new Junior Subordinated Debenture of
the same series of like tenor and principal amount and other terms. Upon the
issuance of any new security, First Security may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses, including the fees and expenses of the
Trustee, connected with it.
INFORMATION REGARDING THE INDENTURE TRUSTEE
The Indenture Trustee, other than during the occurrence and continuance of
a default by First Security under the Indenture, undertakes to perform only such
duties as are specifically set forth in the Indenture. After a default under the
Indenture, which has not been cured or waived, that is actually known to a
responsible officer of the Indenture Trustee, the Indenture Trustee must
exercise the same degree of care and skill as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs. Subject to this
provision, the Indenture Trustee is under no obligation to exercise any of the
powers vested in it by an Indenture at the request of any holder of Junior
Subordinated Debentures unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred by such action.
GOVERNING LAW
The Indenture will be governed by the laws of the State of New York,
including any matters of interpretation under them.
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BOOK-ENTRY ISSUANCE
We have summarized below certain terms relating to the book-entry
facilities of the depositary for the Preferred Securities. To the extent that
this summary is inconsistent with the book-entry provisions and description of
the Preferred Securities in the accompanying prospectus supplement, you should
rely on the description in the accompanying prospectus supplement.
The Preferred Securities of each series will be represented by one or more
global securities that will be deposited with and registered in the name of DTC
or its nominee. This means that each time a Trust issues a new series of
Preferred Securities, it will not issue physical certificates that represent
ownership of the Preferred Securities to the purchasers of these securities.
Rather, the Preferred Securities will be represented by one or more global
securities. Each global security will be issued to DTC, or its nominee, and held
by or on behalf of DTC, or its nominee. DTC will keep a computerized record of
its participants (for example, a broker) whose clients have purchased the
Preferred Securities. Each participant will then keep a record of its clients.
Unless it is exchanged in whole or in part for a certificated security, a global
security may not be transferred. However, DTC, its nominees and their successors
may transfer a global security as a whole to one another.
In the event that Junior Subordinated Debentures are distributed to holders
of the corresponding series of Preferred Securities and Common Securities, as
described under "Description of the Junior Subordinated
Debentures -- Distribution of Junior Subordinated Debentures" in this
prospectus, those Junior Subordinated Debentures would be represented by one or
more global securities. The book-entry and depositary arrangements for these
securities would be substantially similar to those described below for the
Preferred Securities.
RECORDS OF BENEFICIAL INTERESTS
Beneficial interests in a global security will be shown on, and transfers
of the global security will be made only through, records maintained by DTC and
its participants. DTC has provided the Trusts and First Security with the
information that follows. DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the United States Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under the provisions of Section 17A of
the Securities Exchange Act of 1934. DTC holds securities that its participants
(which it terms its "direct participants") deposit with DTC. DTC also records
the settlements among direct participants of securities transactions, such as
transfers and pledges, in deposited securities through computerized records for
direct participants' accounts. This eliminates the need to exchange certificates
in definitive form. Direct participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on file
with the SEC.
DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
When you purchase Preferred Securities through the DTC system, the
purchases must be made by or through a direct participant, who will receive
credit for the Preferred Securities on DTC's records. When you purchase the
Preferred Securities, you will be the beneficial owner. Your ownership interest
will only be recorded on the direct (or indirect) participants' records. DTC
will have no knowledge of your individual ownership of the Preferred Securities.
DTC's records only show the identity of the direct participants and the amount
of the
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Preferred Securities held by or through them. You will not receive a written
confirmation of your purchase or sale or any periodic account statement directly
from DTC. Instead you will receive these from your direct (or indirect)
participant. As a result, the direct (or indirect) participants are responsible
for keeping accurate account of the securities holdings of their customers like
you.
WIRING OF PAYMENTS
Each time that a Trust issues a new series of Preferred Securities, the
Property Trustee will wire payments on the Preferred Securities to DTC's
nominee. First Security, the Trust and the Property Trustee will treat DTC's
nominee as the owner of each global security for all purposes. As a result,
First Security, the Trust, the Property Trustee and any paying agent will have
no direct responsibility or liability to pay amounts due on the global security
to you or any other beneficial owners in the global security.
REDEMPTION
Any redemption notices will be sent by First Security and the Trust
directly to DTC, who will, in turn, inform the direct participants (or the
indirect participants), who will then contact you as a beneficial holder. If
less than all of the Preferred Securities are being redeemed, DTC will
proportionally allot the amount of the interest of each direct participant to be
redeemed.
It is DTC's current practice, upon receipt of any payment of distributions
or liquidation amount, to credit direct participants' accounts on the payment
date based on their holding of beneficial interests in the global securities as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to direct participants whose accounts are credited
with Preferred Securities on a record date, by using an omnibus proxy. Payments
by participants to owners of beneficial interests in the global securities, and
voting by participants, will be based on the customary practices between the
participants and owners of beneficial interests. However, payments will be the
responsibility of the participants and not of DTC, the Property Trustee, First
Security or the Trust.
EXCHANGES
Preferred Securities represented by a global security will be exchangeable
for certificated securities with the same terms in authorized denominations only
if:
- DTC is unwilling or unable to continue as depositary or if DTC ceases to
be a clearing agency registered under applicable law and a successor
depositary is not appointed by the Trust within 90 days; or
- the Trust decides to discontinue use of the system of book-entry transfer
through DTC (or any successor depositary).
If the book-entry only system is discontinued, the Property Trustee will
keep the registration books for the Preferred Securities of each Trust at its
corporate office.
EUROCLEAR AND CEDEL
Links have been established among DTC, Cedel and Euroclear, to facilitate
the initial issuance of the Preferred Securities and cross-market transfers of
the Preferred Securities associated with secondary market trading.
Although DTC, Cedel and Euroclear have agreed to the procedures provided
below in order to facilitate transfers of the Preferred Securities among their
participants, they are under no obligation to perform or continue to perform
such procedures and such procedures may be modified or discontinued at any time.
Cedel and Euroclear will hold interests on behalf of their participants through
customers' securities accounts in Cedel's and Euroclear's names on the books of
their respective depositaries (which we refer to as the "U.S. depositaries"),
which in turn will hold such interests in customers' securities accounts in the
depositaries' names on the books of DTC.
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When Preferred Securities are to be transferred from the account of a DTC
participant to the account of a Cedel participant or a Euroclear participant,
the purchaser must send instructions to Cedel or Euroclear through a participant
at least one business day prior to settlement. Cedel or Euroclear, as the case
may be, will instruct the relevant U.S. depositary to receive the Preferred
Securities against payment. Payment will then be made by such U.S. depositary to
the DTC participant's account against delivery of the Preferred Securities.
After settlement has been completed, the Preferred Securities will be credited
to the respective clearing system and by the clearing system, in accordance with
its usual procedures, to the Cedel participant's or Euroclear participant's
account. Credit for the Preferred Securities will appear on the next day (in
European time).
Because the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Preferred Securities
to the relevant U.S. depositary for the benefit of Cedel participants or
Euroclear participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC participant, a cross-market transaction
will settle no differently than a trade between two DTC participants.
Due to time zone differences in their favor, Cedel participants or
Euroclear participants may employ their customary procedures for transactions in
which Preferred Securities are to be transferred by the respective clearing
system through the relevant U.S. depositary to another DTC participant. The
seller must send instructions to Cedel or Euroclear through a participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct its U.S. depositary to credit the Preferred Securities to the DTC
participant's account against payment. The payment will then be reflected in the
account of the Cedel participant or Euroclear participant the following day, and
receipt of the cash proceeds in the Cedel participant's or Euroclear
participant's account will be back-valued to the value date (which would be the
preceding day, when settlement occurs in New York). If the Cedel participant or
Euroclear participant has a line of credit with its respective clearing system
and elects to draw on such line of credit in anticipation of receipt of the sale
proceeds in its account, the back-valuation may substantially reduce or offset
any overdraft charges incurred over the one-day period. If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedel participant's or Euroclear participant's account
would instead be valued as of the actual settlement date.
YEAR 2000 PROBLEM
DTC's management is aware that some computer applications, systems and the
like for processing data that are dependent upon calendar dates, including dates
before, on, and after January 1, 2000, may encounter "Year 2000 problems". DTC
has informed its participants and other members of the financial community that
it has developed and is implementing a program so that its systems, as the same
relate to the timely payment of distributions (including principal and interest
payments) to security holders, book-entry deliveries and settlement of trades
within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information of the provision of
services, including telecommunications and electrical utility service providers,
among others. DTC has informed its participants and other members of the
financial community that it is contacting (and will continue to contact)
third-party vendors from whom DTC acquires services to impress upon them the
importance of such
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service being Year 2000 compliant and determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, DTC is in the process of developing such contingency plans as it deems
appropriate.
ERISA MATTERS
First Security may be considered a "party in interest" within the meaning
of the Employee Retirement Income Security Act of 1974, as amended (which we
refer to as "ERISA"), and a "disqualified person" under corresponding provisions
of the Code, regarding certain employee benefit plans. Certain transactions
between an employee benefit plan and a party in interest or disqualified person
may result in "prohibited transactions" within the meaning of ERISA and the
Code. Any employee benefit plan proposing to invest in the Preferred Securities
should consult with its legal counsel.
PLAN OF DISTRIBUTION
The Trusts may sell their Preferred Securities in any of three ways:
- through underwriters;
- through agents; or
- directly to a limited number of institutional purchasers or to a single
purchaser.
The prospectus supplement for each series of Preferred Securities will
describe that offering, including:
- the name or names of any underwriters;
- the purchase price and the proceeds to us from that sale;
- any underwriting discounts and other items constituting underwriters'
compensation;
- any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers; and
- any securities exchanges on which the Securities of that series may be
listed.
UNDERWRITERS
If underwriters are used in the sale, we will execute an underwriting
agreement with those underwriters. Unless otherwise set forth in the prospectus
supplement, the obligations of the underwriters to purchase Preferred Securities
will be subject to certain conditions. The underwriters will be obligated to
purchase all of the Preferred Securities of a series if any are purchased.
The Preferred Securities will be acquired by the underwriters for their own
account and may be resold by them from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Underwriters may be deemed to
have received compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from the purchasers of Preferred
Securities for whom they may act as agent. Underwriters may sell Preferred
Securities to or through dealers. These dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
We may authorize underwriters to solicit offers by certain types of
institutions to purchase Preferred Securities from us at the public offering
price stated in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. If we sell
Preferred Securities pursuant to these delayed delivery contracts, the
prospectus supplement will state that as well as the conditions to which these
delayed delivery contracts will be subject
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and the commissions payable for that
solicitation.
AGENTS
We may also sell Preferred Securities through agents designated by us from
time to time. We will name any agent involved in the offer or sale of the
Preferred Securities and will list commissions payable by us to these agents in
the applicable prospectus supplement. These agents will be acting on a best
efforts basis to solicit purchases for the period of its appointment, unless we
state otherwise in the prospectus supplement.
DIRECT SALES
We may sell Preferred Securities directly to purchasers. In this case, we
will not engage underwriters or agents in the offer and sale of Preferred
Securities.
INDEMNIFICATION
We may indemnify underwriters, dealers or agents who participate in the
distribution of Preferred Securities against certain liabilities, including
liabilities under the Securities Act of 1933, and agree to contribute to
payments which these underwriters, dealers or agents may be required to make.
NO ASSURANCE OF LIQUIDITY
Each series of Preferred Securities will be a new issue of securities with
no established trading market. Any underwriters that purchase Preferred
Securities from us may make a market in these Preferred Securities. The
underwriters will not be obligated, however, to make such a market and may
discontinue market-making at any time without notice to holders of the Preferred
Securities. As a result, we cannot assure you that there will be liquidity in
the trading market for any Preferred Securities of any series.
NASD REQUIREMENTS
The underwriting and agency arrangements for any offering of the Capital
Securities will comply with the requirements of Rule 2720 of the National
Association of Securities Dealers, Inc. (which we refer to as the "NASD")
regarding an NASD member firm's participating in distributing its affiliate's
securities.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the Preferred
Securities of each Trust will be passed upon for the Trusts and First Security
by Richards, Layton & Finger, P.A., Wilmington, Delaware. The validity of the
Junior Subordinated Debentures and the Guarantees will be passed upon for First
Security and the Trusts by Ray, Quinney & Nebeker, Salt Lake City, Utah, and,
unless otherwise specified in the applicable prospectus supplement, for any
underwriters or agents by Simpson Thacher & Bartlett, New York, New York. Ray,
Quinney & Nebeker and Simpson Thacher & Bartlett will rely as to certain matters
of Delaware law on the opinion of Richards, Layton & Finger, P.A., and Simpson
Thacher & Bartlett will rely as to matters of Utah law on the opinion of Ray,
Quinney & Nebeker. Certain United States federal income taxation and other
regulatory matters also will be passed upon for First Security and the Trusts by
Ray, Quinney & Nebeker.
Alonzo W. Watson, who is Assistant Secretary of First Security is a member
of the firm Ray, Quinney & Nebeker. A daughter of the Chairman and Chief
Executive Officer of First Security is also a member of Ray, Quinney & Nebeker.
At December 31, 1998, attorneys at Ray, Quinney & Nebeker, together with their
immediate families, beneficially owned less than 5% of the outstanding shares of
common stock of First Security.
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EXPERTS
The consolidated financial statements as of December 31, 1998 and 1997, and
for each of the three years in the period ended December 31, 1998 incorporated
in this prospectus by reference from First Security's Annual Report on Form 10-K
for the year ended December 31, 1998 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
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PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all fees and expenses incurred or
expected to be incurred by the Registrants in connection with the issuance and
distribution of the securities being registered hereby, other than underwriting
discounts and commissions. All but the Securities and Exchange Commission
registration fee are estimates and remain subject to future contingencies.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee......... $ 139,000
NASD fee.................................................... 30,500
New York Stock Exchange listing fee......................... 540,000
Legal fees and expenses..................................... 40,000
Accounting fees and expenses................................ 120,000
Trustees' fees and expenses................................. 48,000
Rating Agency fees.......................................... 250,000
Blue Sky fees and expenses.................................. 15,000
Printing and engraving fees and expenses.................... 150,000
Miscellaneous fees and expenses............................. 2,500
----------
Total.................................................. $1,335,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation law of Delaware (the "DGCL")
contains detailed provisions on indemnification of directors and officers of the
State of Delaware corporation against expenses, judgments, fines and amounts
paid in settlement, actually and reasonably incurred in connection with
litigation.
The Certificate of Incorporation of First Security Corporation provides for
indemnification of directors and officers to the full extent permitted or
allowed by the laws of the State of Delaware, as such laws exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the registrant to provide broader indemnification
rights than permitted or allowed by Section 145 of the DGCL). The registrant
also insures its officers and directors to the full extent permitted by Section
145 of the DGCL.
The Declaration of each Trust also provides that First Security shall
indemnify the Property Trustee or any of its affiliates, the Delaware Trustee or
any of its affiliates, or any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each, a "Fiduciary Indemnified
Person") for, and hold each Fiduciary Indemnified Person harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties under such Declaration.
The Declaration of Trust of each Trust (the "Declaration") also provides
that First Security will indemnify, to the full extent permitted by law, any
Regular Trustee, affiliate of any Regular Trustee or any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee or any affiliate thereof; or any officer, employee or agent of
such Trust or its affiliates (each, a "Debenture Issuer Indemnified Person") who
was or is a party or is threatened to be made
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a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such Trust) by reason of the fact that he is or was a
debenture Issuer Indemnified Person against expenses (including attorney fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of such Trust, and, regarding any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Debenture Issuer Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of such Trust, and, regarding any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful. The
Declaration also provides that First Security shall indemnify, to the full
extent permitted by law, any Debenture Issuer Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that he is or was a Debenture Issuer
Indemnified Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust and except that no
such indemnification shall be made in respect of any claim, issue or matter as
to which such Debenture Issuer Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper. The Declaration further provides that expenses (including
attorneys' fees) incurred by a Debenture Issuer Indemnified Person in defending
a civil, criminal, administrative or investigative action, suit or proceeding
referred to in the immediately preceding two sentences shall be paid by First
Security in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Debenture Issuer
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by First Security as authorized in the
Declaration.
Any underwriting agreement or agency agreement with respect to an offering
of securities registered hereunder will provide for indemnification of First
Security and its officers and directors who signed this registration statement
by the underwriters or agents, as the case may be, against certain liabilities
including liabilities under the Securities Act of 1933.
II-2
<PAGE> 77
ITEM 16. EXHIBITS
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
Exhibit 1(a)* Form of Underwriting Agreement.
Exhibit 4(a)* Indenture, dated as of March 30, 1999, relating to the
Junior Subordinated Debentures to be entered by and between
First Security Corporation and The First National Bank of
Chicago, as Indenture Trustee.
Exhibit 4(b)* Form of Guarantee Agreement to be entered by and between
First Security Corporation, as Guarantor, and The First
National Bank of Chicago, as Guarantor Trustee, for the
benefit of the holders of Preferred Securities.
Exhibit 4(c)* Form of Junior Subordinated Debenture (included in Article 2
of Exhibit 4(a) hereto).
Exhibit 4(d)* Certificate of Trust of First Security Capital II.
Exhibit 4(e)* Certificate of Trust of First Security Capital III.
Exhibit 4(f)* Certificate of Trust of First Security Capital IV.
Exhibit 4(g)* Certificate of Trust of First Security Capital V.
Exhibit 4(h)* Declaration of Trust of First Security Capital II.
Exhibit 4(i)* Declaration of Trust of First Security Capital III.
Exhibit 4(j)* Declaration of Trust of First Security Capital IV.
Exhibit 4(k)* Declaration of Trust of First Security Capital V.
Exhibit 4(l)* Form of Amended and Restated Declaration of Trust (included
as Annex B to Exhibit 4(a) hereto).
Exhibit 4(m)* Form of Preferred Security Certificate (included as Exhibit
A to Exhibit 4(l) hereto).
Exhibit 5(a)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital II.
Exhibit 5(b)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital III.
Exhibit 5(c)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital IV.
Exhibit 5(d)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital V.
Exhibit 5(e)* Opinion of Ray, Quinney & Nebeker as to the validity of the
Guarantee of each of First Security Capital II, First
Security Capital III, First Security Capital IV and First
Security Capital V.
Exhibit 8* Opinion of Ray, Quinney & Nebeker regarding certain tax
matters (included in Exhibit 5(e) hereto).
Exhibit 12(a)* Computation of Ratio of Earnings to Fixed Charges.
Exhibit 12(b)* Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividends.
Exhibit 23(a)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(a) hereto).
Exhibit 23(b)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(b) hereto).
Exhibit 23(c)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(c) hereto).
Exhibit 23(d)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(d) hereto).
</TABLE>
II-3
<PAGE> 78
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
Exhibit 23(e)* Consent of Ray, Quinney & Nebeker (included in Exhibit 5(e)
hereto).
Exhibit 23(f)* Consent of Ray, Quinney & Nebeker (included in Exhibit 8
hereto).
Exhibit 23(g)* Consent of Deloitte & Touche LLP.
Exhibit 24(a)** Powers of Attorney (included on page II-6 of this
Registration Statement).
Exhibit 25(a)* Statement of Eligibility and Qualification on Form T-1 under
the Trust Indenture Act of 1939, as amended ("Form T-1"), of
The First National Bank of Chicago to act as trustee with
respect to the Junior Subordinated Debentures and Guarantees
of First Security Corporation.
Exhibit 25(b)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Capital Securities of First Security
Capital II.
Exhibit 25(c)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Preferred Securities of First Security
Capital III.
Exhibit 25(d)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Preferred Securities of First Security
Capital IV.
Exhibit 25(e)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Preferred Securities of First Security
Capital V.
</TABLE>
- -------------------------
* To be filed by amendment.
** Filed herewith.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(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;
(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 that a 20 percent 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 (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and 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, as amended (the "Exchange Act") that are incorporated by reference
in the registration statement.
II-4
<PAGE> 79
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a registrant of expenses incurred or paid
by a director, officer or controlling person of such registrant in the
successful defense of any action suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 80
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, First Security
Corporation 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, the State of Utah, on March 30, 1999.
FIRST SECURITY CORPORATION
By: /s/ MORGAN J. EVANS
---------------------------------------
Name: Morgan J. Evans
Title: President and Chief Operating
Officer
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints A. Robert Thorup and R. Gary Winger
severally, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, and
in any and all capacities, to sign this Registration Statement and any and all
amendments to this Registration Statement of the Registrant, together with all
schedules and exhibits thereto, and to file the same with all scheduled exhibits
thereto and other documents in connection therewith with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, severally,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as each such person might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof,
all on March 30, 1999.
II-6
<PAGE> 81
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated and on March 30, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ SPENCER F. ECCLES Chairman of the Board and Chief Executive
- --------------------------------------------------- Officer (Chief Executive Officer)
Spencer F. Eccles
/s/ BRAD D. HARDY Executive Vice President and Chief Financial
- --------------------------------------------------- Officer (Principal Financial and Accounting
Brad D. Hardy Officer)
/s/ MORGAN J. EVANS President and Chief Operating Officer
- ---------------------------------------------------
Morgan J. Evans
/s/ JAMES C. BEARDALL Director
- ---------------------------------------------------
James C. Beardall
/s/ RODNEY H. BRADY Director
- ---------------------------------------------------
Rodney H. Brady
/s/ JAMES E. BRUCE Director
- ---------------------------------------------------
James E. Bruce
/s/ THOMAS D. DEE II Director
- ---------------------------------------------------
Thomas D. Dee II
/s/ DR. DAVID P. GARDNER Director
- ---------------------------------------------------
Dr. David P. Gardner
/s/ ROBERT H. GARFF Director
- ---------------------------------------------------
Robert H. Garff
/s/ JAY DEE HARRIS Director
- ---------------------------------------------------
Jay Dee Harris
/s/ ROBERT T. HEINER Director
- ---------------------------------------------------
Robert T. Heiner
/s/ KAREN H. HUNTSMAN Director
- ---------------------------------------------------
Karen H. Huntsman
/s/ G. FRANK JOKLIK Director
- ---------------------------------------------------
G. Frank Joklik
</TABLE>
II-7
<PAGE> 82
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ B. Z. KASTLER Director
- ---------------------------------------------------
B. Z. Kastler
/s/ DR. J. BERNARD MACHEN Director
- ---------------------------------------------------
Dr. J. Bernard Machen
/s/ JOSEPH G. MALOOF Director
- ---------------------------------------------------
Joseph G. Maloof
/s/ MICHELE PAPEN-DANIEL, PH.D. Director
- ---------------------------------------------------
Michele Papen-Daniel, Ph.D.
/s/ SCOTT S. PARKER Director
- ---------------------------------------------------
Scott S. Parker
/s/ JAMES L. SORENSON Director
- ---------------------------------------------------
James L. Sorenson
/s/ HAROLD J. STEELE Director
- ---------------------------------------------------
Harold J. Steele
/s/ JAMES R. WILSON Director
- ---------------------------------------------------
James R. Wilson
</TABLE>
II-8
<PAGE> 83
Pursuant to the requirements of the Securities Act of 1933, First Security
Capital II and First Security Capital III each certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and had duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Salt Lake City, the State of
Utah, on March 30, 1999.
FIRST SECURITY CAPITAL II
By: /s/ BRAD D. HARDY
---------------------------------------
Name: Brad D. Hardy
Title: Trustee
By: /s/ SCOTT C. ULBRICH
---------------------------------------
Name: Scott C. Ulbrich
Title: Trustee
By: /s/ DAVID R. WILSON
---------------------------------------
Name: David R. Wilson
Title: Trustee
FIRST SECURITY CAPITAL III
By: /s/ BRAD D. HARDY
---------------------------------------
Name: Brad D. Hardy
Title: Trustee
By: /s/ SCOTT C. ULBRICH
---------------------------------------
Name: Scott C. Ulbrich
Title: Trustee
By: /s/ DAVID R. WILSON
---------------------------------------
Name: David R. Wilson
Title: Trustee
II-9
<PAGE> 84
Pursuant to the requirements of the Securities Act of 1933, First Security
Capital IV and First Security Capital V each certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and had duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Salt Lake City, the State of
Utah, on March 30, 1999.
FIRST SECURITY CAPITAL IV
By: /s/ BRAD D. HARDY
---------------------------------------
Name: Brad D. Hardy
Title: Trustee
By: /s/ SCOTT C. ULBRICH
---------------------------------------
Name: Scott C. Ulbrich
Title: Trustee
By: /s/ DAVID R. WILSON
---------------------------------------
Name: David R. Wilson
Title: Trustee
FIRST SECURITY CAPITAL V
By: /s/ BRAD D. HARDY
---------------------------------------
Name: Brad D. Hardy
Title: Trustee
By: /s/ SCOTT C. ULBRICH
---------------------------------------
Name: Scott C. Ulbrich
Title: Trustee
By: /s/ DAVID R. WILSON
---------------------------------------
Name: David R. Wilson
Title: Trustee
II-10
<PAGE> 85
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
Exhibit 1(a)* Form of Underwriting Agreement.
Exhibit 4(a)* Indenture, dated as of March 30, 1999, relating to the
Junior Subordinated Debentures to be entered by and between
First Security Corporation and The First National Bank of
Chicago, as Indenture Trustee.
Exhibit 4(b)* Form of Guarantee Agreement to be entered by and between
First Security Corporation, as Guarantor, and The First
National Bank of Chicago, as Guarantor Trustee, for the
benefit of the holders of Preferred Securities.
Exhibit 4(c)* Form of Junior Subordinated Debenture (included in Article 2
of Exhibit 4(a) hereto).
Exhibit 4(d)* Certificate of Trust of First Security Capital II.
Exhibit 4(e)* Certificate of Trust of First Security Capital III.
Exhibit 4(f)* Certificate of Trust of First Security Capital IV.
Exhibit 4(g)* Certificate of Trust of First Security Capital V.
Exhibit 4(h)* Declaration of Trust of First Security Capital II.
Exhibit 4(i)* Declaration of Trust of First Security Capital III.
Exhibit 4(j)* Declaration of Trust of First Security Capital IV.
Exhibit 4(k)* Declaration of Trust of First Security Capital V.
Exhibit 4(l)* Form of Amended and Restated Declaration of Trust (included
as Annex B to Exhibit 4(a) hereto).
Exhibit 4(m)* Form of Preferred Security Certificate (included as Exhibit
A to Exhibit 4(l) hereto).
Exhibit 5(a)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital II.
Exhibit 5(b)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital III.
Exhibit 5(c)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital IV.
Exhibit 5(d)* Opinion of Richards, Layton & Finger, P.A. as to the
validity of the Preferred Securities of First Security
Capital V.
Exhibit 5(e)* Opinion of Ray, Quinney & Nebeker as to the validity of the
Guarantee of each of First Security Capital II, First
Security Capital III, First Security Capital IV and First
Security Capital V.
Exhibit 8* Opinion of Ray, Quinney & Nebeker regarding certain tax
matters (included in Exhibit 5(e) hereto).
Exhibit 12(a)* Computation of Ratio of Earnings to Fixed Charges.
Exhibit 12(b)* Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividends.
Exhibit 23(a)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(a) hereto).
Exhibit 23(b)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(b) hereto).
Exhibit 23(c)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(c) hereto).
Exhibit 23(d)* Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5(d) hereto).
Exhibit 23(e)* Consent of Ray, Quinney & Nebeker (included in Exhibit 5(e)
hereto).
</TABLE>
<PAGE> 86
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
Exhibit 23(f)* Consent of Ray, Quinney & Nebeker (included in Exhibit 8
hereto).
Exhibit 23(g)* Consent of Deloitte & Touche LLP.
Exhibit
24(a)** Powers of Attorney (included on page II-6 of this
Registration Statement).
Exhibit 25(a)* Statement of Eligibility and Qualification on Form T-1 under
the Trust Indenture Act of 1939, as amended ("Form T-1"), of
The First National Bank of Chicago to act as trustee with
respect to the Junior Subordinated Debentures and Guarantees
of First Security Corporation.
Exhibit 25(b)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Capital Securities of First Security
Capital II.
Exhibit 25(c)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Preferred Securities of First Security
Capital III.
Exhibit 25(d)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Preferred Securities of First Security
Capital IV.
Exhibit 25(e)* Form T-1 of The First National Bank of Chicago, as trustee,
with respect to the Preferred Securities of First Security
Capital V.
</TABLE>
- -------------------------
* To be filed by amendment.
** Filed herewith.
