SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 1999
FIRST SECURITY CORPORATION
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Exact name of registrant as specified in its charter
Delaware 1-6906 87-6118148
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State or other jurisdiction Commission File No. IRS Employer ID #
of incorporation
79 South Main, P.O. Box 30006, Salt Lake City, Utah 84130-0006
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Address and zip code of principal executive offices
(801) 246-5706
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Registrant's telephone number
Item 5. Other Events
On January 8, 1999, the Registrant filed its Registration Statement on
Form S-4, File No. 333-69379. The Prospectus/Information Statement described
risks associated with the merger transaction. This Current Report on Form 8-K is
incorporated by reference into the S-4 Registration Statement and related
Prospectus/Information Statement.
The text of the Van Kasper disclosure is attached as Exhibit 99.1
attached hereto. The text of the agreement between the Registrant and Van Kasper
concerning the subject matter of the disclosure is attached as Exhibit 99.2
attached hereto.
Exhibits
99.1 Van Kasper Disclosure Statement
99.2 First Security/Van Kasper Agreement, dated February 8, 1999, relating
to certain litigation.
FIRST SECURITY CORPORATION
/s/ Brad D. Hardy
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Brad D. Hardy
Executive Vice President and
Chief Financial Officer
Dated: February 9, 1999
February 9, 1999
Dear Shareholder:
A civil complaint was recently filed in San Francisco County Superior Court by
two employee shareholders of Van Kasper & Co. ("Van Kasper") alleging, among
other things, breach of contract. The complaint seeks, among other things,
compensatory and punitive damages, and an injunction compelling the issuance to
these employees of additional shares of Van Kasper at a significant discount to
the current fair market value of such shares. Van Kasper estimates that the
actual damages sought by the plaintiffs is approximately $4 million. If these
shareholders prevail on their claims in excess of amounts reserved by Van
Kasper, the representations and warranties under the Amended and Restated
Agreement of Merger dated December 16, 1998 (the "Merger Agreement") could be
breached. Moreover, the mere filing of the complaint could also constitute a
breach of the representations and warranties under the Merger Agreement. Damages
incurred by Van Kasper or its successors relating to a breach would entitle
First Security to, among other things, withhold a portion of the consideration,
referred to in the Merger Agreement as the Holdback, pursuant to the indemnity
provisions under the Merger Agreement in the event that this Holdback
subsequently is earned and becomes due and payable. In this regard, Van Kasper
and First Security have entered into an agreement, the form of which is attached
as an exhibit to First Security's filing of this disclosure on Form 8-K, which
provides that First Security would not be subject to the $1 million basket
provided for under the indemnity provisions for any damages relating to these
types of claims Van Kasper disputes the allegations contained in the complaint
and intends to vigorously defend the matter. If, however, Van Kasper is not
successful in its defenses to these claims, or to other similar claims, if
filed, the amount of consideration which would subsequently be distributable to
all of the shareholders of Van Kasper on the third or fourth anniversary
following the Closing, or at such other time as the Holdback becomes due and
payable, would be reduced on a pro rata basis.
Shareholders of Van Kasper are advised that consents previously tendered in
favor of the Merger may presently be withdrawn in light of the foregoing
information or otherwise. Shareholders may withdraw consents by delivering to
John Chung at the offices of Van Kasper a written consent in the form previously
distributed to the Van Kasper shareholders indicating a vote against the Merger.
The consent must be dated subsequent to any consent previously delivered and
must be delivered and received not later than 6:00 p.m. California time on
Wednesday, February 10, 1999. Additional written consent forms may be obtained
at no charge from John Chung at Van Kasper. The Board of Directors of Van Kasper
has not altered its approval or recommendation in favor of the Merger. Van
Kasper and First Security presently plan to close on the Merger on February 11,
1999.
F. Van Kasper
Chairman
AGREEMENT
This AGREEMENT (the "Agreement") is entered into as of the 9th day of
February, 1999, by and among First Security Corporation, a Delaware corporation
("FSC"), First Security Capital Markets, Inc., a Utah corporation ("FSCMI"), Van
Kasper Acquisition Corporation, a Utah corporation ("VKAC"), and Van Kasper &
Company, a California corporation (the "Company"), in connection with the
acquisition of the Company by FSC (the "Acquisition") pursuant to the terms and
conditions of the Amended and Restated Agreement and Plan of Merger, dated
December 16, 1998 (the "Merger Agreement"). FSC, FSCMI, VKAC and the Company are
also referred to herein, individually, as a "party", and collectively, as the
"parties". Unless otherwise indicated herein, all capitalized terms used herein
without definition shall have the meaning given them in the Merger Agreement.
WHEREAS, Murray Bodine and Greg Madding, each a managing director of
the Company, have asserted certain claims (the "Claims") against the Company as
more fully described in that certain AMENDED VERIFIED COMPLAINT attached hereto
as Exhibit A (the "Complaint"); and
WHEREAS, Mr. Bodine and Mr. Madding (each, a "plaintiff" and
collectively, the "plaintiffs") assert (1) that each has a contractual right to
a "special bonus," consisting of (a) 6,000 fully-paid shares of Company
preferred stock, and (b) additional shares in the amount necessary to bring each
of Mr. Bodine's and Mr. Madding's equity holdings in the Company to three
percent (3%) of the total issued and outstanding shares of Company stock, or a
total aggregate equity participation in the Company of six percent (6%), and (2)
that such "special bonus" will vest upon the consummation of the Acquisition;
and
WHEREAS, the Company disputes certain assumptions relied on by the
plaintiffs in the Complaint; and
WHEREAS, disclosure of the claims asserted by the plaintiffs may
represent a breach of the Company's representations and warranties contained in
Sections 3.4(b), 4.3, 4.7, 4.9, 4.10 and 6.1 of the Merger Agreement; and
WHEREAS, the continuing accuracy of the Company's representations and
warranties is a condition to the obligation of FSC, FSCMI and VKAC to close the
Acquisition under the Merger Agreement; and
WHEREAS, FSC, FSCMI and VKAC each agree to proceed to closing
notwithstanding such possible breach; and
WHEREAS, the parties desire to set forth their agreement with respect
to the risk of loss associated with the plaintiffs' Claims and with respect to
other similar claims, if any, which may in the future be raised by other holders
of Nonvested Options, as such term is defined in the Merger Agreement.
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NOW, THEREFORE, in consideration of the foregoing recitals and the
respective representations, warranties covenants, agreements and conditions set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. FSC, FSCMI and VKAC hereby agree to proceed to Closing
notwithstanding any possible present or future breaches by the Company of
Sections 3.4(b), 4.3, 4.7, 4.9, 4.10 and 6.1 with respect to, and only with
respect to, plaintiffs' Claims or other similar claims, if any, which may in the
future be raised by other holders of Nonvested Options.
2. In consideration of the agreement by FSC, FSCMI and VKAC to proceed
to Closing, the Company hereby agrees that FSC shall be entitled to
indemnification against any and all Losses (as defined in the Merger Agreement)
asserted against or paid by the Company, or the surviving entity of the Merger
or the subsequent merger of FSCMI with and into the Company, relating to the
Claims or other claims relating to the negotiation, settlement and payment for
Nonvested Options. Each of the parties hereby agrees that any such Losses shall
be charged against the Holdback shares under Section 10.1(b) of the Merger
Agreement which shall be the sole and exclusive remedy of FSC and its affiliates
for any Losses suffered as a result of the Claims or other claims related to the
negotiation, settlement and payment for Nonvested Options.
3. The parties agree that any indemnification for the Claims or for
other claims relating to the negotiation, settlement and payment for Nonvested
Options shall be for the entire amount of any Losses suffered by the Company or
FSC or their affiliates with respect to such Losses without regard to the
$1,000,000 threshold requirement (the "Basket") provided for in Section 10.1(b)
of the Merger Agreement. The parties further agree that any such Losses shall
not be included in calculating the one million dollar ($1,000,000) Basket but
shall count toward the ten million dollar ($10,000,000) aggregate liability cap
provided for in Section 10.1(b) of the Merger Agreement.
4. This Agreement shall be construed in accordance with, and governed
by the substantive laws of, the State of California, without reference to
principles governing choice or conflicts of laws.
5. This Agreement constitutes the entire agreement and understanding of
the parties with respect to the subject matter hereof. It may be amended only by
a written instrument executed by all parties hereto.
6. Any number of counterparts of this Agreement may be signed and
delivered and each shall be considered an original and together they shall
constitute one agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
FIRST SECURITY CORPORATION
By: /s/ Morgan G. Evans
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Its: President
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FIRST SECURITY CAPITAL MARKETS, INC.
By: /s/ David R. Wilson
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Its: President
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VAN KASPER ACQUISITION CORPORATION
By: /s/ Scott C. Ulbrich
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Its: President
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VAN KASPER & COMPANY
By: /s/ John Chung
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Its: Vice President and General Counsel
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