<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 27, 1996
333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
FIRST BANK SYSTEM, INC. FBS CAPITAL I
(EXACT NAME OF REGISTRANT AS SPECIFIED
IN ITS CHARTER)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN
ITS TRUST AGREEMENT)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
6712 6719
(PRIMARY STANDARD INDUSTRIAL (PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
41-0255900 41-6419309
(I.R.S. EMPLOYER (I.R.S. EMPLOYER
IDENTIFICATION NO.) IDENTIFICATION NO.)
FIRST BANK PLACE FIRST BANK SYSTEM, INC.
601 SECOND AVENUE SOUTH FIRST BANK PLACE
MINNEAPOLIS, MINNESOTA 601 SECOND AVENUE SOUTH
55402-4302 MINNEAPOLIS, MINNESOTA 55402-4302
(612) 973-1111 (612) 973-1111
(ADDRESS, INCLUDING ZIP CODE, AND (ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, TELEPHONE NUMBER, INCLUDING AREA CODE,
INCLUDING AREA CODE, OF REGISTRANT'S OF REGISTRANT'S PRINCIPAL EXECUTIVE
PRINCIPAL EXECUTIVE OFFICES) OFFICES)
----------------
LEE R. MITAU
FIRST BANK PLACE
601 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55402-4302
(612) 973-1111
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE OF EACH REGISTRANT)
WITH COPIES TO:
CHARLES F. SAWYER, ESQ.
DORSEY & WHITNEY LLP
PILLSBURY CENTER SOUTH
220 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402-4302
(612) 340-2600
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Securities of
FBS Capital I......... $300,000,000 100% $300,000,000 $90,909.00
- ---------------------------------------------------------------------------------
Junior Subordinated
Deferrable Interest
Debentures of First
Bank System, Inc.(2).. -- -- -- NA
- ---------------------------------------------------------------------------------
First Bank System, Inc.
Guarantee with respect
to Capital
Securities(3)......... -- -- -- NA
- ---------------------------------------------------------------------------------
Total(4)............... $300,000,000(5) 100% $300,000,000(5) $90,909.00
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures (the "Junior
Subordinated Debentures") were originally purchased by FBS Capital I with
the proceeds of the sale of the Capital Securities. No separate
consideration will be received for the Junior Subordinated Debentures
distributed upon any liquidation of FBS Capital I.
(3) No separate consideration will be received for the First Bank System, Inc.
Guarantee.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Debentures of First Bank System, Inc., the rights of holders of Junior
Subordinated Debentures of First Bank System, Inc. under the Indenture,
the rights of holders of Capital Securities of FBS Capital I under a Trust
Agreement, the rights of holders of the Capital Securities under the
Guarantee, the Expense Agreement entered into by First Bank System, Inc.
and certain backup undertakings as described herein.
(5) Such amount represents the initial public offering price of the FBS
Capital I Capital Securities to be exchanged hereunder and the principal
amount of Junior Subordinated Debentures that may be distributed upon any
liquidation of FBS Capital I.
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 of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
----------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 27, 1996
PROSPECTUS FBS CAPITAL I
LOGO
OFFER TO EXCHANGE ITS 8.09% CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING 8.09% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
FIRST BANK SYSTEM, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 199 , UNLESS EXTENDED.
FBS Capital I, a trust formed under the laws of the State of Delaware (the
"Trust"), hereby offers, upon the terms and subject to the conditions set forth
in this Prospectus (as the same may be amended or supplemented from time to
time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange up to $300,000,000
aggregate Liquidation Amount of its 8.09% Capital Securities (the "New Capital
Securities") which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement (as
defined herein) of which this Prospectus constitutes a part, for a like
Liquidation Amount of its outstanding 8.09% Capital Securities (the "Old
Capital Securities"), of which $300,000,000 aggregate Liquidation Amount is
outstanding. Pursuant to the Exchange Offer, First Bank System, Inc., a
Delaware corporation ("FBS"), is also exchanging its guarantee of the payment
of Distributions and payments on liquidation or redemption of the Old Capital
Securities (the "Old Guarantee") for a like guarantee of the New Capital
Securities (the "New Guarantee") and all of its 8.09% Junior Subordinated
Deferrable Interest Debentures (the "Old Junior Subordinated Debentures"), of
which $309,279,000 aggregate principal amount is outstanding, for like
aggregate principal of its 8.09% Junior Subordinated Deferrable Interest
Debentures (the "New Junior Subordinated Debentures"), which New Guarantee and
New Junior Subordinated Debentures also have been registered under the
Securities Act. The Old Capital Securities, the Old Guarantee and the Old
Junior Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Guarantee and the New
Junior Subordinated Debentures are collectively referred to herein as the "New
Securities."
The terms of the New Securities are identical in all material respects to the
respective terms of the Old Securities, except that (i) the New Securities have
been registered under the Securities Act and therefore will not be subject to
certain restrictions on transfer applicable to the Old Securities, (ii) the New
Capital Securities will not provide for any increase in the Distribution rate
thereon and (iii) the New Junior Subordinated Debentures will not provide for
any increase in the interest rate thereon. See "Description of the New
Securities" and "Description of the Old Securities." The New Capital Securities
are being offered for exchange in order to satisfy certain obligations of FBS
and the Trust under the Registration Rights Agreement dated as of November 26,
1996 (the "Registration Rights Agreement") among FBS, the Trust and the Initial
Purchasers (as defined herein). In the event that the Exchange Offer is
consummated, any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer and the New Capital Securities issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding Liquidation Amount
thereof have taken certain actions or exercised certain rights under the Trust
Agreement.
----------
SEE "RISK FACTORS" COMMENCING ON PAGE 17 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS WHO TENDER OLD CAPITAL SECURITIES IN THE EXCHANGE
OFFER.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is , 199 .
<PAGE>
The New Capital Securities and the Old Capital Securities (together, the
"Capital Securities"), represent beneficial interests in the Trust. FBS is the
owner of all of the beneficial interests represented by common securities of
the Trust (the "Common Securities" and, collectively with the Capital
Securities, the "Trust Securities"). Wilmington Trust Company is the Property
Trustee of the Trust. The Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in the Junior Subordinated
Debentures. The Junior Subordinated Debentures will mature on November 15, 2026
(the "Stated Maturity"). The Capital Securities will have a preference under
certain circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of New Securities--Description of Capital Securities--
Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture,
as amended and supplemented from time to time, between FBS and Wilmington Trust
Company as trustee (the "Debenture Trustee"), (ii) the "Trust Agreement" means
the Amended and Restated Trust Agreement relating to the Trust among FBS, as
Depositor, Wilmington Trust Company as Property Trustee (the "Property
Trustee"), Wilmington Trust Company as Delaware Trustee (the "Delaware
Trustee"), and the Administrative Agents named therein (collectively, with the
Property Trustee and Delaware Trustee, the "Issuer Trustees"), (iii) the
"Guarantee Agreement" means the Guarantee Agreement relating to the Guarantee
between FBS and Wilmington Trust Company, as trustee (the "Guarantee Trustee")
and (iv) the "Expense Agreement" means the Expense Agreement between FBS and
the Trust. In addition, as the context may require, unless expressly stated
otherwise, (i) "Capital Securities" includes the Old Capital Securities and the
New Capital Securities, (ii) "Junior Subordinated Debentures" includes the Old
Junior Subordinated Debentures and the New Junior Subordinated Debentures and
(iii) "Guarantee" includes the Old Guarantee and the New Guarantee.
Holders of the Capital Securities will be entitled to receive preferential
cumulative cash distributions, and the holder of the Common Securities will be
entitled to receive cumulative cash distributions arising from the payment of
interest on the Junior Subordinated Debentures accruing from November 15, 1996,
and payable semi-annually in arrears on May 15 and November 15 of each year,
commencing May 15, 1997, at the annual rate of 8.09% of the Liquidation Amount
of $1,000 per New Capital Security and at the annual rate of 8.09% of the
Liquidation Amount of $1,000 per Common Security ("Distributions"). FBS has the
right to defer payments of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding 10 consecutive semi-
annual periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity. Upon the termination of any such Extension Period and the payment of
all amounts then due, FBS may elect to begin a new Extension Period subject to
the requirements set forth herein. If interest payments on the Junior
Subordinated Debentures are so deferred, Distributions on the Capital
Securities and on the Common Securities will also be deferred and FBS will not
be permitted, subject to certain exceptions described herein, to declare or pay
any cash distributions with respect to FBS's capital stock (which includes
common and preferred stock) or to make any payment with respect to debt
securities of FBS that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Capital Securities are entitled will
accumulate) at the rate of 8.09% per annum, compounded semi-annually, and
holders of Capital Securities will be required to accrue interest income for
United States federal income tax purposes. See "Description of New Securities--
Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
FBS has, through the Guarantee, the Trust Agreement, the Junior Subordinated
Debentures, the Indenture and the Expense Agreement, taken together, fully,
irrevocably and unconditionally guaranteed all of the Trust's obligations under
the Capital Securities. See "Relationship Among the Capital Securities, the
Junior Subordinated Debentures and the Guarantee--Full and Unconditional
Guarantee." The Guarantee of FBS guarantees the payment of Distributions and
payments on liquidation or redemption of the Capital Securities, but only in
each case to the extent of funds held by the Trust, as described herein. See
"Description of Guarantee." If FBS does not make interest payments on the
Junior Subordinated Debentures held by the Trust, the Trust will have
insufficient funds to pay Distributions on the Capital Securities. The
Guarantee does not cover payment of
2
<PAGE>
Distributions when the Trust does not have sufficient funds to pay such
Distributions. In such event, a holder of Capital Securities may institute a
legal proceeding directly against FBS to enforce payment of such Distributions
to such holder. See "Description of New Securities--Description of Junior
Subordinated Debentures--Enforcement of Certain Rights By Holders of Capital
Securities." The obligations of FBS under the Guarantee and the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Senior and Subordinated Debt (as defined in "Description of New Securities--
Description of Junior Subordinated Debentures--Subordination").
The Trust Securities are subject to mandatory redemption, in whole but not in
part, (i) at the Stated Maturity upon repayment of the Junior Subordinated
Debentures at a redemption price equal to the principal amount of, plus accrued
interest on, the Junior Subordinated Debentures (the "Maturity Redemption
Price"), (ii) at any time, contemporaneously with the prepayment of the Junior
Subordinated Debentures upon the occurrence and continuation of a Tax Event (as
defined herein) at a redemption price equal to the Tax Event Prepayment Price
(as defined below) (the "Tax Event Redemption Price") and (iii) on or after
November 15, 2006 contemporaneously with the optional prepayment by FBS of the
Junior Subordinated Debentures at a redemption price equal to the Optional
Prepayment Price (as defined below) (the "Optional Redemption Price"). Any of
the Maturity Redemption Price, the Tax Event Redemption Price and the Optional
Redemption Price may be referred to herein as the "Redemption Price." See
"Description of New Securities--Capital Securities--Redemption." Subject to FBS
having received prior approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve") to do so if then required under applicable
capital guidelines or policies of the Federal Reserve, the Junior Subordinated
Debentures are prepayable prior to the Stated Maturity at the option of FBS (i)
on or after November 15, 2006, in whole (but not in part) at any time at a
prepayment price (the "Optional Prepayment Price") equal to 104.045% of the
principal amount thereof on November 15, 2006, declining ratably on each
November 15 thereafter to 100% on or after November 15, 2016, plus accrued
interest thereon to the date of prepayment, or (ii) at any time, in whole (but
not in part), upon the occurrence and continuation of a Tax Event (as defined
herein), at a prepayment price (the "Tax Event Prepayment Price") equal to the
greater of (a) 100% of the principal amount thereof or (b) as determined by a
Quotation Agent (as defined herein), the sum of the present values of the
remaining scheduled payments of principal and the interest thereon discounted
to the prepayment date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined
herein) plus, in either case, accrued interest thereon to the date of
prepayment. Either of the Optional Prepayment Price or the Tax Event Prepayment
Price may be referred to herein as the "Prepayment Price." See "Description of
New Securities--Description of Junior Subordinated Debentures--Optional
Prepayment" and "--Tax Event Prepayment."
FBS will have the right at any time to terminate the Trust and cause a Like
Amount (as defined herein) of the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust,
subject to FBS having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of Capital Securities and
prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal Reserve. In the event
of such termination of the Trust, after satisfaction of liabilities to
creditors of the Trust as required by applicable law, the holders of the
Capital Securities generally will be entitled to receive a Liquidation Amount
of $1,000 per Capital Security plus accumulated and unpaid Distributions
thereon to the date of payment, which may be in the form of a distribution of a
Like Amount of Junior Subordinated Debentures, subject to certain exceptions.
See "Description of New Securities--Description of Capital Securities--
Liquidation of the Trust and Distribution of Junior Subordinated Debentures."
----------------
THE CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES).
ANY TRANSFER, SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A BLOCK HAVING
A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING
3
<PAGE>
BUT NOT LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND
SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither FBS nor the Trust has sought its own interpretive letter and
there can be no assurance that the staff of the Division of Corporation Finance
of the Commission would make a similar determination with respect to the
Exchange Offer as it has in such interpretive letters to third parties. Based
on these interpretations by the staff of the Division of Corporation Finance,
and subject to the two immediately following sentences, FBS and the Trust
believe that New Capital Securities issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder who is a broker-
dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of FBS or the Trust or who intends to
participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from the
Trust to resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or
any other available exemption under the Securities Act, (a) will not be able to
rely on the interpretations of the staff of the Division of Corporation Finance
of the Commission set forth in the above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender such Old Capital Securities in the
Exchange Offer and (c) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
other transfer of such Old Capital Securities unless such sale is made pursuant
to an exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Capital Securities acquired for its own account as a
result of market-making or other trading activities and exchanges such Old
Capital Securities for New Capital Securities, then such broker-dealer must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of FBS or the Trust, (ii) any New
Capital Securities to be received by it are being acquired in the ordinary
course of its business, (iii) it has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of such New Capital Securities, and (iv) if such holder is not a broker-
dealer, such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, FBS and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to FBS and the Trust (or an agent thereof) in writing information as to
the number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) on behalf of whom such holder
holds the Capital Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives New Capital Securities for its own account pursuant
to the Exchange Offer must acknowledge that it acquired the Old Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, FBS and the Company believe that broker-dealers who acquired Old Capital
Securities for their own accounts, as a result of market-making activities or
other trading activities ("Participating Broker-Dealers") may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the
Old Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description
4
<PAGE>
of the plan of distribution with respect to the resale of such New Capital
Securities. Accordingly, this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer during the
period referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities where such Old Capital
Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, FBS and the
Trust have agreed that this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer in connection
with resales of such New Capital Securities for a period ending 90 days after
the Expiration Date or, if earlier, when all such New Capital Securities have
been disposed of by such Participating Broker-Dealer. See "Plan of
Distribution." Any Participating Broker-Dealer who is an "affiliate" of the
Trust may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer--Resales of New
Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from FBS
or the Trust of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or which causes this Prospectus to omit to state
a material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating Broker-
Dealer will suspend the sale of New Capital Securities (or the Guarantee or the
Junior Subordinated Debentures, as applicable) pursuant to this Prospectus
until FBS or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or FBS or the Trust
has given notice that the sale of the New Capital Securities (or the Guarantee
or the Junior Subordinated Debentures, as applicable) may be resumed, as the
case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market.
Although the Initial Purchasers have informed FBS and the Trust that they each
currently intend to make a market in the New Capital Securities, they are not
obligated to do so, and any such market making may be discontinued at any time
without notice. Accordingly, there can be no assurance as to the development or
liquidity of any market for the New Capital Securities. The Company currently
does not intend to apply for listing of the New Capital Securities on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Trust Agreement
(except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old
Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither FBS nor the Trust will have any
further obligation to such holders (other than under certain limited
circumstances) to provide for registration under the Securities Act of the Old
Capital Securities held by them. To the extent that Old Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00 p.m.,
New York City time, on , 199 (such time on such date being hereinafter
called the "Expiration Date"), unless the Exchange
5
<PAGE>
Offer is extended by FBS and the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on or
prior to the Expiration Date. The Exchange Offer is not conditioned upon any
minimum Liquidation Amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by FBS or the Trust and to the terms and
provisions of the Registration Rights Agreement. Old Capital Securities may be
tendered in whole or in part having a Liquidation Amount of not less than
$100,000 (100 Capital Securities) and or any integral multiple of $1,000
Liquidation Amount (1 Capital Security) in excess thereof. FBS has agreed to
pay all expenses of the Exchange Offer. See "The Exchange Offer--Fees and
Expenses." Each New Capital Security will pay cumulative Distributions from the
most recent Distribution Date on the Old Capital Securities surrendered in
exchange for such New Capital Securities or, if no Distributions have been paid
on such Old Capital Securities, from November 15, 1996. Holders of the Old
Capital Securities whose Old Capital Securities are accepted for exchange will
not receive accumulated Distributions on such Old Capital Securities for any
period from and after the last Distribution Date on such Old Capital Securities
prior to the original issue date of the New Capital Securities or, if no such
Distributions have been paid, will not receive any accumulated Distributions on
such Old Capital Securities, and will be deemed to have waived the right to
receive any Distributions on such Old Capital Securities accumulated from and
after such Distribution Date or, if no such interest has been paid or duly
provided for, from and after November 15, 1996. This Prospectus, together with
the Letter of Transmittal, is being sent to all registered holders of Old
Capital Securities as of , 1996.
Neither FBS nor the Trust will receive any cash proceeds from the issuance of
the New Capital Securities offered hereby. No dealer-manager is being used in
connection with this Exchange Offer. See "Use of Proceeds From Sale of Old
Capital Securities" and "Plan of Distribution."
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY FBS OR THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF FBS OR THE TRUST SINCE THE DATE HEREOF.
----------------
6
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 8
Incorporation of Certain Documents by Reference........................... 8
Summary................................................................... 10
Risk Factors.............................................................. 17
Ratios of Earnings to Fixed Charges....................................... 22
Use of Proceeds from Sale of Old Capital Securities....................... 22
Capitalization............................................................ 23
Dividend History.......................................................... 23
FBS Capital I............................................................. 24
First Bank System Inc..................................................... 25
The Exchange Offer........................................................ 26
Description of New Capital Securities..................................... 34
Description of Old Capital Securities..................................... 56
Relationship Among the Capital Securities, the Junior Subordinated
Debentures and the Guarantee............................................. 56
Certain United States Federal Income Tax Considerations................... 57
ERISA Considerations...................................................... 61
Plan of Distribution...................................................... 62
Validity of New Securities................................................ 63
Experts................................................................... 63
</TABLE>
FOR CALIFORNIA RESIDENTS ONLY
WITH RESPECT TO SALES OF THE SECURITIES BEING OFFERED HEREBY TO CALIFORNIA
RESIDENTS, SUCH SECURITIES MAY BE SOLD ONLY TO (1) "ACCREDITED INVESTORS"
WITHIN THE MEANING OF REGULATION D UNDER THE SECURITIES ACT OF 1933, (2)
BANKS, SAVINGS AND LOAN ASSOCIATIONS, TRUST COMPANIES, INSURANCE COMPANIES,
INVESTMENT COMPANIES REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940,
PENSION AND PROFIT SHARING TRUSTS, CORPORATIONS OR OTHER ENTITIES WHICH,
TOGETHER WITH THE CORPORATION'S OR OTHER ENTITY'S AFFILIATES, HAVE A NET WORTH
ON A CONSOLIDATED BASIS ACCORDING TO THEIR MOST RECENT REGULARLY PREPARED
FINANCIAL STATEMENTS (WHICH SHALL HAVE BEEN REVIEWED, BUT NOT NECESSARILY
AUDITED, BY OUTSIDE ACCOUNTANTS) OF NOT LESS THAN $14,000,000 AND SUBSIDIARIES
OF THE FOREGOING, (3) ANY CORPORATION, PARTNERSHIP OR ORGANIZATION (OTHER THAN
A CORPORATION, PARTNERSHIP OR ORGANIZATION FORMED FOR THE SOLE PURPOSE OF
PURCHASING THE SECURITIES OFFERED HEREBY) WHO PURCHASES AT LEAST $1,000,000
AGGREGATE AMOUNT OF THE SECURITIES OFFERED HEREBY, (4) ANY NATURAL PERSON WHO
(A) HAS INCOME OF $65,000 AND A NET WORTH OF $250,000, OR (B) HAS A NET WORTH
OF $500,000 (IN EACH CASE, EXCLUDING HOME, HOME FURNISHINGS AND PERSONAL
AUTOMOBILES), OR (5) ANY "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED UNDER RULE
144A OF THE SECURITIES ACT.
7
<PAGE>
AVAILABLE INFORMATION
FBS is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite 1400,
Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can also be obtained at prescribed rates by writing to
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such information may also be accessed electronically
by means of the Commission's home page on the Internet (http://www.sec.gov.).
In addition, such reports, proxy statements and other information concerning
FBS can be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005 on which exchange securities of FBS are
listed.
No separate financial statements of the Trust have been included herein. FBS
and the Trust do not consider that such financial statements would be material
to holders of the Capital Securities because the Trust is a newly formed
special purpose entity, has no operating history or independent operations and
is not engaged in and does not propose to engage in any activity other than
holding as trust assets the Junior Subordinated Debentures and issuing the
Trust Securities. See "FBS Capital I" and "Description of New Securities." In
addition, FBS does not expect that the Trust will file reports under the
Exchange Act with the Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by FBS and the Trust with the Commission
under the Securities Act. This Prospectus does not contain all the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and reference is
hereby made to the Registration Statement and to the exhibits relating thereto
for further information with respect to the Company and the Notes. Any
statements contained herein concerning the provisions of any document are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by FBS with the Commission are incorporated
into this Prospectus by reference:
1. FBS's Annual Report on Form 10-K for the year ended December 31, 1995;
2. FBS's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996, June 30, 1996 and September 30, 1996; and
3. FBS's Current Reports on Form 8-K dated January 9, 1996, January 19,
1996 and January 29, 1996.
Each document or report filed by FBS pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination
of any offering of securities made by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such document. Any statement contained
herein, or in a document all or a portion of which is incorporated or deemed
to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or
8
<PAGE>
otherwise modified from time to time. Statements contained in this Prospectus
as to the contents of any contract or other document referred to herein do not
purport to be complete, and where reference is made to the particular
provisions of such contract or other document, such provisions are qualified
in all respects by reference to all of the provisions of such contract or
other document. FBS will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein
(other than exhibits not specifically incorporated by reference into the texts
of such documents). Requests for such documents should be directed to: First
Bank System, Inc., First Bank Place, 601 Second Avenue South, Minneapolis,
Minnesota 55402-4302, telephone: (612) 973-1111, Attention: John R. Danielson.
9
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and is subject to, the
more detailed information and financial statements contained elsewhere and
incorporated by reference in this Prospectus.
FBS CAPITAL I
The Trust is a statutory business trust formed under Delaware law pursuant to
(i) the Trust Agreement executed by FBS, as Depositor, Wilmington Trust
Company, as Property Trustee and as Delaware Trustee, and the Administrative
Agents named therein, and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on November 6, 1996. The Trust's business and
affairs are conducted by the Issuer Trustees: Wilmington Trust Company, as
Property Trustee and as Delaware Trustee, and three individual Administrative
Agents who are employees or officers of or affiliated with FBS. The Trust
exists for the exclusive purposes of (i) issuing and selling the Trust
Securities and effecting the Exchange Offer for the New Capital Securities,
(ii) using the proceeds from the sale of the Trust Securities to acquire the
Old Junior Subordinated Debentures issued by FBS, (iii) exchanging the Old
Junior Subordinated Debentures for the New Subordinated Debentures in the
Exchange Offer and (iv) engaging in only those other activities necessary,
advisable or incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly, the New Junior Subordinated Debentures will be the
sole assets of the Trust, and payments under the New Junior Subordinated
Debentures and the Expense Agreement will be the sole revenues of the Trust.
All of the Common Securities will be owned by FBS.
FIRST BANK SYSTEM, INC.
FBS is a regional bank holding company headquartered in Minneapolis,
Minnesota. FBS is comprised of nine banks, a savings association and other
financial companies with 380 offices, located primarily in the 11 states of
Minnesota, Colorado, Illinois, Montana, North Dakota, South Dakota, Wisconsin,
Iowa, Nebraska, Kansas and Wyoming. Through its subsidiaries, FBS provides
commercial and agricultural finance, consumer banking, trust, capital markets,
treasury management, investment management, data processing, leasing and
brokerage services. At September 30, 1996, FBS and its consolidated
subsidiaries had consolidated assets of $36.8 billion, consolidated deposits of
$25.0 billion and shareholders' equity of $3.2 billion. FBS has paid a regular
quarterly dividend on its Common Stock since its incorporation in 1929.
THE EXCHANGE OFFER
The Exchange Offer............ Up to $300,000,000 aggregate Liquidation Amount
of New Capital Securities are being offered in
exchange for a like aggregate Liquidation
Amount of Old Capital Securities. Old Capital
Securities may be tendered for exchange in
whole or in part in a Liquidation Amount of
$100,000 (100 Capital Securities) or any inte-
gral multiple of $1,000 in excess thereof. FBS
and the Trust are making the Exchange Offer in
order to satisfy its obligations under the
Registration Rights Agreement relating to the
Old Capital Securities. For a description of
the procedures for tendering Old Capital Secu-
rities, see "The Exchange Offer--Procedures
for Tendering Old Capital Securities."
Expiration Date............... 5:00 p.m., New York City time, on , 199
(such time on such date being hereinafter
called the "Expiration Date") unless the Ex-
change Offer is extended by FBS the Trust (in
10
<PAGE>
which case the term "Expiration Date" shall
mean the latest date and time to which the Ex-
change Offer is extended). See "The Exchange
Offer--Expiration Date; Extensions; Amend-
ments."
Conditions to the Exchange The Exchange Offer is subject to certain condi-
Offer........................ tions, which may be waived by FBS and the
Trust in their sole discretion. The Exchange
Offer is not conditioned upon any minimum Liq-
uidation Amount of Old Capital Securities be-
ing tendered. See "The Exchange Offer--Condi-
tions to the Exchange Offer."
FBS and the Trust reserve the right in their
sole and absolute discretion, subject to ap-
plicable law, at any time and from time to
time, (i) to delay the acceptance of the Old
Capital Securities for exchange, (ii) to ter-
minate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Of-
fer and retain all Old Capital Securities ten-
dered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Capi-
tal Securities to withdraw their tendered Old
Capital Securities, or (iv) to waive any con-
dition or otherwise amend the terms of the Ex-
change Offer in any respect. See "The Exchange
Offer--Expiration Date; Extensions; Amend-
ments."
Withdrawal Rights............. Tenders of Old Capital Securities may be with-
drawn at any time on or prior to the Expira-
tion Date by delivering a written notice of
such withdrawal to the Exchange Agent in con-
formity with certain procedures set forth be-
low under "The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering Old
Capital Securities...........
Tendering holders of Old Capital Securities
must complete and sign a Letter of Transmittal
in accordance with the instructions contained
therein and forward the same by mail, facsim-
ile or hand delivery, together with any other
required documents, to the Exchange Agent, ei-
ther with the Old Capital Securities to be
tendered or in compliance with the specified
procedures for guaranteed delivery of Old Cap-
ital Securities. Certain brokers, dealers,
commercial banks, trust companies and other
nominees may also effect tenders by book-entry
transfer. Holders of Old Capital Securities
registered in the name of a broker, dealer,
commercial bank, trust company or other nomi-
nee are urged to contact such person promptly
if they wish to tender Old Capital Securities
pursuant to the Exchange Offer. See "The Ex-
change Offer--Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and certificates repre-
senting Old Capital Securities should not be
sent to FBS or the Trust. Such documents
should only be sent to the Exchange Agent.
Questions regarding how to tender and requests
for information should be directed to the Ex-
change Agent. See "The Exchange Offer--Ex-
change Agent."
11
<PAGE>
Resales of New Capital FBS and the Trust are making the Exchange Offer
Securities................... in reliance on the position of the staff of
the Division of Corporation Finance of the
Commission as set forth in certain
interpretive letters addressed to third par-
ties in other transactions. However, neither
FBS nor the Trust has sought its own
interpretive letter and there can be no assur-
ance that the staff of the Division of Corpo-
ration Finance of the Commission would make a
similar determination with respect to the Ex-
change Offer as it has in such interpretive
letters to third parties. Based on these in-
terpretations by the staff of the Division of
Corporation Finance, and subject to the two
immediately following sentences, FBS and the
Trust believe that New Capital Securities is-
sued pursuant to this Exchange Offer in ex-
change for Old Capital Securities may be of-
fered for resale, resold and otherwise trans-
ferred by a holder thereof (other than a
holder who is a broker-dealer) without further
compliance with the registration and prospec-
tus delivery requirements of the Securities
Act, provided that such New Capital Securities
are acquired in the ordinary course of such
holder's business and that such holder is not
participating, and has no arrangement or un-
derstanding with any person to participate, in
a distribution (within the meaning of the Se-
curities Act) of such New Capital Securities.
However, any holder of Old Capital Securities
who is an "affiliate" of FBS or the Trust or
who intends to participate in the Exchange Of-
fer for the purpose of distributing the New
Capital Securities, or any broker-dealer who
purchased the Old Capital Securities from the
Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities
Act, (a) will not be able to rely on the in-
terpretations of the staff of the Division of
Corporation Finance of the Commission set
forth in the above-mentioned interpretive let-
ters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Ex-
change Offer and (c) must comply with the reg-
istration and prospectus delivery requirements
of the Securities Act in connection with any
sale or other transfer of such Old Capital Se-
curities unless such sale is made pursuant to
an exemption from such requirements. In addi-
tion, as described below, if any broker-dealer
holds Old Capital Securities acquired for its
own account as a result of market-making or
other trading activities and exchanges such
Old Capital Securities for New Capital Securi-
ties, then such broker-dealer must deliver a
prospectus meeting the requirements of the Se-
curities Act in connection with any resales of
such New Capital Securities.
Each holder of Old Capital Securities who
wishes to exchange Old Capital Securities for
New Capital Securities in the Exchange Offer
will be required to represent that (i) it is
not an "affiliate" of FBS or the Trust, (ii)
any New Capital Securities to be received by
it are being acquired in the ordinary course
of its business, (iii) it has no arrangement
or understanding with any person to partici-
pate in a distribution (within the
12
<PAGE>
meaning of the Securities Act) of such New
Capital Securities, and (iv) if such holder is
not a broker-dealer, such holder is not en-
gaged in, and does not intend to engage in, a
distribution (within the meaning of the Secu-
rities Act) of such New Capital Securities.
Each broker-dealer that receives New Capital
Securities for its own account pursuant to the
Exchange Offer must acknowledge that it ac-
quired the Old Capital Securities for its own
account as the result of market-making activi-
ties or other trading activities and must
agree that it will deliver a prospectus meet-
ing the requirements of the Securities Act in
connection with any resale of such New Capital
Securities. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on
the position taken by the staff of the Divi-
sion of Corporation Finance of the Commission
in the interpretive letters referred to above,
FBS and the Trust believe that broker-dealers
who acquired Old Capital Securities for their
own accounts as a result of market-making ac-
tivities or other trading activities ("Partic-
ipating Broker-Dealers") may fulfill their
prospectus delivery requirements with respect
to the New Capital Securities received upon
exchange of such Old Capital Securities (other
than Old Capital Securities which represent an
unsold allotment from the original sale of the
Old Capital Securities) with a prospectus
meeting the requirements of the Securities
Act, which may be the prospectus prepared for
an exchange offer so long as it contains a de-
scription of the plan of distribution with re-
spect to the resale of such New Capital Secu-
rities. Accordingly, this Prospectus, as it
may be amended or supplemented from time to
time, may be used by a Participating Broker-
Dealer in connection with resales of New Capi-
tal Securities received in exchange for Old
Capital Securities where such Old Capital Se-
curities were acquired by such Participating
Broker-Dealer for its own account as a result
of market-making or other trading activities.
Subject to certain provisions set forth in the
Registration Rights Agreement and to the limi-
tations described below under "The Exchange
Offer--Resale of New Capital Securities," the
Company has agreed that this Prospectus, as it
may be amended or supplemented from time to
time, may be used by a Participating Broker-
Dealer in connection with resales of such New
Capital Securities for a period ending 90 days
after the Expiration Date or, if earlier, when
all such New Capital Securities have been dis-
posed of by such Participating Broker-Dealer.
See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the
Company may not rely on such interpretive let-
ters and must comply with the registration and
prospectus delivery requirements of the Secu-
rities Act in connection with any resale
transaction. See "The Exchange Offer--Resales
of New Capital Securities."
13
<PAGE>
Exchange Agent................ The exchange agent with respect to the Exchange
Offer is Wilmington Trust Company (the "Ex-
change Agent"). The addresses, and telephone
and facsimile numbers of the Exchange Agent
are set forth in "The Exchange Offer--Exchange
Agent" and in the Letter of Transmittal.
Use of Proceeds............... Neither FBS nor the Trust will receive any cash
proceeds from the issuance of the New Capital
Securities offered hereby. See "Use of Pro-
ceeds From Sale of Old Capital Securities."
Certain United States Federal
Income Tax Considerations;
ERISA Considerations.........
Holders of Old Capital Securities should review
the information set forth under "Certain
United States Federal Income Tax Considera-
tions" and "ERISA Considerations" prior to
tendering Old Capital Securities in the Ex-
change Offer.
THE NEW CAPITAL SECURITIES
Securities Offered............ Up to $300,000,000 aggregate Liquidation Amount
of the Trust's 8.09% Capital Securities which
have been registered under the Securities Act
(Liquidation Amount $1,000 per Capital Securi-
ty). The New Capital Securities will be issued
and the Old Capital Securities were issued un-
der the Trust Agreement. The New Capital Secu-
rities and any Old Capital Securities which
remain outstanding after consummation of the
Exchange Offer will constitute a single series
of Capital Securities under the Trust Agree-
ment and, accordingly, will vote together as a
single class for purposes of determining
whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have
taken certain actions or exercised certain
rights under the Trust Agreement. See "De-
scription of New Securities--Description of
the New Capital Securities--General." The
terms of the New Capital Securities are iden-
tical in all material respects to the terms of
the Old Capital Securities, except that the
New Capital Securities have been registered
under the Securities Act and therefore are not
subject to certain restrictions on transfer
applicable to the Old Capital Securities and
will not provide for any increase in the Dis-
tribution rate thereon. See "The Exchange Of-
fer--Purpose of the Exchange Offer," "Descrip-
tion of the New Securities" and "Description
of the Old Securities."
Distribution Dates............ May 15 and November 15 of each year, commencing
on the first such date following the original
issuance of the New Capital Securities.
Extension Periods............. Distributions on the New Capital Securities
will be deferred for the duration of any Ex-
tension Period elected by FBS with respect to
the payment of interest in the Junior Subordi-
nated
14
<PAGE>
Debentures. No Extension Period will exceed 10
consecutive semi-annual periods or extend be-
yond the Stated Maturity. See "Description of
New Securities--Description of Junior Subordi-
nated Debentures--Option to Extend Interest
Payment Period" and "Certain Federal Income
Tax Consequences--Interest Income and Original
Issue Discount."
Ranking....................... The New Capital Securities will rank pari
passu, and payments thereon will be made pro
rata, with the Common Securities except as de-
scribed under "Description of New Securities--
Description of Capital Securities--Subordina-
tion of Common Securities." The Junior Subor-
dinated Debentures will rank pari passu with
all other junior subordinated debentures to be
issued by FBS pursuant to the Indenture (as
hereinafter defined) ("Other Debentures"),
which will be issued and sold (if at all) to
other trusts to be established by FBS (if
any), in each case similar to the Trust
("Other Trusts"), and will be unsecured and
subordinate and junior in right of payment to
the extent and in the manner set forth in the
Indenture to all Senior and Subordinated Debt
(as defined herein). See "Description of New
Securities--Description of Junior Subordinated
Debentures." The Guarantee will rank pari
passu with all other guarantees (if any), to
be issued by FBS with respect to capital secu-
rities (if any), to be issued by Other Trusts
("Other Guarantees") and will constitute an
unsecured obligation of FBS and will rank sub-
ordinate and junior in right of payment to the
extent and in the manner set forth in the
Guarantee Agreement to all Senior and Subordi-
nated Debt. See "Description of New Securi-
ties--Description of Guarantee."
Redemption.................... The Trust Securities are subject to mandatory
redemption in whole but not in part (i) at the
Stated Maturity upon repayment of the Junior
Subordinated Debentures, (ii) at any time con-
temporaneously with the prepayment of the Ju-
nior Subordinated Debentures upon the occur-
rence and continuation of a Tax Event and
(iii) at any time on or after November 15,
2006 contemporaneously with the optional pre-
payment by FBS of the Junior Subordinated De-
bentures, in each case at the applicable Re-
demption Price. See "Capital Securities--Re-
demption."
Rating........................ The New Capital Securities are expected to be
rated "BBB+" by Standard & Poor's Ratings
Services and "a2" by Moody's Investors Servic-
es, Inc.
Absence of Market for the New
Capital Securities...........
The New Capital Securities will be a new issue
of securities for which there currently is no
market. Although Goldman, Sachs & Co., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Morgan Stanley & Co. In-
corporated, Dain Bosworth Incorporated and
Piper Jaffray Inc., the initial purchasers of
the Old Capital Securities (the "Initial
Purchas-
15
<PAGE>
ers"), have informed FBS and the Trust that
they each currently intend to make a market in
the New Capital Securities, they are not obli-
gated to do so, and any such market making may
be discontinued at any time without notice.
Accordingly, there can be no assurance as to
the development or liquidity of any market for
the New Capital Securities. The Trust and FBS
do not intend to apply for listing of the New
Capital Securities on any securities exchange
or for quotation through the National Associa-
tion of Securities Dealers Automated Quotation
System.
RISK FACTORS
Holders tendering Old Capital Securities in the Exchange Offer should
carefully consider the matters set forth under "Risk Factors."
For further information regarding the New Securities, see "Description of the
New Securities."
16
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the New Capital
Securities before deciding whether to accept the Exchange Offer.
RANKING OF OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED
DEBENTURES
The obligations of FBS under the Guarantee issued by FBS for the benefit of
the holders of Capital Securities are unsecured and rank subordinate and
junior in right of payment to all Senior and Subordinated Debt. The
obligations of FBS under the Junior Subordinated Debentures are subordinate
and junior in right of payment to all such Senior and Subordinated Debt. At
September 30, 1996, the aggregate outstanding Senior and Subordinated Debt was
approximately $3.4 billion. Because FBS is a bank holding company, the right
of FBS to participate in any distribution of assets of any subsidiary,
including First Bank National Association, upon such subsidiary's liquidation
or reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary, except to the extent that FBS
may itself be recognized as a creditor of that subsidiary. Accordingly, the
Junior Subordinated Debentures will be effectively subordinated to all
existing and future liabilities of FBS's subsidiaries, and holders of Junior
Subordinated Debentures should look only to the assets of FBS for payments on
the Junior Subordinated Debentures. See "First Bank System, Inc." None of the
Indenture, the Guarantee Agreement or the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior and
Subordinated Debt, that may be incurred by FBS. See "Description of New
Securities--Description of Guarantee--Status of the Guarantee" and "--
Description of Junior Subordinated Debentures--Subordination."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon FBS making payments on the Junior Subordinated
Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Debenture Event of Default has occurred or is continuing, FBS
has the right under the Indenture to defer the payment of interest on the
Junior Subordinated Debentures at any time or from time to time for a period
not exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity. As a consequence of any such deferral, semi-annual
Distributions on the Capital Securities by the Trust will be deferred (and the
amount of Distributions to which holders of the Capital Securities are
entitled will accumulate additional Distributions thereon at the rate of 8.09%
per annum, compounded semi-annually, but not exceeding the interest rate then
accruing on the Junior Subordinated Debentures); from the relevant payment
date for such Distributions during any such Extension Period. During any such
Extension Period, FBS may not, and may not permit any subsidiary of FBS to,
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of FBS's capital
stock (which includes common and preferred stock) or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of FBS (including Other Debentures) that rank pari passu with
or junior in interest to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by FBS of the debt securities
of any subsidiary of FBS (including Other Guarantees) if such guarantee ranks
pari passu with or junior in interest to the Junior Subordinated Debentures
(other than (a) dividends or distributions in common stock of FBS, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee and (d) purchases of common stock related to
the issuance of common stock or rights under any of FBS's benefit plans for
its directors, officers or employees). Prior to the termination of any such
Extension Period, FBS may further extend such Extension Period provided that
such extension does not cause such Extension Period to exceed 10 consecutive
semi-annual periods or to extend beyond the Stated Maturity. Upon the
termination of any Extension Period and the payment of all interest
17
<PAGE>
then accrued and unpaid on the Junior Subordinated Debentures (together with
interest thereon at the annual rate of 8.09%, compounded semi-annually, to the
extent permitted by applicable law), FBS may elect to begin a new Extension
Period subject to the above requirements. There is no limitation on the number
of times that FBS may elect to begin an Extension Period. See "Description of
New Securities--Description of Capital Securities--Distributions" and "--
Description of Junior Subordinated Debentures--Option to Extend Interest
Payment Period."
Because FBS believes that the likelihood of its exercising its option to
defer payments of interest is remote, the Junior Subordinated Debentures will
be treated under new Treasury regulations as issued without "original issue
discount" for United States federal income tax purposes. As a result, holders
of Capital Securities will include interest in taxable income under their own
methods of accounting (i.e., cash or accrual). Under the new regulations,
however, if FBS exercises its right to defer payments of interest, the Junior
Subordinated Debentures will become original issue discount instruments and
holders of Capital Securities will be required to include their pro rata share
of original issue discount in gross income as it accrues for United States
federal income tax purposes in advance of the receipt of cash. See "Certain
Federal Income Tax Consequences--Interest Income and Original Issue Discount"
and "--Sales or Redemption of Capital Securities."
Should FBS elect to exercise its right to defer payments of interest in the
future, the market price of the Capital Securities is likely to be affected. A
holder that disposes of its Capital Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder
that continues to hold its Capital Securities. In addition, as a result of the
existence of FBS's right to defer interest payments on the Junior Subordinated
Debentures, the market price of the Capital Securities (which represent
preferred beneficial interests in the Trust holding the Junior Subordinated
Debentures as its sole asset) may be more volatile than the market prices of
other securities on which original issue discount accrues that are not subject
to such deferrals.
TAX EVENT REDEMPTION; POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL
SECURITIES
Upon the occurrence and continuation of a Tax Event, FBS has the right to
prepay the Junior Subordinated Debentures in whole (but not in part) at the
Tax Event Prepayment Price within 90 days following the occurrence of such Tax
Event and therefore cause a mandatory redemption of the Trust Securities at
the Tax Event Redemption Price. The exercise of such right is subject to FBS
having received prior approval of the Federal Reserve to do so if then
required under applicable guidelines or policies of the Federal Reserve. See
"Description of Capital Securities--Redemption."
A Tax Event means the receipt by FBS and the Trust of an opinion of 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 political subdivision
or taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying
such laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the Issue Date, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90
days of the date of such opinion, subject to United States Federal income tax
with respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by FBS on the Junior Subordinated Debentures
is not, or within 90 days of such opinion, will not be, deductible by FBS, in
whole or in part, for United States Federal income tax purposes, or (iii) the
Trust is, or will be within 90 days of
the date of the opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
introduced. The Bill would, among other things, deny interest deductions for
interest on an instrument, issued by a corporation, that has a maximum term of
more than 20 years and that is not shown as indebtedness on the separate
balance sheet of the issuer or, where the instrument is issued to a related
party (other than a corporation), where the holder or some other related party
issues a related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. If such provision were to apply to the Junior
Subordinated Debentures, FBS would be unable to
18
<PAGE>
deduct interest on the Junior Subordinated Debentures. However, on March 29,
1996, the Chairmen of the Senate Finance and House Ways and Means Committees
issued a joint statement to the effect that it was their intention that the
effective date of the Bill, if adopted, will be no earlier than the date of
appropriate Congressional action. Nonetheless, there can be no assurance that
current or future legislative proposals or final legislation will not affect
the ability of FBS to deduct interest on the Junior Subordinated Debentures.
Such a change could give rise to a Tax Event, which may permit FBS upon
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve, to cause a redemption of the
Trust Securities at the Tax Event Redemption Price by electing to prepay the
Junior Subordinated Debentures at the Tax Event Prepayment Price. See
"Description of New Securities--Description of Capital Securities--Redemption"
and "--Description of Junior Subordinated Debentures--Tax Event Prepayment."
See also "Certain Federal Income Tax Consequences--Possible Tax Law Changes."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures that may be distributed in exchange for Capital
Securities if a termination of the Trust occurs. Accordingly, the Capital
Securities that an investor may purchase whether pursuant to the offer made
hereby or in the secondary market, or the Junior Subordinated Debentures that a
holder of Capital Securities may receive in liquidation of the Trust, may trade
at a discount from the price that the investor paid to purchase the Capital
Securities offered hereby. Because holders of Capital Securities may receive
Junior Subordinated Debentures in liquidation of the Trust and because
Distributions are otherwise limited to payments on the Junior Subordinated
Debentures, prospective purchasers of Capital Securities are also making an
investment decision with regard to the Junior Subordinated Debentures and
should carefully review all the information regarding the Junior Subordinated
Debentures contained herein. See "Description of New Securities--Description of
the Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
Wilmington Trust Company will act as Guarantee Trustee under the Guarantee
Agreement and will hold the Guarantee for the benefit of the holders of the
Capital Securities. Wilmington Trust Company will also act as Property Trustee
and as Delaware Trustee under the Trust Agreement and as Debenture Trustee
under the Indenture. The Guarantee guarantees to the holders of the Capital
Securities the following payments, to the extent not paid by the Trust: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has funds on hand available therefor
at such time, (ii) the applicable Redemption Price with respect to any Capital
Securities called for redemption, to the extent that the Trust has funds on
hand available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Trust (unless the Junior
Subordinated Debentures are distributed to holders of the Capital Securities),
the lesser of (a) the aggregate of the Liquidation Amount and all accumulated
and unpaid Distributions to the date of payment to the extent that the Trust
has funds on hand available therefor at such time and (b) the amount of assets
of the Trust remaining available for distribution to holders of the Capital
Securities. The holders of not less than a majority in aggregate Liquidation
Amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust
power conferred upon the Guarantee Trustee under the Guarantee Agreement. Any
holder of the Capital Securities may institute a legal proceeding directly
against FBS to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Trust, the Guarantee Trustee or any other person
or entity. If FBS were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, in the event a Debenture Event of Default shall have occurred and be
continuing and such event is attributable to the failure of FBS to pay
principal of or interest on the Junior Subordinated Debentures on the payment
date on which such payment is due and payable, then a holder of Capital
Securities may institute a legal proceeding directly against FBS for
enforcement of payment to such holder of the principal of or interest on such
Junior Subordinated
19
<PAGE>
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such holder (a "Direct Action"). Notwithstanding
any payments made to a holder of Capital Securities by FBS in connection with
a Direct Action, FBS shall remain obligated to pay the principal of and
interest on the Junior Subordinated Debentures, and FBS shall be subrogated to
the rights of the holder of such Capital Securities with respect to payments
on the Capital Securities to the extent of any payments made by FBS to such
holder in any Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures or assert directly any other
rights in respect of the Junior Subordinated Debentures. See "Description of
New Securities--Description of Junior Subordinated Debentures--Enforcement of
Certain Rights of Holders of Capital Securities," "--Description of Junior
Subordinated Debentures--Debenture Events of Default" and "--Description of
Guarantee." The Trust Agreement provides that each holder of Capital
Securities by acceptance thereof agrees to the provisions of the Guarantee
Agreement and the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities, the dissolution,
winding-up or liquidation of the Trust, and the exercise of the Trust's rights
as holder of Junior Subordinated Debentures. Holders of Capital Securities
will not be entitled to vote to appoint, remove or replace the Property
Trustee or the Delaware Trustee, and such voting rights are vested exclusively
in the holder of the Common Securities except upon the occurrence of certain
events described herein. The Property Trustee, the Administrative Agents and
FBS may amend the Trust Agreement without the consent of holders of Capital
Securities to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust even if such action adversely
affects the interests of such holders. See "Description of New Securities--
Description of Capital Securities--Voting Rights; Amendment of the Trust
Agreement and --Removal of Issuer Trustees."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities Act
or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements
of the Securities Act and any other applicable securities laws, or pursuant to
an exemption therefrom or in a transaction not subject thereto, and in each
case in compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). FBS and the Trust do not intend to register under the
Securities Act any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
through Automatic Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer,
any trading market for Old Capital Securities which remain outstanding after
the Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement. See
"Description of New Securities--Description of the Capital Securities--
General."
20
<PAGE>
The Old Capital Securities provide that, if the Exchange Offer is not
consummated within 30 days of the date hereof, the Distribution rate borne by
the Old Capital Securities will increase by 0.25% per annum commencing on the
31st day after the date hereof, until the Exchange Offer is consummated. See
"Description of the Old Capital Securities." Following consummation of the
Exchange Offer, the Old Capital Securities will not be entitled to any
increase in the Distribution rate thereon. The New Capital Securities will not
be entitled to any such increase in the interest rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities were issued to, and the Company believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will
be subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the
holders (who are not affiliates of FBS or the Trust) without compliance with
the registration requirements under the Securities Act, they will constitute a
new issue of securities with no established trading market. Capital Securities
may be transferred by the holders thereof only in blocks having a Liquidation
Amount of not less than $100,000 (100 Capital Securities). FBS and the Trust
have been advised by the Initial Purchasers that the Initial Purchasers
presently intend to make a market in the New Capital Securities. However, the
Initial Purchasers are not obligated to do so and any market-making activity
with respect to the New Capital Securities may be discontinued at any time
without notice. In addition, such market-making activity will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be
limited during the Exchange Offer. Accordingly, no assurance can be given that
an active public or other market will develop for the New Capital Securities
or the Old Capital Securities or as to the liquidity of or the trading market
for the New Capital Securities or the Old Capital Securities. If an active
public market does not develop, the market price and liquidity of the New
Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including,
among other things, prevailing interest rates, results of operations and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of FBS, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of FBS or the Trust may publicly offer for sale or resell the
New Notes only in compliance with the provisions of Rule 144 under the
Securities Act.
Each broker-dealer that receives New Capital Securities for its own account
in exchange for Old Capital Securities, where such Old Capital Securities were
acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such New Capital Securities. See "Plan of
Distribution."
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents.
Therefore, holders of the Old Capital Securities desiring to tender such Old
Capital Securities in exchange for New Capital Securities should allow
sufficient time to ensure timely delivery. The Trust is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
21
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
FBS for the respective periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits........ 2.12 2.71 4.06 2.68 3.11 3.62
Including interest on deposits........ 1.21 1.33 1.67 1.56 1.80 2.07
</TABLE>
For purposes of computing these ratios, earnings represent income before
income taxes and cumulative effect of changes in accounting principles and
fixed charges (excluding capitalized interest). Fixed charges, excluding
interest on deposits, include interest (other than on deposits but including
capitalized interest) and the portion deemed representative of the interest
factor of rents. Fixed charges, including interest on deposits, include all
interest (including capitalized interest) and the portion deemed
representative of the interest factor of rents.
USE OF PROCEEDS FROM SALE OF OLD CAPITAL SECURITIES
Neither FBS nor the Trust will receive any cash proceeds from the issuance
of the New Capital Securities offered hereby. In consideration for issuing the
New Capital Securities in exchange for Old Capital Securities as described in
this Prospectus, the Trust will receive Old Capital Securities in like
Liquidation Amount. The Old Capital Securities surrendered in exchange for the
New Capital Securities will be retired and cancelled.
The net proceeds to the Trust from the offering of the Old Capital
Securities was approximately $300.0 million (before deducting expenses
associated with the offering). All of the proceeds from the sale of Capital
Securities were invested by the Trust in the Old Junior Subordinated
Debentures. FBS intends that the net proceeds from the sale of the Old Junior
Subordinated Debentures will be added to its general corporate funds and will
be used for general corporate purposes. Pending such application by FBS, such
net proceeds may be temporarily invested in short-term interest bearing
securities. The Capital Securities will be eligible to qualify as Tier 1
capital under the capital guidelines of the Federal Reserve.
22
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of FBS and
its subsidiaries as of September 30, 1996 as adjusted to give effect to the
consummation of the offering of the Old Capital Securities and the application
of the proceeds thereof. The following data should be read in conjunction with
the consolidated financial statements and notes thereto of FBS and its
subsidiaries incorporated herein by reference. See "Incorporation of Certain
Documents by Reference." The issuance of the New Capital Securities in the
Exchange Offer will have no effect on the capitalization of FBS.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
AS ADJUSTED
------------------
(IN MILLIONS)
(UNAUDITED)
<S> <C>
Deposits.................................................... $25,008
Short-term borrowings....................................... 3,941
Senior and subordinated debt (with original maturities over
one year).................................................. 3,443
-------
Total debt................................................ 32,392
Company-obligated mandatorily redeemable capital securities
of FBS
Capital I (1).............................................. 300
SHAREHOLDERS' EQUITY
Preferred stock............................................. 87
Common stock--$1.25 par value--200,000,000 shares
authorized, 141,747,738 shares issued...................... 177
Capital surplus............................................. 1,145
Retained earnings........................................... 2,170
Unrealized gains and losses on investment securities
available for sale......................................... (17)
Less cost of common stock in treasury--6,300,788 shares..... (381)
-------
Total shareholders' equity................................ 3,181
-------
TOTAL CAPITALIZATION.................................... $35,873
=======
</TABLE>
- --------
(1) FBS Capital I is a wholly-owned subsidiary of FBS and holds the Junior
Subordinated Debentures as its sole asset.
DIVIDEND HISTORY
FBS has paid a regular quarterly dividend on its Common Stock since its
incorporation in 1929.
23
<PAGE>
FBS CAPITAL I
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) the Trust Agreement executed by FBS, as Depositor, Wilmington Trust
Company, as Property Trustee and as Delaware Trustee, and the Administrative
Agents named therein, and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on November 6, 1996. The Trust exists for the
exclusive purposes of (i) issuing and selling the Trust Securities and
effecting the Exchange Offer for the New Capital Securities, (ii) using the
proceeds from the sale of Trust Securities to acquire the Junior Subordinated
Debentures, (iii) exchanging the Old Junior Subordinate Debentures for the New
Junior Subordinated Debentures in the Exchange Offer pursuant to the Indenture
and (iv) engaging in only those other activities necessary, advisable or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the New Junior Subordinated Debentures will be the sole assets of
the Trust, and payments under the New Junior Subordinated Debentures and the
Expense Agreement will be the sole revenues of the Trust. All of the Common
Securities will be owned by FBS. The Common Securities will rank pari passu,
and payments will be made thereon pro rata, with the Capital Securities,
except that upon the occurrence and continuance of an event of default under
the Trust Agreement resulting from a Debenture Event of Default, the rights of
FBS as holder of the Common Securities to payment in respect of Distributions
and payments upon liquidation, redemption or otherwise will be subordinated to
the rights of the holders of the Capital Securities. See "Description of New
Securities--Description of Capital Securities--Subordination of Common
Securities." FBS will acquire Common Securities in an aggregate liquidation
amount equal to 3% of the total capital of the Trust. The Trust has a term of
31 years, but may terminate earlier as provided in the Trust Agreement. The
Trust's business and affairs are conducted by its agents, each appointed by
FBS as holder of the Common Securities. The trustees for the Trust will be
Wilmington Trust Company, as the Property Trustee (the "Property Trustee"),
and as the Delaware Trustee (the "Delaware Trustee"), and three individual
agents (the "Administrative Agents") who are employees or officers of or
affiliated with FBS (collectively, the "Issuer Trustees"). Wilmington Trust
Company, as Property Trustee, will act as sole indenture trustee under the
Trust Agreement. Wilmington Trust Company will also act as trustee under the
Guarantee Agreement and the Indenture. See "Description of New Securities--
Description of Guarantee" and "--Description of Junior Subordinated
Debentures." The holder of the Common Securities of the Trust, or the holders
of a majority in Liquidation Amount of the Capital Securities, if an Event of
Default under the Trust Agreement has occurred and is continuing, will be
entitled to appoint, remove or replace the Property Trustee and/or the
Delaware Trustee. In no event will the holders of the Capital Securities have
the right to vote to appoint, remove or replace the Administrative Agents;
such voting rights are vested exclusively in the holder of the Common
Securities. The duties and obligations of each Issuer Trustee are governed by
the Trust Agreement. Pursuant to the Expense Agreement and the Registration
Rights Agreement, FBS will pay all fees and expenses related to the Trust, and
the offering of the Capital Securities and the Exchange Offer and will pay,
directly or indirectly, all ongoing costs, expenses and liabilities of the
Trust. The principal executive office of the Trust is c/o First Bank System,
Inc., First Bank Place, 601 Second Avenue South, Minneapolis, Minnesota 55402-
4302, Attention: Secretary, and its telephone number is (612) 973-1111.
24
<PAGE>
FIRST BANK SYSTEM, INC.
FBS is a regional bank holding company headquartered in Minneapolis,
Minnesota. FBS is comprised of nine banks, a savings association and other
financial companies with 380 offices, located primarily in the 11 states of
Minnesota, Colorado, Illinois, Montana, North Dakota, South Dakota, Wisconsin,
Iowa, Nebraska, Kansas and Wyoming. Through its subsidiaries, FBS provides
commercial and agricultural finance, consumer banking, trust, capital markets,
treasury management, investment management, data processing, leasing and
brokerage services. At September 30, 1996, FBS and its consolidated
subsidiaries had consolidated assets of $36.8 billion, consolidated deposits
of $25.0 billion and shareholders' equity of $3.2 billion.
The subsidiary banks of FBS engage in general commercial banking business,
principally in domestic markets, and provide banking and ancillary services to
individuals, businesses, institutional organizations, governmental entities
and other financial institutions. The largest subsidiary bank, First Bank
National Association ("FBNA"), had assets of $16.9 billion at September 30,
1996.
FBS is a legal entity separate and distinct from its banking and non-banking
affiliates. The principal sources of FBS' income are dividends, interest and
fees from FBNA and the other banking and non-banking affiliates. The bank
subsidiaries of FBS, including FBNA (the "Banks"), are subject to certain
restrictions imposed by federal law on any extensions of credit to, and
certain other transactions with, FBS and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent
FBS and such other affiliates from borrowing from the Banks unless the loans
are secured by various types of collateral. Further, such secured loans, other
transactions and investments by any of the Banks are generally limited in
amount as to FBS and as to each of such other affiliates to 10% of such Bank's
capital and surplus and as to FBS and all of such other affiliates to an
aggregate of 20% of such Bank's capital and surplus. In addition, payment of
dividends to FBS by the subsidiary banks is subject to ongoing review by
banking regulators and is subject to various statutory limitations and in
certain circumstances requires approval by banking regulatory authorities.
FBS was incorporated under Delaware law in 1929 and has functioned as a
multi-bank holding company since that time. Its principal executive offices
are located at First Bank Place, 601 Second Avenue South, Minneapolis,
Minnesota 55402-4302 (telephone (612) 973-1111). For further information
concerning FBS, see the FBS documents incorporated by reference herein as
described under "Incorporation of Certain Documents by Reference."
25
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, FBS and the Trust
entered into the Registration Rights Agreement with the Initial Purchasers,
pursuant to which FBS and the Trust agreed to file and to use their reasonable
efforts to cause to become effective with the Commission a registration
statement with respect to the exchange of the Old Capital Securities for
capital securities with terms identical in all material respects to the terms
of the Old Capital Securities. A copy of the Registration Rights Agreement has
been filed as an Exhibit to the Registration Statement of which this
Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
FBS and the Trust under the Registration Rights Agreement. The form and terms
of the New Capital Securities are the same as the form and terms of the Old
Capital Securities except that the New Capital Securities have been registered
under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Capital Securities and will not
provide for any increase in the Distribution rate thereon. In that regard, the
Old Capital Securities provide, among other things, that, if the Exchange
Offer is not consummated by June 24, 1997, the Distribution rate borne by the
Old Capital Securities commencing on June 25, 1997, will increase by 0.25% per
annum until the Exchange Offer is consummated. Upon consummation of the
Exchange Offer, holders of Old Capital Securities will not be entitled to any
increase in the Distribution rate thereon or any further registration rights
under the Registration Rights Agreement, except under limited circumstances.
See "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of the Old Capital Securities."
The Exchange Offer is not being made to, nor will the Company accept tenders
for exchange from, holders of Old Capital Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by The Depository Trust Company who
desires to deliver such Old Capital Securities by book-entry transfer at The
Depository Trust Company.
Pursuant to the Exchange Offer, FBS will exchange as soon as practicable
after the date hereof, the Old Guarantee for the New Guarantee and all of the
Old Junior Subordinated Debentures, of which $309,279,000 aggregate principal
amount is outstanding, for like aggregate principal of the New Junior
Subordinated Debentures. The New Guarantee and New Junior Subordinated
Debentures have been registered under the Securities Act.
TERMS OF THE EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $300,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date (as defined below) and
not properly withdrawn in accordance with the procedures described below. The
Company will issue, promptly after the Expiration Date, an aggregate
Liquidation Amount of up to $300,000,000 of New Capital Securities in exchange
for a like principal amount of outstanding Old Capital Securities tendered and
accepted in connection with the Exchange Offer. Holders may tender their Old
Capital Securities in whole or in part in a Liquidation Amount of not less
than $100,000 or any integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount of
Old Capital Securities being tendered. As of the date of this Prospectus
$300,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
26
<PAGE>
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances.
See "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein
or otherwise, certificates for any such unaccepted Old Capital Securities will
be returned, without expense, to the tendering holder thereof promptly after
the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
FBS will pay all charges and expenses, other than certain applicable taxes
described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF FBS NOR THE TRUSTEE OF THE TRUST MAKES ANY
RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD CAPITAL SECURITIES
PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO
MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES MUST MAKE
THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF
SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER READING
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 199 unless the Exchange Offer is extended by the Trust (in which
case the term "Expiration Date" shall mean the latest date and time to which
the Exchange Offer is extended).
The Trust expressly reserves the right in its sole and absolute discretion,
subject to applicable law, at any time and from time to time, (i) to delay the
acceptance of the Old Capital Securities for exchange, (ii) to terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore
been accepted for exchange) if the Trust determines, in its sole and absolute
discretion, that any of the events or conditions referred to under "--
Conditions to the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and
retain all Old Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Old Capital Securities to
withdraw their tendered Old Capital Securities as described under "--
Withdrawal Rights," and (iv) to waive any condition or otherwise amend the
terms of the Exchange Offer in any respect. If the Exchange Offer is amended
in a manner determined by the Trust to constitute a material change, or if the
Trust waives a material condition of the Exchange Offer, the Trust will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders of the Old Capital Securities, and
the Trust will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Trust may choose to make any public
announcement and subject to applicable law, the Trust shall have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a release to an appropriate news agency.
27
<PAGE>
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old Capital
Securities tendered and accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of
Old Capital Securities into the Exchange Agent's account at The Depositary
Trust Company ("DTC"), (ii) the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and (iii) any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of Old Capital Securities into the Exchange Agent's account at
DTC.
Subject to the terms and conditions of the Exchange Offer, the Trust will be
deemed to have accepted for exchange, and thereby exchanged, Old Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Old Capital Securities for exchange pursuant to the Exchange Offer. The
Exchange Agent will act as agent for the Trust for the purpose of receiving
tenders of Old Capital Securities, Letters of Transmittal and related
documents, and as agent for tendering holders for the purpose of receiving Old
Capital Securities, Letters of Transmittal and related documents and
transmitting New Capital Securities to validly tendering holders. Such
exchange will be made promptly after the Expiration Date. If for any reason
whatsoever, acceptance for exchange or the exchange of any Old Capital
Securities tendered pursuant to the Exchange Offer is delayed (whether before
or after the Trust's acceptance for exchange of Old Capital Securities) or the
Trust extends the Exchange Offer or is unable to accept for exchange or
exchange Old Capital Securities tendered pursuant to the Exchange Offer, then,
without prejudice to the Trust's rights set forth herein, the Exchange Agent
may, nevertheless, on behalf of the Trust and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered Old Capital Securities and such Old Capital
Securities may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital Securities
will warrant and agree in the Letter of Transmittal that it has full power and
authority to tender, exchange, sell, assign and transfer Old Capital
Securities, that the Trust will acquire good, marketable and unencumbered
title to the tendered Old Capital Securities, free and clear of all liens,
restrictions, charges and encumbrances, and the Old Capital Securities
tendered for exchange are not subject to any adverse claims or proxies. The
holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Trust or the Exchange Agent to
be necessary or desirable to complete the exchange, sale, assignment, and
transfer of the Old Capital Securities tendered pursuant to the Exchange
Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital Securities
to be validly tendered pursuant to the Exchange Offer, a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation must be received by the Exchange Agent, in each
case on or prior to the Expiration Date, or (iii) the guaranteed delivery
procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in
the appropriate box on the Letter of Transmittal. The entire amount of Old
Capital Securities delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
28
<PAGE>
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Old Capital Securities
by causing DTC to transfer such Old Capital Securities into the Exchange
Agent's account at DTC in accordance with DTC's procedures for transfers.
However, although delivery of Old Capital Securities may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in
any case be delivered to and received by the Exchange Agent at its address set
forth under "--Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT
Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the
certificate or (b) such registered holder completes the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (a) or (b) above, such certificates for Old
Capital Securities must be duly endorsed or accompanied by a properly executed
bond power, with the endorsement or signature on the bond power and on the
Letter of Transmittal guaranteed by a firm or other entity identified in Rule
17Ad-15 under the Exchange Act as an "eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker
or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (an
"Eligible Institution"), unless surrendered on behalf of such Eligible
Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
29
<PAGE>
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
entry confirmation with respect to such Old Capital Securities, and a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees and any other documents
required by the Letter of Transmittal. Accordingly, the delivery of New
Capital Securities might not be made to all tendering holders at the same
time, and will depend upon when Old Capital Securities, book-entry
confirmations with respect to Old Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange
of any tendered Old Capital Securities will be determined by the Trust, in its
sole discretion, whose determination shall be final and binding on all
parties. The Trust reserves the absolute right, in its sole and absolute
discretion, to reject any and all tenders determined by it not to be in proper
form or the acceptance of which, or exchange for, may, in the view of counsel
to the Trust, be unlawful. The Trust also reserves the absolute right, subject
to applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The Trust's interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Capital Securities will be deemed to have
been validly made until all irregularities with respect to such tender have
been cured or waived. Neither the Trust, any affiliates or assigns of the
Trust, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in tenders or incur any liability for
failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Trust,
proper evidence satisfactory to the Trust, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither FBS nor the Trust sought
its own interpretive letter and there can be no assurance that the staff of
the Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, FBS and the Trust believe that New Capital
Securities issued pursuant to this Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no
30
<PAGE>
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities who is an "affiliate" of FBS or
the Trust or who intends to participate in the Exchange Offer for the purpose
of distributing New Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Trust to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (a) will not be able to rely on
the interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Old Capital Securities in the Exchange
Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other
transfer of such Old Capital Securities unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Old Capital Securities acquired for its own account as a
result of market-making or other trading activities and exchanges such Old
Capital Securities for New Capital Securities, then such broker-dealer must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of FBS or the Trust, (ii) any New
Capital Securities to be received by it are being acquired in the ordinary
course of its business, (iii) it has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of such New Capital Securities, and (iv) if such holder is not a broker-
dealer, such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. In addition, FBS and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer, to
furnish to FBS and the Trust (or an agent thereof) in writing information as to
the number of "beneficial owners" (within the meaning of Rule 13d-3 under the
Exchange Act) on behalf of whom such holder holds the Capital Securities to be
exchanged in the Exchange Offer. Each broker-dealer that receives New Capital
Securities for its own account pursuant to the Exchange Offer must acknowledge
that it acquired the Old Capital Securities for its own account as the result
of market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on the position taken by the staff of
the Division of Corporation Finance of the Commission in the interpretive
letters referred to above, FBS and the Trust believe that broker-dealers who
acquired Old Capital Securities for their own accounts as a result of market-
making activities or other trading activities ("Participating Broker-Dealers")
may fulfill their prospectus delivery requirements with respect to the New
Capital Securities received upon exchange of such Old Capital Securities (other
than Old Capital Securities which represent an unsold allotment from the
original sale of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, FBS and the Trust have agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 90 days after the Expiration Date or, if
earlier, when all such New Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of FBS or the Trust may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of
31
<PAGE>
notice from FBS or the Trust of the occurrence of any event or the discovery
of any fact which makes any statement contained or incorporated by reference
in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading or of the occurrence
of certain other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of New Capital Securities
(or the Guarantee or the Junior Subordinated Debentures, as applicable)
pursuant to this Prospectus until FBS or the Trust has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating Broker-
Dealer or FBS or the Trust has given notice that the sale of the New Capital
Securities (or the Guarantee or the Junior Subordinated Debentures, as
applicable) may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "--Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be
withdrawn, the aggregate principal amount of Old Capital Securities to be
withdrawn, and (if certificates for such Old Capital Securities have been
tendered) the name of the registered holder of the Old Capital Securities as
set forth on the Old Capital Securities, if different from that of the person
who tendered such Old Capital Securities. If Old Capital Securities have been
delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Old Capital Securities, the tendering holder must
submit the serial numbers shown on the particular Old Capital Securities to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, except in the case of Old Capital Securities tendered
for the account of an Eligible Institution. If Old Capital Securities have
been tendered pursuant to the procedures for book-entry transfer set forth in
"--Procedures for Tendering Old Capital Securities," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of Old Capital Securities, in which case a notice of withdrawal
will be effective if delivered to the Exchange Agent by written, telegraphic,
telex or facsimile transmission. Withdrawals of tenders of Old Capital
Securities may not be rescinded. Old Capital Securities properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but
may be retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its
sole discretion, whose determination shall be final and binding on all
parties. Neither the Trust, any affiliates or assigns of the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned
to the holder thereof promptly after withdrawal.
DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with
respect to such Old Capital Securities prior to the original issue date of the
New Capital Securities or, if no such Distributions have been made, will not
receive any accumulated Distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and after such Distribution Date or, if no
such Distributions have been made, from and after November 15, 1996.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Trust will not be required to accept for exchange,
or to exchange, any Old Capital Securities for any New Capital
32
<PAGE>
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the staff
of the Commission which permits the New Capital Securities issued pursuant
to the Exchange Offer in exchange for Old Capital Securities to be offered
for resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an "affiliate" of FBS or the
Trust within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New Capital Securities are acquired in
the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the
distribution of such New Capital Securities; or
(b) any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect to
the Exchange Offer which, in the Trust's judgment, would reasonably be
expected to impair the ability of the Trust to proceed with the Exchange
Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Trust's judgment, would reasonably be expected to
impair the ability of the Trust to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or Minnesota or New York State authorities which, in the Company's
judgment, would reasonably be expected to impair the ability of the Company
to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Trust's
judgment, would reasonably be expected to impair the ability of the Trust
to proceed with the Exchange Offer; or
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
FBS or the Trust, threatened for that purpose any governmental approval has
not been obtained, which approval the Trust shall, in its sole discretion,
deem necessary for the consummation of the Exchange Offer as contemplated
hereby; or
(g) any change, or any development involving a prospective change, in the
business or financial affairs of the Trust or any of its subsidiaries has
occurred which, in the sole judgment of the Trust, might materially impair
the ability of the Trust to proceed with the Exchange Offer.
If the Trust determines in its sole and absolute discretion that any of the
foregoing events or conditions has occurred or exists or has not been
satisfied, the Trust may, subject to applicable law, terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any such condition or otherwise amend the terms of
the Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Trust will promptly disclose such
waiver by means of a prospectus supplement that will be distributed to the
registered holders of the Old Capital Securities, and the Trust will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
Wilmington Trust Company, has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
Wilmington Trust Company
[Address]
Attention: Corporate Trust
Telephone:
Facsimile:
33
<PAGE>
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
FBS has agreed to pay the Exchange Agent reasonable and customary fees for
its services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith. FBS will also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of this Prospectus and related documents to the beneficial
owners of Old Capital Securities, and in handling or tendering for their
customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Capital Securities in connection with the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Neither FBS nor the Trust will make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer.
DESCRIPTION OF THE NEW CAPITAL SECURITIES
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Issuer Trustees have issued
the Old Capital Securities and the Common Securities and will issue the New
Capital Securities. The New Capital Securities will represent preferred
beneficial interests in the Trust and the holders thereof will be entitled to a
preference in certain circumstances with respect to Distributions and amounts
payable on redemption of the Trust Securities or liquidation of the Trust over
the Common Securities. See "--Subordination of Common Securities." The Trust
Agreement has been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). This summary of certain provisions of the Capital
Securities, the Common Securities and the Trust Agreement does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Trust Agreement, including the definitions
therein of certain terms.
GENERAL
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $300,000,000 aggregate Liquidation
Amount at any one time outstanding. The Capital Securities will rank pari
passu, and payments will be made thereon pro rata, with the Common Securities
except as described under "--Subordination of Common Securities." Legal title
to the Junior Subordinated Debentures will be held by the Property Trustee in
trust for the benefit of the holders of the Capital Securities and Common
Securities. The Guarantee executed by FBS for the benefit of the holders of the
Capital Securities (the "Guarantee") will be a guarantee on a subordinated
basis but will not guarantee payment of Distributions or amounts payable on
redemption of the Capital Securities or on liquidation of the Trust when the
Trust does not have funds on hand available to make such payments. See "--
Description of Guarantee."
DISTRIBUTIONS
Distributions on the Capital Securities will be cumulative, will accumulate
from November 15, 1996 and will be payable at the annual rate of 8.09% of the
Liquidation Amount, and will be payable semi-annually in
34
<PAGE>
arrears on May 15 and November 15 of each year, commencing May 15, 1997. The
record dates will be the preceding April 30 and October 31, respectively. The
amount of Distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
Distributions are payable on the Capital Securities is not a Business Day (as
defined below), payment of the Distribution payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect to any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date (each date on which Distributions are
payable in accordance with the foregoing, a "Distribution Date"). A "Business
Day" shall mean any day other than a Saturday or a Sunday, or a day on which
banking institutions in The City of New York are authorized or required by law
or executive order to remain closed or a day on which the corporate trust
office of the Property Trustee or the Debenture Trustee is closed for
business.
So long as no Debenture Event of Default has occurred and is continuing, FBS
has the right under the Indenture to defer the payment of interest on the
Junior Subordinated Debentures at any time or from time to time for a period
not exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity. As a consequence of any such election, semi-annual
Distributions on the Capital Securities will be deferred by the Trust during
any such Extension Period. Distributions to which holders of the Capital
Securities are entitled will accumulate additional Distributions thereon at
the rate per annum of 8.09% thereof, compounded semi-annually from the
relevant Distribution Date, but not exceeding the interest rate then accruing
on the Junior Subordinated Debentures. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, FBS may not, and may not permit any subsidiary of FBS to, (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or
make a liquidation payment with respect to, any of FBS's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of FBS (including Other Debentures) that rank pari passu with or
junior in interest to the Junior Subordinated Debentures or make any guarantee
payments with respect to any guarantee by FBS of the debt securities of any
subsidiary of FBS (including Other Guarantees) if such guarantee ranks pari
passu with or junior in interest to the Junior Subordinated Debentures (other
than (a) dividends or distributions in common stock of FBS, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee and (d) purchases of common stock related to
the issuance of common stock or rights under any of FBS's benefit plans for
its directors, officers or employees). Prior to the termination of any such
Extension Period, FBS may further extend such Extension Period, provided that
such extension does not cause such Extension Period to exceed 10 consecutive
semi-annual periods or to extend beyond the Stated Maturity. Upon the
termination of any such Extension Period and the payment of all amounts then
due, and subject to the foregoing limitations, FBS may elect to begin a new
Extension Period. FBS must give the Property Trustee, the Administrative
Agents and the Debenture Trustee notice of its election of any such Extension
Period at least five Business Days prior to the earlier of (i) the date the
Distributions on the Capital Securities would have been payable except for the
election to begin such Extension Period or (ii) the date the Administrative
Agents are required to give notice to any automated quotation system or to
holders of such Capital Securities of the record date or the date such
Distributions are payable but in any event not less than five Business Days
prior to such record date. There is no limitation on the number of times that
FBS may elect to begin an Extension Period. See "--Description of Junior
Subordinated Debentures--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
FBS believes that the likelihood of it exercising its right to defer
payments of interest on the Junior Subordinated Debentures is remote.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the the Trust will invest the proceeds from the
35
<PAGE>
issuance and sale of the Trust Securities. See "--Description of Junior
Subordinated Debentures--General." If FBS does not make interest payments on
the Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds legally available for
the payment of such Distributions and cash sufficient to make such payments) is
guaranteed by FBS on a limited basis as set forth herein under "--Description
of Guarantee."
REDEMPTION
Upon the repayment in full at the Stated Maturity or prepayment in whole (but
not in part) of the Junior Subordinated Debentures, the proceeds from such
repayment or prepayment shall be applied by the Property Trustee to redeem the
Trust Securities, upon not less than 30 nor more than 60 days' notice of a date
of redemption (the "Redemption Date"), at the applicable Redemption Price,
which shall be equal to (i) in the case of the repayment of the Junior
Subordinated Debentures at the Stated Maturity, the Maturity Redemption Price
(equal to the principal of, and accrued interest on, the Junior Subordinated
Debentures), (ii) in the case of the prepayment of the Junior Subordinated
Debentures upon the occurrence and continuation of a Tax Event, the Tax Event
Redemption Price (equal to the Tax Event Prepayment Price in respect of the
Junior Subordinated Debentures) and (iii) in the case of the optional
prepayment of the Junior Subordinated Debentures, the Optional Redemption Price
(equal to the Optional Prepayment Price in respect of the Junior Subordinated
Debentures). See "Description of Junior Subordinated Debentures--Optional
Prepayment;--Tax Event Prepayment."
FBS will have the right to prepay the Junior Subordinated Debentures in whole
(but not in part) (i) on or after November 15, 2006, at any time at the
applicable Optional Prepayment Price (as defined under "Description of Junior
Subordinated Debentures--Optional Prepayment"), and (ii) at any time, upon the
occurrence of a Tax Event, at the Tax Event Prepayment Price (as defined under
"Description of Junior Subordinated Debentures--Tax Event Prepayment"), in each
case subject to receipt of prior approval by the Federal Reserve if then
required under applicable capital guidelines or policies of the Federal
Reserve.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
FBS will have the right at any time to terminate the Trust and cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust. Such right is subject to FBS having
received an opinion of counsel to the effect that such distribution will not be
a taxable event to holders of Capital Securities and prior approval of the
Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of FBS; (ii) the
distribution of a Like Amount (as defined below) of the Junior Subordinated
Debentures to the holders of the Trust Securities, if FBS, as Depositor, has
given written direction to the Property Trustee to terminate the Trust (which
direction is optional and, except as described above, wholly within the
discretion of FBS, as Depositor); (iii) redemption of all of the Trust
Securities as described under "--Redemption"; (iv) expiration of the term of
the Trust; and (v) the entry of an order for the dissolution of the Trust by a
court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) (iv), or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, to the holders of the Trust Securities a Like Amount of the Junior
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practical, in which event such holders will be entitled to
receive out of the assets of the Trust available for distribution to holders,
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to, the aggregate of the Liquidation Amount
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Capital Securities
36
<PAGE>
shall be paid on a pro rata basis. The holder(s) of the Common Securities will
be entitled to receive distributions upon any such liquidation pro rata with
the holders of the Capital Securities, except that if a Debenture Event of
Default has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities. See "--Subordination of Common
Securities." If an early termination occurs as described in clause (v) above,
the Junior Subordinated Debentures will be subject to optional prepayment in
whole (but not in part).
"Like Amount" means Junior Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the holder to whom
such Junior Subordinated Debentures are distributed.
If FBS elects not to prepay the Junior Subordinated Debentures prior to
maturity and either elects not to or is unable to liquidate the Trust and
distribute the Junior Subordinated Debentures to holders of the Trust
Securities, the Capital Securities will remain outstanding until the repayment
of the Junior Subordinated Debentures at the Stated Maturity.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities (i) the Capital
Securities will no longer be deemed to be outstanding, (ii) The Depository
Trust Company ("DTC") or its nominee, as the record holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution and (iii) any certificates representing Capital Securities not
held by DTC or its nominee will be deemed to represent Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of such
Capital Securities, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on such Capital Securities until such
certificates are presented to the Administrative Agents or their agent for
cancellation whereupon FBS will issue to such holder, and the Debenture Trustee
will authenticate, a certificate representing such Junior Subordinated
Debentures.
There can be no assurance as to the market prices for the Capital Securities
or the Junior Subordinated Debentures that may be distributed in exchange for
the Trust Securities if a dissolution and liquidation of the Trust were to
occur. Accordingly, the Capital Securities that an investor may purchase, or
the Junior Subordinated Debentures that the investor may receive on dissolution
and liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Capital Securities offered hereby.
REDEMPTION PROCEDURES
Trust Securities shall be redeemed, if at all, at the applicable Redemption
Price with the proceeds from the contemporaneous repayment or prepayment of the
Junior Subordinated Debentures. Redemptions of the Trust Securities shall be
made and the applicable Redemption Price shall be payable on the Redemption
Date only to the extent that the Trust has funds on hand available for the
payment of such applicable Redemption Price. See also "--Subordination of
Common Securities."
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, with respect to the Capital Securities held in
global form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the applicable Redemption Price to the
holders of the Capital Securities. See "--Form, Denomination, Book-Entry
Procedures and Transfer." With respect to the Capital Securities held in
certificated form, the Property Trustee, to the extent funds are available,
will irrevocably deposit with the paying agent for the Capital Securities funds
sufficient to pay the applicable Redemption Price and will give such paying
agent irrevocable instructions and authority to pay the applicable Redemption
Price to the holders thereof upon surrender of their certificates evidencing
the Capital Securities. See "--Payment and Paying Agency." Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date shall be
payable to the holders of such Capital Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of the Capital Securities will cease, except the right of
the holders of the Capital Securities to receive the applicable Redemption
Price, but without interest
37
<PAGE>
on such Redemption Price, and the Capital Securities will cease to be
outstanding. In the event that any date fixed for redemption of Capital
Securities is not a Business Day, then payment of the applicable Redemption
Price payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the applicable Redemption Price is improperly withheld or
refused and not paid either by the Trust or by FBS pursuant to the Guarantee as
described under "--Description of Guarantee," Distributions on Capital
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Trust to the date such applicable
Redemption Price is actually paid, in which case the actual payment date will
be the date fixed for redemption for purposes of calculating the applicable
Redemption Price.
Subject to applicable law (including, without limitation, United States
Federal securities law), FBS or its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market
or by private agreement.
Payment of the applicable Redemption Price on, and any distribution of Junior
Subordinated Debentures to holders of, the Trust Securities shall be made to
the applicable recordholders thereof as they appear on the register therefor on
the relevant record date, which shall be a date at least 15 days prior to the
Redemption Date or liquidation date, as applicable.
Notice of any redemption will be mailed at least 30 days but not more than 60
days before the Redemption Date to each holder of Trust Securities at its
registered address. Unless FBS defaults in payment of the applicable Prepayment
Price on, or in the repayment of, the Junior Subordinated Debentures, on and
after the Redemption Date Distributions will cease to accrue on the Trust
Securities called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based
on the Liquidation Amounts of the Capital Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date a
Debenture Event of Default shall have occurred and be continuing, no payment of
any Distribution on, or applicable Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of the Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the applicable Redemption Price the
full amount of such Redemption Price on all of the outstanding Capital
Securities, shall have been made or provided for, and all funds available to
the Property Trustee shall first be applied to the payment in full in cash of
all Distributions on, or Redemption Price of, the Capital Securities then due
and payable.
In the case of any Event of Default under the Trust Agreement resulting from
a Debenture Event of Default, FBS as holder of the Common Securities will be
deemed to have waived any right to act with respect to any such Event of
Default until the effect of all such Events of Default have been cured, waived
or otherwise eliminated. Until any such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the holders of the Capital Securities and not on behalf of FBS as holder of
the Common Securities, and only the holders of the Capital Securities will have
the right to direct the Property Trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures--Debenture Events of Default"); or
38
<PAGE>
(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is addressed in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Capital Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by FBS to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Agents and FBS, as Depositor, unless such Event of Default shall
have been cured or waived. FBS, as Depositor, and the Administrative Agents are
required to file annually with the Property Trustee a certificate as to whether
or not they are in compliance with all the conditions and covenants applicable
to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities upon termination
of the Trust as described above. See "--Liquidation of the Trust and
Distribution of Junior Subordinated Debentures."
REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Agents, which
voting rights are vested exclusively in FBS as the holder of the Common
Securities. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment
by the successor trustee in accordance with the provisions of the Trust
Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any time
or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust's property
may at the time be located, FBS, as the holder of the Common Securities, and
the Administrative Agents shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or any
part of such Trust's property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or any
Administrative Agent that is not a natural person may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Issuer Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Issuer Trustee, shall be the successor of such Issuer
Trustee under the Trust Agreement, provided such corporation shall be otherwise
qualified and eligible.
39
<PAGE>
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other Person, except as described below. The
Trust may, at the request of FBS, as Depositor, with the consent of the
Administrative Agents but without the consent of the holders of the Capital
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to a trust organized as such under the laws of any State; provided,
that (i) such successor entity either (a) expressly assumes all of the
obligations of the Trust with respect to the Capital Securities or (b)
substitutes for the Capital Securities other securities having substantially
the same terms as the Capital Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Capital Securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) FBS expressly appoints a trustee of such
successor entity possessing the same powers and duties as the Property Trustee
as the holder of the Junior Subordinated Debentures, (iii) the Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Capital Securities are then listed, if any, (iv) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the Capital Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose identical to that of
the Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, FBS has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of
the holders of the Capital Securities (including any Successor Securities) in
any material respect, and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor
such successor entity will be required to register as an investment company
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and (viii) FBS or any permitted successor or assignee owns all of the
common securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Trust or the successor entity to be classified as other than a grantor
trust for United States Federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "--Description of Guarantee--Amendments
and Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by FBS, the Property
Trustee and the Administrative Agents, without the consent of the holders of
the Trust Securities (i) to cure any ambiguity, correct or supplement any
provisions in the Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Trust Agreement, which shall not be inconsistent with the
other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States Federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Trust will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of clause (i), such action shall not adversely affect in any
material respect the interests of any holder of Trust Securities, and any
amendments of the Trust Agreement shall become effective when notice thereof is
given to the holders of the Trust Securities. The Trust
40
<PAGE>
Agreement may be amended by the Issuer Trustees and FBS with (i) the consent of
holders representing not less than a majority (based upon Liquidation Amounts)
of the outstanding Trust Securities, and (ii) receipt by the Issuer Trustees of
an opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
affect the Trust's status as a grantor trust for United States Federal income
tax purposes or the Trust's exemption from status as an "investment company"
under the Investment Company Act, provided that without the consent of each
holder of Trust Securities, the Trust Agreement may not be amended to (i)
change the amount or timing of any Distribution on the Trust Securities or
otherwise adversely affect the amount of any Distribution required to be made
in respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Property Trustee with respect to
the Junior Subordinated Debentures, (ii) waive any past default that is
waivable under Section 513 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of a majority in aggregate
Liquidation Amount of all outstanding Capital Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of Junior Subordinated Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior consent of each holder
of the Capital Securities. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of such holders. The Property Trustee
shall notify each holder of Capital Securities of any notice of default with
respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States Federal
income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be given to each
holder of record of Capital Securities in the manner set forth in the Trust
Agreement.
No vote or consent of the holders of Capital Securities will be required for
the Trust to redeem and cancel the Capital Securities in accordance with the
Trust Agreement.
Notwithstanding that holders of the Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by FBS, the Issuer Trustees or any affiliate of FBS
or any Issuer Trustees, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
In the event that Capital Securities are issued in certificated form, such
Capital Securities will be in blocks having a Liquidation Amount of not less
than $100,000 (100 Capital Securities) and may be transferred or exchanged in
such blocks in the manner and at the offices described below.
The New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global
Capital Securities"). The Global Capital Securities will be deposited upon
issuance with the Property Trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
41
<PAGE>
Except as set forth below, the Global Capital Securities may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee. Beneficial interests in the Global Capital Securities may
not be exchanged for Capital Securities in certificated form except in the
limited circumstances described below. See "--Exchange of Book-Entry Capital
Securities for Certificated Capital Securities".
Depositary Procedures
DTC has advised the Trust and FBS that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic book-
entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership
interest of each actual purchaser of each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and FBS that, pursuant to procedures
established by it, (i) upon deposit of the Global Capital Securities, DTC will
credit the accounts of Participants designated by the Initial Purchasers with
portions of the principal amount of the Global Capital Securities and (ii)
ownership of such interests in the Global Capital Securities will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Capital Securities).
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL CAPITAL
SECURITIES WILL NOT HAVE CAPITAL SECURITIES REGISTERED IN THEIR NAME, WILL NOT
RECEIVE PHYSICAL DELIVERY OF CAPITAL SECURITIES IN CERTIFICATED FORM AND WILL
NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE TRUST
AGREEMENT FOR ANY PURPOSE.
Payments in respect of the Global Capital Security registered in the name of
DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Capital Securities, including the Global Capital Securities, are registered
as the owners thereof for the purpose of receiving such payments and for any
and all other purposes whatsoever. Consequently, neither the Property Trustee
nor any agent thereof has or will have any responsibility or liability for (i)
any aspect of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global Capital Securities, or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect Participant's
records relating to the beneficial ownership interests in the Global Capital
Securities or (ii) any other matter relating to the actions and practices of
DTC or any of its Participants or Indirect Participants. DTC has advised the
Trust and FBS that its current practice, upon receipt of any payment in respect
of securities such as the Capital Securities, is to credit the accounts of the
relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in Liquidation Amount of beneficial
interests in the relevant security as shown on the records of DTC unless DTC
has reason to believe it will not receive payment on such payment date.
Payments by the Participants and the Indirect Participants to the beneficial
owners of Capital Securities will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Property
Trustee or the Trust. Neither the Trust nor the Property Trustee will be liable
for any delay by DTC or any of its Participants in identifying the beneficial
owners of the Capital Securities, and the Trust and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
42
<PAGE>
Interests in the Global Capital Securities will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
DTC has advised the Trust and FBS that it will take any action permitted to
be taken by a holder of Capital Securities only at the direction of one or more
Participants to whose account with DTC interests in the Global Capital
Securities are credited and only in respect of such portion of the aggregate
Liquidation Amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Trust Agreement, DTC reserves the right to exchange the
Global Capital Securities for legended Capital Securities in certificated form
and to distribute such Capital Securities to its Participants.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities held in global form shall be
made to the Depositary, which shall credit the relevant accounts at the
Depositary on the applicable Distribution Dates or in respect of the Capital
Securities that are not held by the Depositary, such payments shall be made by
check mailed to the address of the holder entitled thereto as such address
shall appear on the register. The paying agent (the "Paying Agent") shall
initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Agents and FBS. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and FBS. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Agents shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Agents and FBS) to act as Paying Agent.
RESTRICTIONS ON TRANSFER
The Capital Securities will be issued, any may be transferred only, in blocks
having a Liquidation Amount of not less than $100,000 (100 Capital Securities).
Any attempted transfer, sale or other disposition of Capital Securities in a
block having a Liquidation Amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed not
to be the holder of such Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such Capital Securities, and such
transferee shall be deemed to have no interest whatsoever in such Capital
Securities.
RATING
The Capital Securities are expected to be rated "BBB+" by Standard & Poor's
Rating Services and "a2" by Moody's Investor Services, Inc.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the Capital
Securities.
Registration of transfers of the Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required to register or cause to be registered
the transfer of the Capital Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default,
43
<PAGE>
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of
Trust Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the Trust Agreement or is unsure of the application of any provision of the
Trust Agreement, and the matter is not one on which holders of the Capital
Securities or the Common Securities are entitled under the Trust Agreement to
vote, then the Property Trustee shall take such action as is directed by FBS
and if not so directed, shall take such action as it deems advisable and in
the best interests of the holders of the Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Agents are authorized and directed to conduct the affairs
of and to operate the Trust in such a way that the Trust will not be deemed to
be an "investment company" required to be registered under the Investment
Company Act or classified as an association taxable as a corporation for
United States Federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of FBS for United States Federal
income tax purposes. In this connection, FBS and the Administrative Agents are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that FBS and the
Administrative Agents determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures will be issued as a separate series under the
Indenture. The Indenture has been qualified under the Trust Indenture Act.
This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Indenture does not purport to be complete, and where
reference is made to particular provisions of the Indenture, such provisions,
including the definitions of certain terms, some of which are not otherwise
defined herein, are qualified in their entirety by reference to all of the
provisions of the Indenture and those terms made a part of the Indenture by
the Trust Indenture Act.
GENERAL
Concurrently with the issuance of the Capital Securities, the Trust invested
the proceeds thereof, together with the consideration paid by FBS for the
Common Securities, in Old Junior Subordinated Debentures issued by FBS.
Pursuant to the Exchange Offer, FBS will exchange the Old Junior Subordinated
Debentures for the New Junior Subordinated Debentures as soon as practicable
after the date hereof. No Old Junior Subordinated Debentures will remain
outstanding after such exchange. The following is a description of the New
Junior Subordinated Debentures (referred to in this subsection as the "Junior
Subordinated Debentures").
The Junior Subordinated Debentures will bear interest at the annual rate of
8.09% of the principal amount thereof, payable semi-annually in arrears on May
15 and November 15 of each year (each, an "Interest Payment Date"), commencing
May 15, 1997, to the person in whose name each Junior Subordinated Debenture
is registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. It is anticipated
that, until the liquidation, if any, of the Trust, each Junior Subordinated
Debenture
44
<PAGE>
will be held in the name of the Property Trustee in trust for the benefit of
the holders of the Trust Securities. The amount of interest payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable
Interest Payment Date will bear additional interest on the amount thereof (to
the extent permitted by law) at the rate per annum of 8.09% thereof, compounded
semi-annually. The term "interest" as used herein shall include semi-annual
interest payments, interest on semi-annual interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The Junior Subordinated Debentures will mature on November 15, 2026. The
Junior Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior and Subordinated Debt. Because
FBS is a bank holding company, the right of FBS to participate in any
distribution of assets of any subsidiary, including FBNA, upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability
of holders of the Capital Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary,
except to the extent that FBS may itself be recognized as a creditor of that
subsidiary. Accordingly, the Junior Subordinated Debentures will be
subordinated to all Senior and Subordinated Debt and effectively subordinated
to all existing and future liabilities of FBS's subsidiaries, and holders of
Junior Subordinated Debentures should look only to the assets of FBS for
payments on the Junior Subordinated Debentures. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of FBS, including
Senior and Subordinated Debt whether under the Indenture or any existing or
other indenture that FBS may enter into in the future or otherwise. See "--
Subordination."
The Junior Subordinated Debentures will rank pari passu with all Other
Debentures issued under the Indenture and will be unsecured and subordinate and
junior in right of payment to the extent and in the manner set forth in the
Indenture to all Senior and Subordinated Debt of FBS. See "--Subordination."
FBS is a non-operating holding company and almost all of the operating assets
of FBS and its consolidated subsidiaries are owned by such subsidiaries. FBS
relies primarily on dividends from such subsidiaries to meet its obligations.
FBS is a legal entity separate and distinct from its banking and non-banking
affiliates. The principal sources of FBS' income are dividends, interest and
fees from FBNA and the other banking and non-banking affiliates. The bank
subsidiaries of FBS, including FBNA (the "Banks"), are subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, FBS and certain other affiliates, and on investments
in stock or other securities thereof. Such restrictions prevent FBS and such
other affiliates from borrowing from the Banks unless the loans are secured by
various types of collateral. Further, such secured loans, other transactions
and investments by any of the Banks are generally limited in amount as to FBS
and as to each of such other affiliates to 10% of such Bank's capital and
surplus and as to FBS and all of such other affiliates to an aggregate of 20%
of such Bank's capital and surplus. In addition, payment of dividends to FBS by
the subsidiary banks is subject to ongoing review by banking regulators and is
subject to various statutory limitations and in certain circumstances requires
approval by banking regulatory authorities. Because FBS is a holding company,
the right of FBS to participate in any distribution of assets of any subsidiary
upon such subsidiary's liquidation or reorganization or otherwise, is subject
to the prior claims of creditors of the subsidiary, except to the extent FBS
may itself be recognized as a creditor of that subsidiary. Accordingly, the
Junior Subordinated Debentures will be effectively subordinated to all existing
and future liabilities of FBS's subsidiaries, and holders of Junior
Subordinated Debentures should look only to the assets of FBS for payments on
the Junior Subordinated Debentures. The Indenture does not limit the incurrence
or issuance of other secured or unsecured debt of FBS, including Senior and
Subordinated Debt, whether under the Indenture, any other indenture that FBS
may enter into in the future or otherwise. See "--Subordination."
The Other Debentures will be issuable in one or more series pursuant to an
indenture supplemental to the Indenture or a resolution of FBS's Board of
Directors or a committee thereof.
45
<PAGE>
DENOMINATIONS, REGISTRATION AND TRANSFER
The Junior Subordinated Debentures will be represented by one or more global
certificates registered in the name of Cede & Co. as the nominee of DTC.
Beneficial interests in the Junior Subordinated Debentures will be shown on,
and transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described below, Junior Subordinated Debentures
in certificated form will not be issued in exchange for the global
certificates.
A global security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than Cede & Co. only if (i) DTC
notifies FBS that it is unwilling or unable to continue as a depositary for
such global security and no successor depositary shall have been appointed, or
if at any time DTC ceases to be a "clearing agency" registered under the
Exchange Act, at a time when DTC is required to be so registered to act as such
depositary, (ii) FBS in its sole discretion determines that such global
security shall be so exchangeable, or (iii) there shall have occurred and be
continuing a Debenture Event of Default. Any global security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
certificates registered in such names as DTC shall direct. It is expected that
such instructions will be based upon directions received by DTC from its
Participants with respect to ownership of beneficial interests in such global
security. In the event that Junior Subordinated Debentures are issued in
certificated form, such Junior Subordinated Debentures will be in minimum
denominations of $100,000 and integral multiples of $1,000 in excess thereof
and may be transferred or exchanged only in such minimum denominations and in
the manner and at the offices described below.
Payments on Junior Subordinated Debentures represented by a global security
will be made to DTC, as the depositary for the Junior Subordinated Debentures.
In the event Junior Subordinated Debentures are issued in certificated form,
principal and interest will be payable, the transfer of the Junior Subordinated
Debentures will be registrable, and Junior Subordinated Debentures will be
exchangeable for Junior Subordinated Debentures of other denominations of a
like aggregate principal amount, at the corporate office of the Debenture
Trustee in New York, New York, or at the offices of any paying agent or
transfer agent appointed by FBS, provided that payment of interest may be made
at the option of FBS by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Junior Subordinated Debentures
are issued in certificated form, the record dates for payment of interest will
be the 15th day of the last month of each semi-annual period.
For a description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemptions and other notices
and other matters, see "--Description of Capital Securities--Form,
Denomination, Book-Entry Procedures and Transfer" above. If the Junior
Subordinated Debentures are distributed to the holders of the Trust Securities
upon the termination of the Trust, the form, denomination, book-entry and
transfer procedures with respect to the Capital Securities as described above
under "--Description of Capital Securities--Form, Denominations, Book-Entry
Procedures and Transfer," shall apply to the Junior Subordinated Debentures
mutatis mutandis.
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and any interest on Junior
Subordinated Debentures will be made at the office of the Debenture Trustee in
the City of New York or at the office of such Paying Agent or Paying Agents as
FBS may designate from time to time, except that at the option of FBS payment
of any interest may be made except in the case of Junior Subordinated
Debentures in global form, (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the register for Junior
Subordinated Debentures or (ii) by transfer to an account maintained by the
Person entitled thereto as specified in such register, provided that proper
transfer instructions have been received by the relevant Record Date. Payment
of any interest on any Junior Subordinated Debenture will be made to the Person
in whose name such Junior Subordinated Debenture is registered at the close of
business on the Record Date for such interest, except in the case of defaulted
interest. FBS may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent; however FBS will at all times be required to
maintain a Paying Agent in each Place of Payment for the Junior Subordinated
Debentures.
46
<PAGE>
Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by FBS in trust, for the payment of the principal of (and premium, if any)
or interest on any Junior Subordinated Debenture and remaining unclaimed for
two years after such principal (and premium, if any) or interest has become due
and payable shall, at the request of FBS, be repaid to FBS and the holder of
such Junior Subordinated Debenture shall thereafter look, as a general
unsecured creditor, only to FBS for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no Debenture Event of Default has occurred or is continuing, FBS
has the right under the Indenture at any time during the term of the Junior
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity. At the end of such Extension Period, FBS must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of 8.09%, compounded semi-annually, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Junior Subordinated Debentures (and holders of the Capital
Securities while Capital Securities are outstanding) will be required to accrue
interest income for United States federal income tax purposes. See "Certain
Federal Income Tax Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, FBS may not, and may not permit any
subsidiary of FBS to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of FBS's capital stock (which includes common and preferred stock) or (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of FBS (including any Other Debentures) that rank
pari passu with or junior in interest to the Junior Subordinated Debentures or
make any guarantee payments with respect to any guarantee by FBS of the debt
securities of any subsidiary of FBS (including any Other Guarantees) if such
guarantee ranks pari passu with or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock of FBS, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Guarantee, and (d) purchases of common
stock related to the issuance of common stock or rights under any of FBS's
benefit plans for its directors, officers or employees). Prior to the
termination of any such Extension Period, FBS may further extend such Extension
Period, provided that such extension does not cause such Extension Period to
exceed 10 consecutive semi-annual periods or to extend beyond the Stated
Maturity. Upon the termination of any such Extension Period and the payment of
all amounts then due on any Interest Payment Date, FBS may elect to begin a new
Extension Period subject to the above requirements. No interest shall be due
and payable during an Extension Period, except at the end thereof. FBS must
give the Property Trustee, the Administrative Agents and the Debenture Trustee
notice of its election of any Extension Period (or an extension thereof) at
least five Business Days prior to the earlier of (i) the date the Distributions
on the Trust Securities would have been payable except for the election to
begin or extend such Extension Period or (ii) the date the Administrative
Agents are required to give notice to any automated quotation system or to
holders of Capital Securities of the record date or the date such Distributions
are payable, but in any event not less than five Business Days prior to such
record date. The Debenture Trustee shall give notice of FBS's election to begin
or extend a new Extension Period to the holders of the Capital Securities.
There is no limitation on the number of times that FBS may elect to begin an
Extension Period.
OPTIONAL PREPAYMENT
The Junior Subordinated Debentures will be prepayable, in whole (but not in
part), at the option of FBS at any time on or after November 15, 2006, subject
to FBS having received prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve, at a
prepayment price (the
47
<PAGE>
"Optional Prepayment Price") equal to the percentage of the outstanding
principal amount of the Junior Subordinated Debentures specified below, plus,
in each case, accrued interest thereon to the date of prepayment:
November 15, 2006 to November 14, 2007: 104.045%
November 15, 2007 to November 14, 2008: 103.641%
November 15, 2008 to November 14, 2009: 103.236%
November 15, 2009 to November 14, 2010: 102.832%
November 15, 2010 to November 14, 2011: 102.427%
November 15, 2011 to November 14, 2012: 102.023%
November 15, 2012 to November 14, 2013: 101.618%
November 15, 2013 to November 14, 2014: 101.214%
November 15, 2014 to November 14, 2015: 100.809%
November 15, 2015 to November 14, 2016: 100.405%
On or after November 15, 2016: 100%
TAX EVENT PREPAYMENT
If a Tax Event (as defined below) shall occur and be continuing, FBS may, at
its option and subject to receipt of prior approval of the Federal Reserve if
then required under applicable capital guidelines or policies of the Federal
Reserve, prepay the Junior Subordinated Debentures in whole (but not in part)
at any time within 90 days of the occurrence of such Tax Event, at a prepayment
price (the "Tax Event Prepayment Price") equal to the greater of (i) 100% of
the principal amount of such Junior Subordinated Debentures or (ii) as
determined by a Quotation Agent (as defined below), the sum of the present
values of the remaining scheduled payments of principal and interest thereon
discounted to the prepayment date on a semi-annual basis (assuming a 360 day
year consisting of 30-day months) at the Adjusted Treasury Rate, plus, in each
case, accrued interest thereon to the date of prepayment.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue plus (i) if such prepayment date occurs prior to
November 15, 1997, 1.25% or (ii) if such prepayment date occurs on or after
November 15, 1997, 1.00%, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Junior Subordinated Debentures to be prepaid that would
be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Junior Subordinated
Debentures.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Debenture Trustee after consultation with FBS. "Reference Treasury Dealer"
means (i) Goldman, Sachs & Co. and their respective successors; provided,
however, that if the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), FBS shall
substitute therefor another Primary Treasury Dealer; and (ii) any other Primary
Treasury Dealer selected by the Debenture Trustee after consultation with FBS.
"Comparable Treasury Price" means, with respect to any prepayment date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such prepayment date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Debenture Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such Quotations.
48
<PAGE>
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any prepayment date, the average, as determined by the
Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted
in writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00
p.m. on the third Business Day preceding such prepayment date.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding Capital Securities and Common Securities shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Tax Event.
"Tax Event" means the receipt by the Trust of an opinion of 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 political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the Issue Date, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90
days of the date of such opinion, subject to United States Federal income tax
with respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by FBS on the Junior Subordinated Debentures
is not, or within 90 days of the date of such opinion, will not be, deductible
by FBS, in whole or in part, for United States Federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
Notice of any prepayment will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of Junior Subordinated
Debentures to be prepaid at its registered address. Unless FBS defaults in
payment of the prepayment price, on and after the prepayment date interest
ceases to accrue on such Junior Subordinated Debentures called for prepayment.
If the the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, FBS will pay as additional
amounts on the Junior Subordinated Debentures the Additional Sums.
RESTRICTIONS ON CERTAIN PAYMENTS
FBS will also covenant that it will not, and will not permit any subsidiary
of FBS to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of FBS's
capital stock (which includes common and preferred stock) or (ii) make any
payment of principal, interest or premium, if any, on or repay or repurchase or
redeem any debt securities of FBS (including Other Debentures) that rank pari
passu with or junior in interest to the Junior Subordinated Debentures or make
any guarantee payments with respect to any guarantee by FBS of the debt
securities of any subsidiary of FBS (including under Other Guarantees) if such
guarantee ranks pari passu or junior in interest to the Junior Subordinated
Debentures (other than (a) dividends or distributions in common stock of FBS,
(b) any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee and (d) purchases of common stock related to
the issuance of common stock or rights under any of FBS's benefit plans for its
directors, officers or employees) if at such time (i) there shall have occurred
any event of which FBS has actual knowledge that (a) with the giving of notice
or the lapse of time, or both, would constitute a "Debenture Event of Default"
and (b) in respect of which FBS shall not have taken reasonable steps to cure,
(ii) if such Junior Subordinated Debentures are held by the Trust, FBS shall be
in default with respect to its payment of any obligations under the Guarantee
or (iii) FBS shall have given notice of its election of an Extension Period as
provided in the Indenture and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing.
49
<PAGE>
MODIFICATION OF INDENTURE
From time to time FBS and the Debenture Trustee may, without the consent of
the holders of Junior Subordinated Debentures, amend, waive or supplement the
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any such action does not
materially adversely affect the interest of the holders of Junior Subordinated
Debentures and qualifying, or maintaining the qualification of, the Indenture
under the Trust Indenture Act. The Indenture contains provisions permitting FBS
and the Debenture Trustee, with the consent of the holders of not less than a
majority in principal amount of Junior Subordinated Debentures, to modify the
Indenture in a manner affecting the rights of the holders of Junior
Subordinated Debentures; provided, that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity, or reduce the principal amount of the
Junior Subordinated Debentures, or reduce the rate or extend the time of
payment of interest thereon or (ii) reduce the percentage of principal amount
of Junior Subordinated Debentures, the holders of which are required to consent
to any such modification of the Indenture.
In addition, FBS and the Debenture Trustee may execute, without the consent
of any holder of Junior Subordinated Debentures, any supplemental Indenture for
the purpose of creating any Other Debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described events
with respect to the Junior Subordinated Debentures constitutes a "Debenture
Event of Default":
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures or any Other Debentures, when due (subject to the deferral of
any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the Junior
Subordinated Debentures or any Other Debentures when due whether at
maturity, upon redemption by declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
FBS from the Debenture Trustee or the holders of at least 25% in aggregate
outstanding principal amount of Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of FBS.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures may annul such declaration and waive the default
if the default (other than the non-payment of the principal of the Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders
of all the Junior Subordinated Debentures, waive any past default, except a
default in the payment of principal or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Junior Subordinated Debenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default has occurred and is continuing and such event
is attributable to the failure of FBS to pay interest or principal on the
Junior Subordinated Debentures on the date such interest or principal
50
<PAGE>
is otherwise payable, a holder of Capital Securities may institute a Direct
Action. FBS may not amend the Indenture to remove the foregoing right to bring
a Direct Action without the prior written consent of the holders of all of the
Capital Securities. If the right to bring a Direct Action is removed following
the Exchange Offer, the Trust may become subject to the reporting obligations
under the Securities Exchange Act of 1934, as amended. Notwithstanding any
payments made to a holder of Capital Securities by FBS in connection with a
Direct Action, FBS shall remain obligated to pay the principal of or interest
on the Junior Subordinated Debentures, and FBS shall be subrogated to the
rights of the holder of such Capital Securities with respect to payments on the
Capital Securities to the extent of any payments made by FBS to such holder in
any Direct Action.
The holders of the Capital Securities would not be able to exercise directly
any remedies, other than those set forth in the preceding paragraph, available
to the holders of the Junior Subordinated Debentures unless there shall have
been an Event of Default under the Trust Agreement. See "Description of Capital
Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that FBS shall not consolidate with or merge into any
other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate
with or merge into FBS or convey, transfer or lease its properties and assets
substantially as an entirety to FBS, unless (i) in case FBS consolidates with
or merges into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia,
and such successor Person expressly assumes FBS's obligations on the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time
or both, would become a Debenture Event of Default, shall have happened and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving FBS that may adversely affect holders of the Junior
Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior Subordinated
Debentures not previously delivered to the Debenture Trustee for cancellation
(i) have become due and payable or (ii) will become due and payable at their
Stated Maturity within one year, and FBS deposits or causes to be deposited
with the Debenture Trustee funds, in trust, for the purpose and in an amount
sufficient to pay and discharge the entire indebtedness on the Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation, for the principal (and premium, if any) and interest to the date
of the deposit or to the Stated Maturity, as the case may be, then the
Indenture will cease to be of further effect (except as to FBS's obligations to
pay all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and FBS will be deemed
to have satisfied and discharged the Indenture.
SUBORDINATION
In the Indenture, FBS has covenanted and agreed that any Junior Subordinated
Debentures issued thereunder will be subordinate and junior in right of payment
to all Senior and Subordinated Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of FBS, the holders of Senior and Subordinated Debt will
first be entitled to receive payment in full of all Allocable Amounts (as
defined below) on such Senior and Subordinated Debt before the holders of
Junior Subordinated Debentures will be entitled to receive or retain any
payment in respect thereof.
51
<PAGE>
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior and Subordinated Debt outstanding at the
time of such acceleration will first be entitled to receive payment in full of
all amounts due thereon (including any amounts due upon acceleration) before
the holders of Junior Subordinated Debentures will be entitled to receive or
retain any payment in respect of the Junior Subordinated Debentures.
No payments on account of principal (or premium, if any) or interest, if any,
in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
and Subordinated Debt, or an event of default with respect to any Senior and
Subordinated Debt resulting in the acceleration of the maturity thereof, or if
any judicial proceeding shall be pending with respect to any such default.
"Allocable Amounts," when used with respect to any Senior and Subordinated
Debt, means all amounts due or to become due on such Senior and Subordinated
Debt less, if applicable, any amount which would have been paid to, and
retained by, the holders of such Senior and Subordinated Debt (whether as a
result of the receipt of payments by the holders of such Senior and
Subordinated Debt from FBS or any other obligor thereon or from any holders of,
or trustee in respect of, other indebtedness that is subordinate and junior in
right of payment to such Senior and Subordinated Debt pursuant to any provision
of such indebtedness for the payment over of amounts received on account of
such indebtedness to the holders of such Senior and Subordinated Debt or
otherwise) but for the fact that such Senior and Subordinated Debt is
subordinate or junior in right of payment to (or subject to a requirement that
amounts received on such Senior and Subordinated Debt be paid over to obligees
on) trade accounts payable or accrued liabilities arising in the ordinary
course of business.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) all
indebtedness of such Person whether incurred on or prior to the date of the
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable, directly or indirectly, as obligor
or otherwise.
"Senior and Subordinated Debt" means the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to FBS whether or not
such claim for post-petition interest is allowed in such proceeding), on Debt
of FBS, whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Junior Subordinated Debentures or the Other
Debentures; provided, however, that Senior and Subordinated Debt shall not be
deemed to include (i) any Debt of FBS which when incurred and without respect
to any election under Section 1111(b) of the United States Bankruptcy Code of
1978, as amended, was without recourse to FBS, (ii) any Debt of FBS to any of
its subsidiaries, (iii) Debt to any employee of FBS and (iv) any other debt
securities issued pursuant to the Indenture.
FBS is a non-operating holding company and almost all of the operating assets
of FBS are owned by FBS's subsidiaries. FBS relies primarily on dividends from
such subsidiaries to meet its obligations for payment of principal and interest
on its outstanding debt obligations and corporate expenses. FBS is a legal
entity separate and distinct from its banking and non-banking affiliates. The
principal sources of FBS' income are dividends, interest and fees from FBNA and
the other banking and non-banking affiliates. The bank subsidiaries of FBS,
52
<PAGE>
including FBNA (the "Banks"), are subject to certain restrictions imposed by
federal law on any extensions of credit to, and certain other transactions
with, FBS and certain other affiliates, and on investments in stock or other
securities thereof. Such restrictions prevent FBS and such other affiliates
from borrowing from the Banks unless the loans are secured by various types of
collateral. Further, such secured loans, other transactions and investments by
any of the Banks are generally limited in amount as to FBS and as to each of
such other affiliates to 10% of such Bank's capital and surplus and as to FBS
and all of such other affiliates to an aggregate of 20% of such Bank's capital
and surplus. In addition, payment of dividends to FBS by the subsidiary banks
is subject to ongoing review by banking regulators and is subject to various
statutory limitations and in certain circumstances requires approval by
banking regulatory authorities. Accordingly, the Junior Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of FBS's subsidiaries. Holders of Junior Subordinated Debentures
should look only to the assets of FBS for payments of interest and principal
and premium, if any.
The Indenture places no limitation on the amount of additional Senior and
Subordinated Debt that may be incurred by FBS. FBS expects from time to time
to incur additional indebtedness constituting Senior and Subordinated Debt.
RESTRICTIONS ON TRANSFER
The Junior Subordinated Debentures will be issued, and may be transferred
only, in minimum denominations of not less than $100,000 and multiples of
$1,000 in excess thereof. Any transfer, sale or other disposition of Junior
Subordinated Debentures in a denomination of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever. Any such transferee shall
be deemed not to be the holder of such Junior Subordinated Debentures for any
purpose, including but not limited to the receipt of payments on such Junior
Subordinated Debentures, and such transferee shall be deemed to have no
interest whatsoever in such Junior Subordinated Debentures.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to such provisions, the Debenture Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Junior Subordinated Debentures, unless offered reasonable indemnity
by such holder against the costs, expenses and liabilities which might be
incurred thereby. The Debenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance
of its duties if the Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by FBS concurrently with the
issuance by the Trust of the Old Capital Securities for the benefit of the
holders from time to time of the Capital Securities. As soon as practicable
after the date hereof, the Old Guarantee will be exchanged by FBS for the New
Guarantee. The Guarantee Agreement has been qualified under the Trust
Indenture Act. This summary of certain provisions of the Guarantee Agreement
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all of the provisions of the Guarantee Agreement,
including the definitions therein of certain terms, and the Trust Indenture
Act. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Capital Securities.
53
<PAGE>
GENERAL
FBS has irrevocably agreed (and under the New Guarantee will irrevocably
agree) to pay in full on a subordinated basis, to the extent set forth herein,
the Guarantee Payments (as defined below) to the holders of the Capital
Securities, as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert other than the defense of
payment. The following payments with respect to the Capital Securities, to the
extent not paid by or on behalf of the Trust (the "Guarantee Payments"), will
be subject to the Guarantee: (i) any accumulated and unpaid Distributions
required to be paid on Capital Securities, to the extent that the Trust has
funds on hand available therefor at such time, (ii) the applicable Redemption
Price with respect to Capital Securities called for redemption to the extent
that the Trust has funds on hand available therefor at such time, or (iii)
upon a voluntary or involuntary dissolution, winding up or liquidation of the
Trust, the lesser of (a) the Liquidation Distribution and (b) the amount of
assets of the Trust remaining available for distribution to holders of Capital
Securities. FBS's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by FBS to the holders of the Capital
Securities or by causing the Trust to pay such amounts to such holders.
The Guarantee will rank subordinate and junior in right of payment to all
Senior and Subordinated Debt. See "--Status of the Guarantee". Because FBS is
a holding company, the right of FBS to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization
or otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent FBS may itself be recognized as a creditor of that
subsidiary. Accordingly, FBS's obligations under the Guarantee will be
effectively subordinated to all existing and future liabilities of FBS's
subsidiaries, and claimants should look only to the assets of FBS for payments
thereunder. See "First Bank System, Inc." The Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt of FBS, including
Senior and Subordinated Debt, whether under the Indenture, any other indenture
that FBS may enter into in the future or otherwise.
FBS has, through the Guarantee, the Guarantee Agreement, the Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed
all of the Trust's obligations under the Capital Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Capital
Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of FBS and will rank
subordinate and junior in right of payment to all Senior and Subordinated Debt
in the same manner as Junior Subordinated Debentures.
The Guarantee will rank pari passu with all Other Guarantees issued by FBS.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
FBS to enforce its rights under the Guarantee without first instituting a
legal proceeding against any other person or entity). The Guarantee will be
held for the benefit of the holders of the Capital Securities. The Guarantee
will not be discharged except by payment of the Guarantee Payments in full to
the extent not paid by the Trust or upon distribution to the holders of the
Capital Securities of the Junior Subordinated Debentures. The Guarantee does
not place a limitation on the amount of additional Senior and Subordinated
Debt that may be incurred by FBS. FBS expects from time to time to incur
additional indebtedness constituting Senior and Subordinated Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee Agreement may not be amended without the prior
approval of the holders of not less than a majority of the aggregate
Liquidation Amount of such outstanding Capital Securities. The manner of
obtaining any such approval will be as set forth under "Description of the
Capital Securities--Voting Rights; Amendment of the Trust Agreement." All
guarantees and agreements contained in the Guarantee Agreement shall bind the
successors, assigns, receivers, trustees and representatives of FBS and shall
inure to the benefit of the holders of the Capital Securities then
outstanding.
54
<PAGE>
EVENTS OF DEFAULT
An event of default under the Guarantee Agreement will occur upon the
failure of FBS to perform any of its payment or other obligations thereunder.
The holders of not less than a majority in aggregate Liquidation Amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee Agreement.
Any holder of the Capital Securities may institute a legal proceeding
directly against FBS to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity.
FBS, as guarantor, is required to file annually with the Guarantee Trustee a
certificate as to whether or not FBS is in compliance with all the conditions
and covenants applicable to it under the Guarantee Agreement.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Guarantee Agreement provides that FBS shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into FBS or convey, transfer or lease its properties
and assets substantially as an entirety to FBS, unless (i) in case FBS
consolidates with or merges into another Person or conveys or transfers its
properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes FBS's
obligations on the Guarantee; (ii) immediately after giving effect thereto, no
event of default under the Guarantee Agreement, and no event which, after
notice or lapse of time or both, would become an event of default under the
Guarantee Agreement, shall have happened and be continuing; and (iii) certain
other conditions as prescribed in the Guarantee Agreement are met.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by FBS in performance of the Guarantee, undertakes to perform only
such duties as are specifically set forth in the Guarantee Agreement and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee
Agreement at the request of any holder of the Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the applicable Redemption Price of the Capital Securities, upon
full payment of the amounts payable upon liquidation of the Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Capital
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the Capital Securities must
restore payment of any sums paid under the Capital Securities or the
Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by FBS under the Trust
Agreement, FBS irrevocably and unconditionally guaranteed to each person or
entity to whom the Trust becomes indebted or liable, the full payment of any
costs, expenses or liabilities of the Trust, other than obligations of the
Trust to pay to the holders of any Trust Securities or other similar interests
in the Trust of the amounts due such holders pursuant to the terms of the
Trust Securities or such other similar interests, as the case may be.
55
<PAGE>
DESCRIPTION OF THE OLD SECURITIES
The terms of the Old Securities are identical in all material respect to the
New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the applicable Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange
Offer, except under limited circumstances); (ii) the New Capital Securities
will not provide for any increase in the Distribution rate thereon; and (iii)
the New Junior Subordinated Debentures will not provide for any increase in
the interest rate thereon. The Old Securities provide that, in the event that
the Exchange Offer is not consummated on or prior to June 24, 1997, or, in
certain limited circumstances, in the event a shelf registration statement
(the "Shelf Registration Statement") with respect to the resale of the Old
Capital Securities is not declared effective on or prior to May 24, 1997, then
interest will accrue (in addition to the stated interest rate on the Junior
Subordinated Debentures) at the rate of 0.25% per annum on the principal
amount of the Junior Subordinated Debentures and Distributions will accrue (in
addition to the stated Distribution rate on the Capital Securities) at the
rate of 0.25% per annum on the Liquidation Amount of the Capital Securities,
for the period from the occurrence of such event until such time as such
required Exchange Offer is consummated or any required Shelf Registration
Statement is effective. The New Securities are not, and upon consummation of
the Exchange Offer the Old Securities will not be, entitled to any such
additional interest or Distributions. Accordingly, holders of Old Capital
Securities should review the information set forth under "Risk Factors--
Certain Consequences of a Failure to Exchange Old Capital Securities" and
"Description of New Securities."
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
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by FBS as and to the extent set
forth under "Description of New Securities--Description of Guarantee." Taken
together, FBS's obligations under the Junior Subordinated Debentures, the
Indenture, the Trust Agreement, the Expense Agreement, the Guarantee Agreement
and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Capital Securities. If and to the extent that
FBS does not make payments on the Junior Subordinated Debentures, the Trust
will not 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 such event, the remedy of a
holder of Capital Securities is to institute a Direct Action. The obligations
of FBS under the Guarantee are subordinate and junior in right of payment to
all Senior and Subordinated Debt.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount or Prepayment Price of the Junior
Subordinated Debentures will be equal to the sum of the aggregate Liquidation
Amount or Redemption Price, as applicable, of the Capital Securities and
Common Securities; (ii) the interest rate and interest and other payment dates
on the Junior Subordinated Debentures will match the Distribution rate and
Distribution and other payment dates for the Trust Securities; (iii) FBS shall
pay for all and any costs, expenses and liabilities of the Trust except the
Trust's obligations to holders of Trust Securities under such Trust
Securities; and (iv) the Trust Agreement further provides that the Trust will
not engage in any activity that is not consistent with the limited purposes
thereof.
56
<PAGE>
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against FBS to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Guarantee Trustee, the Trust or any other person
or entity.
A default or event of default under any Senior and Subordinated Debt would
not constitute a default or Event of Default under the Trust Agreement.
However, in the event of payment defaults under, or acceleration of, Senior and
Subordinated Debt, the subordination provisions of the Indenture provide that
no payments may be made in respect of the Junior Subordinated Debentures until
such Senior and Subordinated Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on
Junior Subordinated Debentures would constitute an Event of Default under the
Trust Agreement.
LIMITED PURPOSE OF THE TRUST
The Capital Securities evidence a beneficial interest in the Trust, and the
Trust exists for the sole purpose of issuing the Capital Securities and Common
Securities, investing the proceeds of the Trust Securities in Junior
Subordinated Debentures and exchanging the Junior Subordinated Debentures in
the Exchange Offer pursuant to the Indenture. A principal difference between
the rights of a holder of a Capital Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture is
entitled to receive from FBS the principal amount of and interest accrued on
Junior Subordinated Debentures held, while a holder of Capital Securities is
entitled to receive Distributions from the Trust (or from FBS under the
Guarantee) if and to the extent the Trust has funds available for the payment
of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Trust involving the liquidation of the Junior Subordinated Debentures, the
holders of the Trust Securities will be entitled to receive, out of assets held
by the Trust, the Liquidation Distribution in cash. See "Description of New
Securities--Description of Capital Securities--Liquidation of the Trust and
Distribution of Junior Subordinated Debentures." Upon any voluntary or
involuntary liquidation or bankruptcy of FBS, the Property Trustee, as holder
of the Junior Subordinated Debentures, would be a subordinated creditor of FBS,
subordinated in right of payment to all Senior and Subordinated Debt as set
forth in the Indenture, but entitled to receive payment in full of principal
and interest, before any stockholders of FBS receive payments or distributions.
Since FBS is the guarantor under the Guarantee and has agreed to pay for all
costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of its Trust Securities), the positions of a holder
of Capital Securities and a holder of Junior Subordinated Debentures relative
to other creditors and to stockholders of FBS in the event of liquidation or
bankruptcy of FBS are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Capital Securities.
This summary only addresses the tax consequences to a person that acquires
Capital Securities on their original issue at their original offering price.
This summary does not address all tax consequences that may be applicable to
beneficial owners of Capital Securities, nor does it address the tax
consequences to (i) persons that may be subject to special treatment under
United States federal income tax law, such as banks, insurance companies,
thrift institutions, regulated investment companies, real estate investment
trusts, tax-exempt organizations and dealers in securities or currencies, (ii)
persons that will hold Capital Securities as part of a position in a "straddle"
or as part of a "hedging," "conversion" or other integrated investment
transaction for federal income tax purposes, (iii) persons whose functional
currency is not the United States dollar or (iv) persons that do not hold
Capital Securities as capital assets.
57
<PAGE>
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Davis Polk & Wardwell, special tax counsel to FBS and
the Trust. This summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, Internal Revenue Service rulings
and pronouncements and judicial decisions now in effect, all of which are
subject to change at any time. Such changes may be applied retroactively in a
manner that could cause the tax consequences to vary substantially from the
consequences described below, possibly adversely affecting a beneficial owner
of Capital Securities. In particular, legislation has been proposed that could
adversely affect FBS's ability to deduct interest on the Junior Subordinated
Debentures, which may in turn permit FBS to cause a redemption of the Capital
Securities. See "--Possible Tax Law Changes." The authorities on which this
summary is based are subject to various interpretations, and it is therefore
possible that the federal income tax treatment of the purchase, ownership and
disposition of Capital Securities may differ from the treatment described
below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES, AS WELL AS
THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Old Capital Securities for New Capital Securities should not
be a taxable event to holders for federal income tax purposes. The exchange of
Old Capital Securities for New Capital Securities pursuant to the Exchange
Offer should not be treated as an "exchange" for federal income tax purposes
because the New Capital Securities should not be considered to differ
materially in kind or extent from the Old Capital Securities and because the
exchange will occur by operation of the terms of the Old Capital Securities.
If, however, the exchange of the Old Capital Securities for the New Capital
Securities were treated as an exchange for federal income tax purposes, such
exchange should constitute a recapitalization for federal income tax purposes.
Accordingly, the New Capital Securities should have the same issue price as the
Old Capital Securities, and a holder should have the same adjusted basis and
holding period in the New Capital Securities as the holder had in the Old
Capital Securities immediately before the exchange.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Old Capital Securities, Davis Polk &
Wardwell has rendered its opinion to the effect that, under then current law
and assuming compliance with the terms of the Trust Agreement, and based on
certain facts and assumptions contained in such opinion, the Trust will be
classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes. As a result, each
beneficial owner of Capital Securities (a "Securityholder") will be treated as
owning an undivided beneficial interest in the Junior Subordinated Debentures.
Accordingly, each Securityholder will be required to include in its gross
income its pro rata share of income on the Junior Subordinated Debentures. See
"--Interest Income and Original Issue Discount." No amount included in income
with respect to the Capital Securities will be eligible for the dividends-
received deduction.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
FBS believes that the likelihood of its exercising its option to defer
payments of interest is "remote" because exercising that option would prevent
FBS from declaring dividends on its common stock. Thus, in the opinion of
special tax counsel to FBS, based on regulations issued by the U.S. Treasury
Department on June 14, 1996, the Junior Subordinated Debentures will not be
treated as issued with original issue discount ("OID") for federal income tax
purposes and each Securityholder will be required to include interest payments
(other than an amount of the first interest payment attributable to pre-
issuance accrued interest, which a Securityholder may treat as a reduction of
the issue price of the Junior Subordinated Debentures rather than as gross
income) in taxable income under its own method of accounting (i.e., cash or
accrual) instead of under the daily economic accrual rules for OID instruments.
58
<PAGE>
Under the new regulations, however, if FBS exercises its right to defer
payments of interest, the Junior Subordinated Debentures will become OID
instruments, and all Securityholders (including those Securityholders that
otherwise report income based on the cash method of accounting) will be
required to accrue interest on a daily basis during an Extension Period even
though FBS will not pay the interest in cash until the end of the Extension
Period. A Securityholder who disposes of the Capital Securities during an
Extension Period may suffer a loss because the market value of the Capital
Securities will likely fall if FBS exercises its option to defer payments of
interest on the Junior Subordinated Debentures. Furthermore, the market value
of the Capital Securities may not reflect the accumulated distributions that
will be paid at the end of the Extension Period, and a Securityholder who sells
the Capital Securities during the Extension Period will not receive from FBS
any cash related to the interest income the Securityholder accrued and included
in its taxable income under the OID rules (because the cash attributable to the
interest will be paid to the holder of record at the end of the Extension
Period).
If the Junior Subordinated Debentures become OID instruments (i.e., if FBS
ever exercises its right to defer payments of interest), the Debentures will be
taxed as OID instruments for as long as they remain outstanding. Thus, even
after the end of the Extension Period, all Securityholders will be required to
continue accruing interest on the Junior Subordinated Debentures on a daily
basis, regardless of their method of accounting. Under the OID rules, a
Securityholder would accrue an amount of interest income each year that
approximates the interest payments called for under the terms of the Junior
Subordinated Debentures and actual cash payments of interest on the Junior
Subordinated Debentures would not be reported separately as taxable income.
The new regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to special counsel's interpretation.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF CAPITAL SECURITIES
A distribution by the Trust of the Junior Subordinated Debentures as
described under the caption "Description of Capital Securities--Liquidation of
the Trust and Distribution of Junior Subordinated Debentures" must be non-
taxable and such a distribution will result in the Securityholder receiving
directly his pro rata share of the Junior Subordinated Debentures previously
held indirectly through the Trust, with a holding period and aggregate tax
basis equal to the holding period and aggregate tax basis such Securityholder
had in its Capital Securities before such distribution. A Securityholder will
recognize interest income in respect of Junior Subordinated Debentures received
from the Trust in the manner described above under "--Interest Income and
Original Issue Discount."
SALES OR REDEMPTION OF CAPITAL SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Capital
Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized (which for this purpose, will exclude
amounts attributable to accrued interest or OID not previously included in
income) and the Securityholder's adjusted tax basis in the Capital Securities
sold or so redeemed. Gain or loss recognized by a Securityholder on Capital
Securities held for more than one year will generally be taxable as long-term
capital gain or loss. Amounts attributable to accrued interest with respect to
a Securityholder's pro rata share of the Junior Subordinated Debentures not
previously included in income will be taxable as ordinary income.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The Trust will report the interest and original issue discount (if any) that
accrued during the year with respect to the Junior Subordinated Debentures, and
any gross proceeds received by the Trust from the retirement or redemption of
the Junior Subordinated Debentures, annually to the holders of record of the
Capital Securities and the Internal Revenue Service. The Trust currently
intends to deliver such reports to holders of record prior to January 31
following each calendar year. It is anticipated that persons who hold Capital
Securities as nominees for beneficial holders will report the required tax
information to beneficial holders on Form 1099.
59
<PAGE>
Payments made on, and proceeds from the sale of Capital Securities may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax, provided the
required information is timely filed with the Internal Revenue Service.
UNITED STATES ALIEN SECURITYHOLDERS
For purposes of this discussion, a United States Alien Securityholder is any
corporation, individual, partnership, estate or trust that for United States
federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a foreign partnership or a non-resident fiduciary of a foreign
estate or trust.
Under present United States federal income tax law:
(i) payments by the Trust or any of its paying agents to any holder of
Capital Securities who or which is a United States Alien Securityholder
will not be subject to United States federal withholding tax, provided that
(a) the beneficial owner of the Capital Securities does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of FBS entitled to vote, (b) the beneficial owner of the
Capital Securities is not a controlled foreign corporation that is related
to FBS through stock ownership, and (c) either (A) the beneficial owner of
the Capital Securities certifies to the Trust or its agent, under penalties
of perjury, that it is not a United States Securityholder and provides its
name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution") and holds the
Capital Securities certifies to the Trust or its agent under penalties of
perjury that such statement has been received from the beneficial owner by
it or by a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Securityholder of Capital Securities will not
be subject to United States federal withholding tax on any gain realized
upon the sale or other disposition of Capital Securities.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's budget proposal, was released. The Bill
would, among other things, deny interest deductions for interest on an
instrument issued by a corporation that has a maximum term of more than 20
years and that is not shown as indebtedness on the separate balance sheet of
the issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. The above-described provision of the Bill was proposed to be
effective generally for instruments issued on or after December 7, 1995. If
such provision were to apply to the Junior Subordinated Debentures, FBS would
be unable to deduct interest on the Junior Subordinated Debentures. However, on
March 29, 1996, the Chairmen of the Senate Finance and House Ways and Means
Committees issued a joint statement to the effect that it was their intention
that the effective date of the President's legislative proposals, if adopted,
will be no earlier than the date of appropriate Congressional action. However,
there can be no assurance that current or future legislative proposals or final
legislation will not affect the ability of FBS to deduct interest on the Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which
may permit FBS to cause a redemption of the Capital Securities. See
"Description of Capital Securities--Redemption" and "Description of Junior
Subordinated Debentures--Tax Event Prepayment."
60
<PAGE>
ERISA CONSIDERATIONS
GENERAL
A fiduciary of an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") should consider
fiduciary standards under ERISA in the context of the particular circumstances
of such plan before authorizing an investment in the Capital Securities or the
Exchange Capital Securities. Such fiduciary should consider whether the
investment satisfies ERISA's diversification and prudence requirements,
whether the investment constitutes unauthorized delegation of fiduciary
authority and whether the investment is in accordance with the documents and
instruments governing the plan. In addition, ERISA and the Code prohibit a
wide range of transactions ("Prohibited Transactions") involving the assets of
a plan subject to ERISA or the assets of an individual retirement account or
plan subject to Section 4975 of the Code (hereinafter an "ERISA Plan") and
persons who have certain specified relationships to the ERISA Plan ("parties
in interest," within the meaning of ERISA, and "disqualified persons," within
the meaning of the Code). Such transactions may require "correction" and may
cause the ERISA Plan fiduciary to incur certain liabilities and the parties in
interest or disqualified persons to be subject to excise taxes.
The acquisition of any Capital Security by any person who is using for such
acquisition the assets of an ERISA Plan shall constitute a representation by
such person to FBS that (i) if FBS is a "party in interest" or a "disqualified
person" with respect to such ERISA Plan, then such security is being acquired
pursuant to an exemption from the Prohibited Transaction rules under ERISA and
the Code, and (ii) FBS is not a "fiduciary," within the meaning of Section
3(21) of ERISA and the regulations thereunder, with respect to such person's
interest in the Capital Securities or the Junior Subordinated Debentures.
Governmental plans and certain church plans (each as defined under ERISA)
are not subject to the Prohibited Transaction rules. Such plans may, however,
be subject to federal, state or local laws or regulations which may affect
their investment in the Capital Securities. Any fiduciary of such a
governmental or church plan considering an investment in the Capital
Securities should determine the need for, and the availability, if necessary,
of any exemptive relief under such laws or regulations.
THE DISCUSSION HEREIN OF ERISA IS GENERAL IN NATURE AND IS NOT INTENDED TO
BE ALL INCLUSIVE. ANY FIDUCIARY OF AN ERISA PLAN, GOVERNMENTAL PLAN OR CHURCH
PLAN CONSIDERING AN INVESTMENT IN THE CAPITAL SECURITIES SHOULD CONSULT WITH
ITS LEGAL ADVISORS REGARDING THE CONSEQUENCES OF SUCH INVESTMENT.
PROHIBITED TRANSACTIONS
FBS may be a party in interest or a disqualified person with respect to an
ERISA Plan investing in the Capital Securities, and, therefore, such
investments by an ERISA Plan may give rise to a Prohibited Transaction.
Consequently, before investing in the Capital Securities, any person who is,
or who in acquiring such Capital Securities is using the assets of, an ERISA
Plan should determine that either a statutory or an administrative exemption
from the Prohibited Transaction rules discussed below or otherwise available
is applicable to such person's investment in the Capital Securities, or that
its investment in such securities will not result in a Prohibited Transaction.
Certain statutory or administrative exemptions from the Prohibited
Transaction rules under ERISA and the Code may be available to an ERISA Plan
which is investing in the Capital Securities. Included among these exemptions
are: Prohibited Transaction Class Exemption ("PTE") 90-1, regarding
investments by insurance company pooled separate accounts; PTE 91-38,
regarding investments by bank collective investment funds; PTE 84-14,
regarding transactions effected by qualified professional asset managers; PTE
96-23, regarding transactions effected by in-house asset managers; or PTE 95-
60, regarding investments by insurance company general accounts.
TRUST ASSETS AS "PLAN ASSETS"
The Department of Labor has issued final regulations (the "Regulations") as
to what constitutes assets of an employee benefit plan ("plan asset") under
ERISA. The Regulations provide that, as a general rule, when an
61
<PAGE>
ERISA Plan acquires an equity interest in an entity and such interest does not
represent a "publicly offered security" nor a security issued by an investment
company registered under the Investment Company Act of 1940, the ERISA Plan's
assets include both the equity interest and an undivided interest in each of
the underlying assets of the entity, unless it is established either that the
entity is an operating company or that equity participation in the entity by
"benefit plan investors" is not "significant." For purposes of the Regulations,
the Trust will not be an investment company nor an operating company and the
Capital Securities will not constitute a "publicly offered security."
Under the Regulations, equity participation by benefit plan investors will
not be considered "significant" on any date only if, immediately after the most
recent acquisition of Capital Securities, the aggregate interest in the Capital
Securities held by benefit plan investors will be less than 25% of the value of
the Capital Securities. Although it is possible that the equity participation
by benefit plan investors on any date will not be "significant" for purposes of
the Regulations, such result cannot be assured. Consequently, if ERISA Plans
purchase the Capital Securities, the Trust's assets could be deemed to be "plan
assets" of such ERISA Plans for purposes of the fiduciary responsibility
provisions of ERISA and the Code. Under ERISA, any person who exercises any
authority or control respecting the management or disposition of the assets of
an ERISA Plan is considered to be a fudiciary of such ERISA Plan. For example,
the Property Trustee could therefore become a fiduciary of the ERISA Plans that
invest in the Capital Securities and be subject to the general fiduciary
requirements of ERISA in exercising its authority with respect to the
management of the assets of the Trust. However, the Property Trustee will have
only limited discretionary authority with respect to the Trust's assets and the
remaining functions and responsibilities performed by the Property Trustee will
be for the most part custodial and ministerial in nature. Inasmuch as the
Property Trustee or another person with authority or control respecting the
management or disposition of the Trust assets may become a fiduciary with
respect to the ERISA Plans that will purchase the Capital Securities, there may
be an improper delegation by such ERISA Plans of the responsibility to manage
plan assets.
The New Capital Securities may qualify as "publicly offered securities" under
the Regulations if at the time of the Exchange Offer they are also "widely
held" and "freely transferable." Under the Regulations, a class of securities
is "widely held" only if it is a class of securities that is owned by 100 or
more investors independent of the issuer and of one another. Although it is
possible that at the time of the Exchange Offer the New Capital Securities will
be "widely held," such result cannot be assured. Whether a security is "freely
transferable" for purposes of the Regulations is a factual question to be
determined on the basis of all relevant facts and circumstances. If at the time
of the Exchange Offer the New Capital Securities qualify as "publicly offered
securities," the assets of the Trust should not be "plan assets" as of such
time. If at the time of the Exchange Offer the New Capital Securities do not
qualify as "publicly offered securities," the "plan asset" considerations
discussed in the immediately preceding paragraph in connection with the Capital
Securities could also be applicable in connection with the investment by ERISA
Plans in the New Capital Securities.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-
making activities or other trading activities. The Company has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending days after the Expiration Date (subject to
extension under certain limited circumstances described herein) or, if earlier,
when all such New Capital Securities have been disposed of by such
Participating Broker-Dealer. See "The Exchange Offer--Resales of New Capital
Securities." The Company will not receive
62
<PAGE>
any cash proceeds from the issuance of the New Capital Securities offered
hereby. New Capital Securities received by broker-dealers for their own
accounts in connection with the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Capital Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Capital Securities. Any broker-dealer that resells New Capital Securities that
were received by it for its own account in connection with the Exchange Offer
and any broker or dealer that participates in a distribution of such New
Capital Securities may be deemed to be an "underwriter" within the meaning of
the Securities Act, and any profit on any such resale of New Capital Securities
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
VALIDITY OF NEW CAPITAL SECURITIES
Certain matters of Delaware law relating to the validity of the New Capital
Securities, the enforceability of the Trust Agreement and the formation of the
Trust will be passed upon by Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware Counsel to FBS and the Trust. The validity of the
Guarantee and the Junior Subordinated Debentures will be passed upon for FBS by
Dorsey & Whitney LLP, Minneapolis, Minnesota. Certain matters relating to
United States federal income tax considerations will be passed upon for FBS by
Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements of FBS appearing in FBS's Annual Report
on Form 10-K for the year ended December 31, 1995, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
63
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law contains detailed
provisions for indemnification of directors and officers of Delaware
corporations against expenses, judgments, fines and settlements in connection
with litigation.
Article Ninth of FBS's Restated Certificate of Incorporation, as amended,
provides that a director shall not be liable to FBS or its stockholders for
monetary damages for a breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to FBS or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under the Delaware
statutory provision making directors personally liable for unlawful dividends
or unlawful stock repurchases or redemptions or (iv) for any transaction for
which the directors derived an improper personal benefit.
The Bylaws of FBS provide that the officers and directors of FBS and certain
others shall be indemnified to substantially the same extent permitted by
Delaware law.
FBS maintains a standard policy of officers' and directors' insurance.
In the Underwriting Agreement, a form of which is filed as Exhibit 1.1
hereto, the Underwriters will agree to indemnify, under certain conditions,
FBS, its directors, certain of its officers and persons who control FBS within
the meaning of the Securities Act of 1933, as amended (the "Act") against
certain liabilities.
Under the Trust Agreement, FBS will agree to indemnify each of the Trustees
of the Issuer or any predecessor Trustee for the Issuer, and to hold the
Trustee harmless against, any loss, damage, claims, 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 Agreements,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties under the Trust Agreements.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
4.1 Form of Junior Subordinated Indenture
4.2 Certificate of Trust of FBS Capital I
4.3 Trust Agreement of FBS Capital I
4.4 Form of Amended and Restated Trust Agreement for FBS Capital I*
4.5 Form of Capital Security Certificate for FBS Capital I (included as
Exhibit D to Exhibits 4.4)*
4.6 Form of Guarantee Agreement for FBS Capital I
4.7 Registration Rights Agreement dated November 26, 1996*
5.1 Opinion and consent of Dorsey & Whitney LLP to FBS as to legality of
the Junior Subordinated Debentures and the Guarantees to be issued by
FBS*
5.2 Opinion of special Delaware counsel as to legality of the Capital
Securities to be issued by FBS Capital I*
8 Opinion of Special tax counsel as to certain federal income tax
matters*
12 Computation of ratio of earnings to fixed charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)*
23.3 Consent of Special Delaware Counsel (included in Exhibit 5.2)*
24 Power of Attorney
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Junior Subordinated Indenture*
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Amended and Restated Trust Agreement of FBS
Capital I*
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company under
the Guarantee for the benefit of the holders of Capital Securities of
FBS Capital I*
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
</TABLE>
- --------
* To be filed by amendment.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants, hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in
this Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
each Registrant pursuant to the provisions, or otherwise, each Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by each Registrant of
expenses incurred or paid by a director, officer of controlling person of each
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, each Registrant will, unless in the opinion
of its counsel the matter has been settled by the controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired or involved therein, that was not the subject of and included
in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING A FORM S-4 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF MINNEAPOLIS, STATE OF MINNESOTA, ON NOVEMBER 27,
1996.
First Bank System, Inc.
/s/ John F. Grundhofer
By: _________________________________
John F. Grundhofer
Chairman, President and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED
BELOW ON NOVEMBER 27, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ John F. Grundhofer Chairman, President, Chief Executive
___________________________________________ Officer and Director (principal executive
John F. Grundhofer officer)
/s/ Susan E. Lester Executive Vice President and Chief
___________________________________________ Financial Officer (principal financial
Susan E. Lester officer)
/s/ David J. Parrin Senior Vice President and Controller
___________________________________________ (principal accounting officer)
David J. Parrin
Arthur D. Collins, Jr.* Director
___________________________________________
Arthur D. Collins, Jr.
Peter H. Coors* Director
___________________________________________
Peter H. Coors
Roger L. Hale* Director
___________________________________________
Roger L. Hale
Delbert W. Johnson* Director
___________________________________________
Delbert W. Johnson
Norman M. Jones* Director
___________________________________________
Norman M. Jones
Richard L. Knowlton* Director
___________________________________________
</TABLE> Richard L. Knowlton
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Jerry W. Levin* Director
___________________________________________
Jerry W. Levin
Kenneth A. Macke* Director
___________________________________________
Kenneth A. Macke
Director
___________________________________________
Marilyn Carlson Nelson
Edward J. Phillips* Director
___________________________________________
Edward J. Phillips
James J. Renier* Director
___________________________________________
James J. Renier
S. Walter Richey* Director
___________________________________________
S. Walter Richey
Director
___________________________________________
Richard L. Robinson
Richard L. Schall* Director
___________________________________________
Richard L. Schall
Walter Scott, Jr.* Director
___________________________________________
Walter Scott, Jr.
</TABLE>
/s/ David J. Parrin
*By: ________________________________
David J. Parrin
Attorney-in-fact
II-5
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FBS CAPITAL I
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-4 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF MINNEAPOLIS, AND STATE OF MINNESOTA ON NOVEMBER 27,
1996.
FBS Capital I
By: First Bank System, Inc., as
Depositor
/s/ David J. Parrin
By: ____________________________________
David J. Parrin Senior Vice
President and Controller
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. DESCRIPTION NO.
----------- ----------- ----
<C> <S> <C>
4.1 Form of Junior Subordinated Indenture
4.2 Certificate of Trust of FBS Capital I
4.3 Trust Agreement of FBS Capital I
4.4 Form of Amended and Restated Trust Agreement for FBS Capi-
tal I*
4.5 Form of Capital Security Certificate for FBS Capital I (in-
cluded as Exhibit D of Exhibits 4.4)*
4.6 Form of Guarantee Agreement for FBS Capital I
4.7 Registration Rights Agreement dated November 26, 1996*
5.1 Opinion and consent of Dorsey & Whitney LLP to FBS as to
legality of the Junior Subordinated Debentures and the
Guarantees to be issued by FBS*
5.2 Opinion of special Delaware counsel as to legality of the
Capital Securities to be issued by FBS Capital I*
8 Opinion of Special tax counsel as to certain federal income
tax matters*
12 Computation of ratio of earnings to fixed charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)*
23.3 Consent of Special Delaware Counsel (included in Exhibit
5.2)*
24 Power of Attorney
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Com-
pany to act as trustee under the Junior Subordinated Inden-
ture*
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Com-
pany to act as trustee under the Amended and Restated Trust
Agreement of FBS Capital I*
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Com-
pany under the Guarantee for the benefit of the holders of
Capital Securities of FBS Capital I*
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
Exhibit 4.1
________________________________________________________________________________
FIRST BANK SYSTEM, INC.
TO
WILMINGTON TRUST COMPANY
TRUSTEE
____________________________
JUNIOR SUBORDINATED INDENTURE
DATED AS OF NOVEMBER 15, 1996
________________________________________________________________________________
<PAGE>
FIRST BANK SYSTEM, INC.
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317 which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the
Trust Reform Act of 1990, are a part of and govern the Indenture whether or not
physically contained therein) and the Junior Subordinated Indenture, dated as of
November 15, 1996.
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------- -------
<S> <C> <C>
(S) 310 (a) (1), (2) and (5).................................... Not Applicable
(a) (3)................................................. Not Applicable
(a) (4)................................................. Not Applicable
(b)..................................................... 6.8
........................................................ 6.10
(c)..................................................... Not Applicable
(S) 311 (a)..................................................... 6.13(a)
(b)..................................................... 6.13(b)
(b) (2)................................................. 7.3(a) (2)
........................................................ 7.3(a) (2)
(S) 312 (a)..................................................... 7.1
........................................................ 7.2(a)
(b)..................................................... 7.2(b)
(c)..................................................... 7.2(c)
(S) 313 (a)..................................................... 7.3(a)
(b)..................................................... 7.3(b)
(c)..................................................... 7.3(a), 7.3(b)
(d)..................................................... 7.3(c)
(S) 314 (a) (1), (2) and (3).................................... 7.4
(a) (4)................................................. 10.5
(b)..................................................... Not Applicable
(c) (1)................................................. 1.2
(c) (2)................................................. 1.2
(c) (3)................................................. Not Applicable
(d)..................................................... Not Applicable
(e)..................................................... 1.2
(f)..................................................... Not Applicable
(S) 315 (a)..................................................... 6.1(a)
(b)..................................................... 6.2
........................................................ 7.3(a) (6)
(c)..................................................... 6.1(b)
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
----------- -------
<S> <C> <C>
(d)..................................................... 6.1 (c)
(d) (1)................................................. 6.1(a) (1)
(d) (2)................................................. 6.1(c) (2)
(d) (3)................................................. 6.1(c) (3)
(e)..................................................... 5.14
(S) 316 (a)..................................................... 1.1
(a) (1) (A)............................................. 5.12
(a) (1) (B)............................................. 5.13
(a) (2)................................................. Not Applicable
(b)..................................................... 5.8
(c)..................................................... 1.4(f)
(S) 317 (a) (1)................................................. 5.3
(a) (2)................................................. 5.4
(b)..................................................... 10.3
(S)318 (a)..................................................... 1.7
</TABLE>
- ------------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Junior Subordinated Indenture.
-ii-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION......................................................... 1
SECTION 1.1. Definitions................................................... 1
SECTION 1.2. Compliance Certificate and Opinions........................... 10
SECTION 1.3. Forms of Documents Delivered to Trustee....................... 11
SECTION 1.4. Acts of Holders............................................... 11
SECTION 1.5. Notices, Etc. to Trustee and Company.......................... 14
SECTION 1.6. Notice to Holders; Waiver..................................... 14
SECTION 1.7. Conflict with Trust Indenture Act............................. 15
SECTION 1.8. Effect of Headings and Table of Contents...................... 15
SECTION 1.9. Successors and Assigns........................................ 15
SECTION 1.10. Separability Clause........................................... 15
SECTION 1.11. Benefits of Indenture......................................... 15
SECTION 1.12. Governing Law................................................. 15
SECTION 1.13. Non-Business Days............................................. 15
ARTICLE II SECURITY FORMS...................................................... 16
SECTION 2.1. Forms Generally............................................... 16
SECTION 2.2. Form of Face of Security...................................... 17
SECTION 2.3. Form of Reverse of Security................................... 20
SECTION 2.4. Additional Provisions Required in Global Security............. 23
SECTION 2.5. Form of Trustee's Certificate of Authentication............... 24
ARTICLE III THE SECURITIES...................................................... 24
SECTION 3.1. Title and Terms............................................... 24
SECTION 3.2. Denominations................................................. 27
SECTION 3.3. Execution, Authentication, Delivery and Dating................ 27
SECTION 3.4. Temporary Securities.......................................... 29
SECTION 3.5. Registration, Transfer and Exchange........................... 29
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.............. 31
SECTION 3.7. Payment of Interest; Interest Rights Preserved................ 32
SECTION 3.8. Persons Deemed Owners......................................... 34
SECTION 3.9. Cancellation.................................................. 34
SECTION 3.10. Computation of Interest....................................... 34
SECTION 3.11. Deferrals of Interest Payment Dates........................... 34
SECTION 3.12. Right of Set-Off.............................................. 36
SECTION 3.13. Agreed Tax Treatment.......................................... 36
SECTION 3.14. Shortening or Extension of Stated Maturity.................... 36
SECTION 3.15. CUSIP Numbers................................................. 36
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV SATISFACTION AND DISCHARGE.......................................... 37
SECTION 4.1. Satisfaction and Discharge of Indenture....................... 37
SECTION 4.2. Application of Trust Money.................................... 38
ARTICLE V REMEDIES............................................................ 38
SECTION 5.1. Events of Default............................................. 38
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment............ 39
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee........................................ 41
SECTION 5.4. Trustee May File Proofs of Claim.............................. 42
SECTION 5.5. Trustee May Enforce Claim Without Possession
of Securities................................................. 43
SECTION 5.6. Application of Money Collected................................ 43
SECTION 5.7. Limitation on Suits........................................... 43
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of
Capital Securities............................................ 44
SECTION 5.9. Restoration of Rights and Remedies............................ 45
SECTION 5.10. Rights and Remedies Cumulative................................ 45
SECTION 5.11. Delay or Omission Not Waiver.................................. 45
SECTION 5.12. Control by Holders............................................ 45
SECTION 5.13. Waiver of Past Defaults....................................... 46
SECTION 5.14. Undertaking for Costs......................................... 46
SECTION 5.15. Waiver of Usury, Stay or Extension Laws....................... 47
ARTICLE VI THE TRUSTEE......................................................... 47
SECTION 6.1. Certain Duties and Responsibilities........................... 47
SECTION 6.2. Notice of Defaults............................................ 48
SECTION 6.3. Certain Rights of Trustee..................................... 49
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities........ 50
SECTION 6.5. May Hold Securities........................................... 50
SECTION 6.6. Money Held in Trust........................................... 50
SECTION 6.7. Compensation and Reimbursement................................ 50
SECTION 6.8. Disqualification; Conflicting Interests....................... 51
SECTION 6.9. Corporate Trustee Required; Eligibility....................... 51
SECTION 6.10. Resignation and Removal; Appointment of Successor............. 52
SECTION 6.11. Acceptance of Appointment by Successor........................ 53
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business................................................... 55
SECTION 6.13. Preferential Collection of Claims Against Company............. 55
SECTION 6.14. Appointment of Authenticating Agent........................... 55
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE
AND COMPANY......................................................... 57
SECTION 7.1. Company to Furnish Trustee Names and
Addresses of Holders.......................................... 57
SECTION 7.2. Preservation of Information, Communications
to Holders.................................................... 57
SECTION 7.3. Reports by Trustee............................................ 58
SECTION 7.4. Reports by Company............................................ 58
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE................................................... 59
SECTION 8.1. Company May Consolidate, Etc., Only on
Certain Terms................................................. 59
SECTION 8.2. Successor Corporation Substituted............................. 60
ARTICLE IX SUPPLEMENTAL INDENTURES............................................. 60
SECTION 9.1. Supplemental Indentures without Consent of Holders............ 60
SECTION 9.2. Supplemental Indentures with Consent of Holders............... 62
SECTION 9.3. Execution of Supplemental Indentures.......................... 63
SECTION 9.4. Effect of Supplemental Indentures............................. 64
SECTION 9.5. Conformity with Trust Indenture Act........................... 64
SECTION 9.6. Reference in Securities to Supplemental Indentures............ 64
ARTICLE X COVENANTS........................................................... 64
SECTION 10.1. Payment of Principal, Premium and Interest.................... 64
SECTION 10.2. Maintenance of Office or Agency............................... 65
SECTION 10.3. Money for Security Payments to be Held in Trust............... 65
SECTION 10.4. Statement as to Compliance.................................... 67
SECTION 10.5. Waiver of Certain Covenants................................... 67
SECTION 10.6. Additional Sums............................................... 67
SECTION 10.7. Additional Covenants.......................................... 68
ARTICLE XI REDEMPTION OF SECURITIES............................................ 69
SECTION 11.1. Applicability of This Article................................. 69
SECTION 11.2. Election to Prepay; Notice to Trustee......................... 69
SECTION 11.3. Selection of Securities to be Redeemed........................ 70
SECTION 11.4. Notice of Redemption.......................................... 70
SECTION 11.5. Deposit of Redemption Price................................... 71
SECTION 11.6. Payment of Securities Called for Redemption................... 71
SECTION 11.7. Right of Redemption of Securities Initially
Issued to an FBS Trust........................................ 72
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
ARTICLE XII SINKING FUNDS....................................................... 72
SECTION 12.1. Applicability of Article...................................... 72
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities......... 73
SECTION 12.3. Redemption of Securities for Sinking Fund..................... 73
ARTICLE XIII SUBORDINATION OF SECURITIES......................................... 75
SECTION 13.1. Securities Subordinate to Senior and Subordinated Debt........ 75
SECTION 13.2. Payment Over of Proceeds Upon Dissolution, Etc................ 75
SECTION 13.3. Prior Payment to Senior and Subordinated
Debt Upon Acceleration of Securities.......................... 76
SECTION 13.4. No Payment When Senior and
Subordinated Debt in Default.................................. 77
SECTION 13.5. Payment Permitted If No Default............................... 78
SECTION 13.6. Subrogation to Rights of Holders of Senior and
Subordinated Debt............................................. 78
SECTION 13.7. Provisions Solely to Define Relative Rights................... 79
SECTION 13.8. Trustee to Effectuate Subordination........................... 79
SECTION 13.9. No Waiver of Subordination Provisions......................... 80
SECTION 13.10. Notice to Trustee............................................. 80
SECTION 13.11. Reliance on Judicial Order or Certificate of
Liquidating Agent............................................. 81
SECTION 13.12. Trustee Not Fiduciary for Holders of
Senior and Subordinated Debt.................................. 81
SECTION 13.13. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.............................. 82
SECTION 13.14. Article Applicable to Paying Agents........................... 82
SECTION 13.15. Certain Conversions or Exchanges Seemed Payment............... 82
</TABLE>
-iv-
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of November 15, 1996, between
FIRST BANK SYSTEM, INC., a Delaware corporation (hereinafter called the
"Company") having its principal office at 601 Second Avenue South, Minneapolis,
Minnesota 55402, and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
as Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including, without limitation,
Securities issued to evidence loans made to the Company of the proceeds from the
issuance from time to time by one or more business trusts (each an "FBS Trust,"
and, collectively, the "FBS Trusts") of preferred trust interests in such Trusts
(the Capital Securities") and common interests in such Trusts (the "Common
Securities" and, collectively with the Capital Securities, the Trust
Securities), and to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(2) All other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
<PAGE>
(3) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such computation;
provided, that when two or more principles are so generally accepted, it shall
mean that set of principles consistent with those in use by the Company; and
(4) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which an FBS Trust has become subject from time to time
as a result of a Tax Event.
"Administrative Trustee" means, in respect of any FBS Trust, each Person
identified as an "Administrative Trustee" or an "Administrative Agent" in the
related Trust Agreement, solely in such Person's capacity as Administrative
Trustee or an Administrative Agent, as the case may be, of such FBS Trust under
such Trust Agreement and not in such Person's individual capacity, or any
successor administrative trustee or successor administrative agent, as the case
may be, appointed as therein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, no FBS Trust to which
Securities have been issued shall be deemed to be an Affiliate of the Company.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
-2-
<PAGE>
"Allocable Amounts," when used with respect to any Senior and Subordinated
Debt, means all amounts due or to become due on such Senior and Subordinated
Debt less, if applicable, any amount which would have been paid to, and retained
by, the holders of such Senior and Subordinated Debt (whether as a result of the
receipt of payments by the holders of such Senior and Subordinated Debt from the
Company or any other obligor thereon or from any holders of, or trustee in
respect of, other indebtedness that is subordinate and junior in right of
payment to such Senior and Subordinated Debt pursuant to any provision of such
indebtedness for the payment over of amounts received on account of such
indebtedness to the holders of such Senior and Subordinated Debt or otherwise)
but for the fact that such Senior and Subordinated Debt is subordinate or junior
in right of payment to (or subject to a requirement that amounts received on
such Senior and Subordinated Debt be paid over to obligees on) trade accounts
payable or accrued liabilities arising in the ordinary course of business.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities of
one or more series.
"Board of Directors" means either the board of directors of the Company or
any committee of that board duly authorized to act hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee, or, with respect to the Securities of a
series initially issued to an FBS Trust, the principal office of the Property
Trustee under the related Trust Agreement, is closed for business.
"Capital Securities" has the meaning specified in the first recital of this
Indenture.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
-3-
<PAGE>
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means the common stock, par value $1.25 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chairman of the Board
of Directors, the Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered.
"Corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) all
indebtedness of such Person whether incurred on or prior to the date of this
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
-4-
<PAGE>
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depositary by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
"Discount Security" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions," with respect to the Trust Securities issued by an FBS
Trust, means amounts payable in respect of such Trust Securities as provided in
the related Trust Agreement and referred to therein as "Distributions."
"Dollar" or "U.S. $" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.
"Event of Default" has the meaning specified in Article V unless otherwise
specified in the supplemental indenture or the Officers' Certificate delivered
pursuant to Section 3.1 hereof creating a series of Securities.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Extension Period" has the meaning specified in Section 3.11.
"FBS Guarantee" means the guarantee by the Company of distributions on the
Capital Securities of an FBS Trust to the extent provided in the related
Guarantee Agreement.
"FBS Trust" has the meaning specified in the first recital of this
Indenture.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depositary or
its nominee for such series, and registered in the name of such Depositary or
its nominee.
"Guarantee Agreement" means the Guarantee Agreement substantially in the
form attached hereto as Annex C, or substantially in such form as may be
specified as contemplated by Section 3.1 with respect to the Securities of any
series, in each case as amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
-5-
<PAGE>
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof or one or more
Officers' Certificates delivered pursuant to Section 3.1 and shall include the
terms of each particular series of Securities established as contemplated by
Section 3.1.
"Interest Payment Date" means as to each series of Securities the Stated
Maturity of an installment of interest on such Securities.
"Junior Subordinated Payment" has the meaning specified in Section 13.2.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, a Vice Chairman of the Board of Directors, the President or
a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Date" means the date of issuance specified as such in each
Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; and
-6-
<PAGE>
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or which have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the Securities or
any Affiliate of the Company or such other obligor. Upon the written request of
the Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, if any, known by the Company
to be owned or held by or for the account of the Company, or any other obligor
on the Securities or any Affiliate of the Company or such obligor, and, subject
to the provisions of Section 6.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Securities not listed therein are Outstanding for the
purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the Company to
pay) the principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, with respect to the Securities of any series, the
place or places where the principal of (and premium, if any) and interest on the
Securities of such series are payable pursuant to Sections 3.1 and 3.11.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any security
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen
-7-
<PAGE>
Security shall be deemed to evidence the same debt as the lost, destroyed or
stolen Security.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, in respect of any FBS Trust, the commercial bank
or trust company identified as the "Property Trustee" in the related Trust
Agreement, solely in its capacity as Property Trustee of such FBS Trust under
such Trust Agreement and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as
therein provided.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 3.1 with respect to Securities of a series, (i) in the case
of Securities of a series represented by one or more Global Securities, the
Business Day next preceding such Interest Payment Date and (ii) in the case of
Securities of a series not represented by one or more Global Securities, the
date which is fifteen days next preceding such Interest Payment Date (whether or
not a Business Day).
"Responsible Officer" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee from time to time to administer
its corporate trust matters.
"S&P" means Standard & Poor's Ratings Services.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Senior and Subordinated Debt" means the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt of the Company, whether incurred on or prior to the date of this Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior
-8-
<PAGE>
in right of payment to the Securities, provided, however, that Senior and
Subordinated Debt shall not be deemed to include (a) any Debt of the Company
which, when incurred and without respect to any election under Section 1111(b)
of the Bankruptcy Reform Act of 1978, as amended, was without recourse to the
Company, (b) any Debt of the Company to any of its Subsidiaries, (c) Debt to any
employee of the Company, and (d) any Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" when used with respect to any Security or any installment
of principal thereof or interest thereon means the date specified pursuant to
the terms of such Security as the date on which the principal of such Security
or such installment of interest is due and payable, in the case of such
principal, as such date may be shortened or extended as provided pursuant to the
terms of such Security and this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Tax Event" means the receipt by the FBS Trust of an Opinion of Counsel (as
defined in the relevant FBS Trust Agreement) 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 political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Capital Securities of such FBS Trust, there is more than an
insubstantial risk that (i) such FBS Trust is, or will be within 90 days of the
date of such Opinion of Counsel, subject to United States Federal income tax
with respect to income received or accrued on the corresponding series of
Securities, (ii) interest payable by the Company on such corresponding series of
Securities is not, or within 90 days of the date of such Opinion of Counsel,
will not be, deductible by the Company, in whole or in part, for United States
Federal income tax purposes or (iii) such FBS Trust is, or will be within 90
days of the date of such Opinion of Counsel, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Trust Agreement" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated
-9-
<PAGE>
Trust Agreement substantially in the form attached hereto as Annex B, or
substantially in such form as may be specified as contemplated by Section 3.1
with respect to the Securities of any series, in each case as amended from time
to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
(S)(S) 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Vice President" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
Section 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent (including covenants compliance with which
constitute a condition precedent), if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.5) shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
-10-
<PAGE>
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
Section 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
-11-
<PAGE>
similar tenor signed by such Holders in person or by an agent or proxy duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is
by a Person acting in other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority.
(c) The fact and date of the execution by any Person of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient and in accordance
with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
-12-
<PAGE>
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities of the relevant series in
the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of
-13-
<PAGE>
Securities of the relevant series in the manner set forth in Section 10.6, on or
prior to the existing Expiration Date. If an Expiration Date is not designated
with respect to any record date set pursuant to this Section, the party hereto
which set such record date shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Capital Securities or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
office, or
(2) the Company by the Trustee, any Holder or any holder of Capital
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company, addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
Section 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders
-14-
<PAGE>
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
Section 1.7. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture
Act through operation of Section 318(c) thereof, such imposed duties shall
control.
Section 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the Holders of Senior and Subordinated Debt, the Holders of the
Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9,
5.11, 5.13, 9.1 and 9.2, the holders of Capital Securities, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.13. Non-Business Days.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
-15-
<PAGE>
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until such next succeeding Business Day except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day (in each case with the same force and
effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity)).
ARTICLE II
SECURITY FORMS
Section 2.1. Forms Generally.
The Securities of each series shall be in substantially the forms set forth
in this Article, or in such other form or forms as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with applicable tax
laws or the rules of any securities exchange or as may, consistently herewith,
be determined by the officers executing such securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.3 with respect to
the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
-16-
<PAGE>
Section 2.2. Form of Face of Security.
FIRST BANK SYSTEM, INC.
__% JUNIOR SUBORDINATED DEBENTURE DUE
Registered Principal Amount:
No. CUSIP No.:
First Bank System, Inc., a corporation organized and existing under the
laws of Delaware (hereinafter called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to __________, or registered assigns, the
principal sum of $_______ Dollars on _____________; provided that the Company
may (i) shorten the Stated Maturity of the principal of this Security to a date
not earlier than _____________, and (ii) extend the Stated Maturity of the
principal of this Security at any time on one or more occasions, subject to
certain conditions specified in Section 3.14 of the Indenture, but in no event
to a date later than _______________. The Company further promises to pay
interest on said principal sum from _______________ or from the most recent
interest payment date (each such date, an "Interest Payment Date") on which
interest has been paid or duly provided for, semi-annually (subject to deferral
as set forth herein) in arrears on the last day of_____ and_____ of each year
commencing __________________ at the rate of ____% per annum, until the
principal hereof shall have become due and payable, plus Additional Interest, if
any, until the principal hereof is paid or duly provided for or made available
for payment and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the rate of ____% per annum, compounded semi-
annually. The amount of interest payable for any period shall be computed on
the basis of twelve 30-day months and a 360-day year. The amount of interest
payable for any partial period shall be computed on the basis of the number of
days elapsed in a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on this Security is not a Business Day, then a
payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. A "Business Day" shall mean any
day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office of
-17-
<PAGE>
the Trustee, or the principal office of the Property Trustee under the Trust
Agreement (hereinafter referred to) for [name of trust] is closed for business.
The interest installment so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
installment, which shall be[insert Record Date] next preceding such Interest
Payment Date. Any such interest installment not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than _____ days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right at any time during the term of this Security to defer
payment of interest on this Security, at any time or from time to time, for up
to ____ consecutive __________ interest payment periods with respect to each
deferral period (each an "Extension Period"), (during which Extension Periods
the Company shall have the right to make partial payments of interest on any
Interest Payment Date, and at the end of which the Company shall pay all
interest then accrued and unpaid (together with Additional Interest thereon to
the extent permitted by applicable law)); provided, however, that no Extension
Period shall extend beyond the Stated Maturity of the principal of this
Security; provided, further, that during any such Extension Period, the Company
shall not, and shall not permit any Subsidiary of the Company to, (i) declare or
pay any dividends or distributions or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), or (ii) make any payment of principal of
or interest or premium, if any, on or repay, repurchase or redeem any debt
security of the Company (including Securities issued by the Company pursuant to
the Indenture other than the Securities represented by this certificate) that
ranks pari passu with or junior in interest to this Security or make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiaries of the Company (including FBS Guarantees other
than the FBS Guarantee related to the Capital Securities issued by [NAME OF
TRUST]) if such guarantee ranks pari passu with or junior in interest to this
Security (other than (a) dividends or distributions in Common Stock of the
Company, (b) any declaration of a dividend in connection with the implementation
of a stockholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the FBS
-18-
<PAGE>
Guarantee related to the Capital Securities issued by [NAME OF TRUST], and (d)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers or
employees). Prior to the termination of any such Extension Period, the Company
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed __________ consecutive interest payment
periods or to extend beyond the Stated Maturity. Upon the termination of any
such Extension Period and upon the payment of all amounts then due, and subject
to the foregoing limitation, the Company may elect to begin a new Extension
Period. No interest shall be due and payable during an Extension Period except
at the end thereof. The Company shall give the Trustee, the Property Trustee and
the Administrative Trustees of [NAME OF TRUST] notice of its election to begin
any Extension Period at least ___ Business Days prior to the earlier of (i) the
date on which Distributions on the Capital Securities would be payable except
for the election to begin such Extension Period, or (ii) the date the
Administrative Trustees are required to give notice to any automated quotation
system or to holders of such Capital Securities of the record date or the date
such Distributions are payable, but in any event not less than _____ Business
Days prior to such record date.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register or (ii) by wire
transfer in immediately available funds at such place and to such account as may
be designated by the Person entitled thereto as specified in the Securities
Register.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, unsecured and will rank junior and subordinate and subject in
right of payments to the prior payment in full of all Senior and Subordinated
Debt, and this Security is issued subject to the provisions of the Indenture
with respect thereto. Each Holder of this Security, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his behalf to take such actions as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes. Each Holder hereof, by his
acceptance hereof, waives all notice of the acceptance of the subordination
provisions contained herein and in the Indenture by each holder of Senior and
Subordinated Debt, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
-19-
<PAGE>
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
FIRST BANK SYSTEM, INC.
By:______________________________________
[President or Vice President]
Attest:
____________________________________
[Secretary or Assistant Secretary]
Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Indenture, dated as of November 15, 1996
(herein called the "Indenture"), between the Company and Wilmington Trust
Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Trustee,
the Company and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof, limited in aggregate principal
amount to $_________.
All terms used in this Security that are defined in the Indenture and in
the Trust Agreement, dated as of __________ ___, ____, as amended (the "Trust
Agreement"), for [insert name of trust] among First Bank System, Inc., as
Depositor, and the Trustees named therein, shall have the meanings assigned to
them in the Indenture or the Trust Agreement, as the case may be.
[If applicable, insert--The Company may at any time, at its option, on or
after ________, and subject to the terms and conditions of Article XI of the
Indenture],
-20-
<PAGE>
[if applicable insert--and subject to FBS having received prior approval of the
Board of Governors of the Federal Reserve System (the "Federal Reserve") if then
required under applicable capital guidelines or policies of the Federal Reserve]
redeem this Security [in whole at any time] [or in part from time to time],
without premium or penalty, at a redemption price equal to [insert redemption
price] to the Redemption Date.]
[If applicable, insert--Upon the occurrence and during the continuation of
a Tax Event in respect of an FBS Trust, the Company may, at its option, at any
time within 90 days of the occurrence of such Tax Event redeem this Security,
[if applicable, insert--in whole but not in part], subject to the provisions of
Section 11.7 and the other provisions of Article XI of the Indenture, at a
redemption price equal to [insert redemption price] to the Redemption Date.
[If applicable, insert--In the event of redemption of this Security in part
only, a new Security or Securities of this series for the portion hereof not
redeemed will be issued in the name of the Holder hereof upon the cancellation
hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of each series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
[If the Security is not a Discount Security,--As provided in and subject to
the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of this series may declare the
principal amount of all the Securities of this series to be due and payable
immediately, by a notice in writing to
-21-
<PAGE>
the Company (and to the Trustee if given by Holders), provided that, in the case
of the Securities of this series issued to an FBS Trust, if upon an Event of
Default, the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities of this series fails to declare the principal of all
the Securities of this series to be immediately due and payable, the holders of
at least 25% in aggregate Liquidation Amount of the Capital Securities then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration the principal amount of and the accrued
interest (including any Additional Interest) on all the Securities of this
series shall become immediately due and payable, provided that the payment of
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII of the
Indenture.]
[If the Security is a Discount Security,--As provided in and subject to the
provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than such portion
of the principal amount as may be specified in the terms of this series may
declare an amount of principal of the Securities of this series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, in the case of the Securities of this
series issued to an FBS Trust, if upon an Event of Default, the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of this series fails to declare the principal of all the Securities of this
series to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Capital Securities then outstanding shall
have such right by a notice in writing to the Company and the Trustee. Such
amount shall be equal to [insert formula for determining the amount]. Upon any
such declaration, such amount of the principal of and the accrued interest
(including any Additional Interest) on all the Securities of this series shall
become immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture. Upon
payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal and overdue interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
interest, if any, on this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon
-22-
<PAGE>
surrender of this Security for registration of transfer at the office or agency
of the Company maintained under Section 10.2 of the Indenture duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in denominations of minimum denominations of $[100,000] and any integral
multiples of $[1,000] in excess thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of such series
of a different authorized denomination, as requested by the Holder surrendering
the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
Section 2.4. Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3, bear a legend in substantially the following
form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE
-23-
<PAGE>
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY."
Section 2.5. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
WILMINGTON TRUST COMPANY,
as Trustee
By:_________________________
Authorized Officer
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate (such Officers' Certificate shall have the effect of a supplemental
indenture for all purposes hereunder), or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of a series:
(a) the title of the securities of such series, which shall distinguish the
Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any
Securities which, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder); provided, however, that the authorized
aggregate principal amount of such series may be increased above such amount by
a Board Resolution to such effect;
-24-
<PAGE>
(c) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof;
(d) the rate or rates, if any, at which the Securities of such series shall
bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable in respect of any Securities of such series,
the Interest Payment Dates on which such interest shall be payable, the right,
pursuant to Section 3.11 or as otherwise set forth therein, of the Company to
defer or extend an Interest Payment Date, and the Regular Record Date for the
interest payable on any Interest Payment Date or the method by which any of the
foregoing shall be determined;
(e) the place or places where the principal of (and premium, if any) and
interest on the Securities of such series shall be payable, the place or places
where the Securities of such series may be presented for registration of
transfer or exchange, and the place or places where notices and demands to or
upon the Company in respect of the Securities of such series may be made;
(f) the period or periods within or the date or dates on which, if any, the
price or prices at which and the terms and conditions upon which the Securities
of such series may be redeemed, in whole or in part, at the option of the
Company;
(g) the obligation or the right, if any, of the Company to prepay, repay or
purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions, or at the option of a Holder thereof, 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 Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(h) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $100,000 and any integral multiples of
$1,000 in excess thereof;
(i) if other than 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 Securities of the series shall be payable, or in which the
Securities of the series shall be denominated;
(j) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
-25-
<PAGE>
(k) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(l) the additions or changes, if any, to this Indenture with respect to the
Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
(m) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Securities of such series or the manner
in which such amounts will be determined;
(n) whether the Securities of the series, or any portion thereof, shall
initially be issuable in the form of a temporary Global Security representing
all or such portion of the Securities of such series and provisions for the
exchange of such temporary Global Security for definitive Securities of such
series;
(o) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such case,
the respective Depositaries for such Global Securities, the form of any legend
or legends which shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 2.4 and any circumstances in addition to or in
lieu of those set forth in Section 3.5 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or names
of Persons other than the Depositary for such Global Security or a nominee
thereof;
(p) the appointment of any Paying Agent or Agents for the Securities of
such series;
(q) the terms of any right to convert or exchange Securities of such series
into any other securities or property of the Company, and the additions or
changes, if any, to this Indenture with respect to the Securities of such series
to permit or facilitate such conversion or exchange;
(r) the form or forms of the Trust Agreement, Amended and Restated Trust
Agreement and Guarantee Agreement, if different from the forms attached hereto
as Annexes A, B and C, respectively;
(s) the relative degree, if any, to which the Securities of the series
shall be senior to or be subordinated to other series of Securities in right of
payment, whether such other series of Securities are Outstanding or not; and
-26-
<PAGE>
(t) any other terms of the Securities of such series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided herein or in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior and
Subordinated Debt as provided in Article XIII.
Section 3.2. Denominations.
The Securities of each series shall be in registered form without coupons
and shall be issuable in minimum denominations of $100,000 and integral
multiples of $1,000 in excess thereof, unless otherwise specified as
contemplated by Section 3.1.
Section 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its President
or one of its Vice Presidents under its corporate seal reproduced or impressed
thereon and attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of
the Securities of the series have been established by or pursuant to one or more
Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to
-27-
<PAGE>
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant to
Board Resolution as permitted by Section 3.1, that such terms have been
established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of
-28-
<PAGE>
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
Section 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination, substantially of the tenor of the
definitive Securities of such series in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities
of the same series of authorized denominations having the same Original Issue
Date and Stated Maturity and having the same terms as such temporary Securities.
Until so exchanged, the temporary Securities of any series shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities
of such series.
Section 3.5. Registration, Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series of any
authorized denominations, of a like aggregate principal amount, of the same
Original Issue Date and Stated Maturity and having the same terms.
-29-
<PAGE>
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary (i) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or
(ii) has
-30-
<PAGE>
ceased to be a clearing agency registered under the Exchange Act at a time when
the Depositary is required to be so registered to act as depositary, in each
case unless the Company has approved a successor Depositary within 90 days, (B)
there shall have occurred and be continuing an Event of Default with respect to
such Global Security, (C) the Company in its sole discretion determines that
such Global Security will be so exchangeable or transferable or (D) there shall
exist such circumstances, if any, in addition to or in lieu of the foregoing as
have been specified for this purpose as contemplated by Section 3.1.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued in
exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or 11.6 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of notice of redemption or
(b) to transfer or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same issue
and series of like tenor and principal amount, having the same Original Issue
Date and Stated Maturity, and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost
-31-
<PAGE>
or stolen Security, a new Security of the same issue and series of like tenor
and principal amount, having the same Original Issue Date and Stated Maturity as
such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security of any series which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date, shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
in respect of Securities of such series, except that, unless otherwise provided
in the Securities of such series, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security of any series which is issued
between a Regular Record Date and the related Interest Payment Date shall be
payable as provided in such Security or in the Board Resolution pursuant to
Section 3.1 with respect to the related series of Securities.
Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
-32-
<PAGE>
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
in this Clause provided. Thereupon, the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class, postage prepaid, to each Holder of a
Security of such series at the address of such Holder as it appears in the
Securities Register not less than 10 days prior to such Special Record Date.
The Trustee may, in its discretion, in the name and at the expense of the
Company, cause a similar notice to be published at least once in a newspaper,
customarily published in the English language on each Business Day and of
general circulation in the Borough of Manhattan, The City of New York, but such
publication shall not be a condition precedent to the establishment of such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are registered on such
Special Record Date and shall no longer be payable pursuant to the following
Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of the series in respect of which interest is in default
may be listed and, upon such notice as may be required by such exchange (or by
the Trustee if the Securities are not listed), if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause, such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
-33-
<PAGE>
Section 3.8. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.7) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 3.9. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities shall be destroyed by the
Trustee and the Trustee shall deliver to the Company a certificate of such
destruction.
Section 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series for any period shall be
computed on the basis of a 360-day year of twelve 30-day months and interest on
the Securities of each series for any partial period shall be computed on the
basis of the number of days elapsed in a 360-day year of twelve 30-day months.
Section 3.11. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time during
the term of such series, from time to time to defer the payment of interest on
such Securities for such period or periods as may be specified as contemplated
by Section 3.1 (each, an "Extension Period") during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date. No Extension Period shall end on a date other than an
Interest Payment Date. At the end of any such Extension Period the Company shall
pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at
-34-
<PAGE>
the rate specified for the Securities of such series to the extent permitted by
applicable law); provided, however, that no Extension Period shall extend beyond
the Stated Maturity of the principal of the Securities of such series; provided,
further, that during any such Extension Period, the Company shall not, and shall
not permit any Subsidiary to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock (which includes common and preferred stock),
or (ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company (including
Securities other than the Securities of such series) that ranks pari passu with
or junior in interest to the Securities of such series or make any guarantee
payments with respect to any guarantee by the Company of the debt securities of
any Subsidiary of the Company (including FBS Guarantees other than the FBS
Guarantee related to the Capital Securities issued by the FBS Trust holding
Securities of such series) if such guarantee rank pari passu with or junior in
interest to the securities of such series (other than (a) dividends or
distributions in Common Stock of the Company, (b) any declaration of a dividend
in connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the FBS
Guarantee related to the Capital Securities issued by the FBS Trust holding
Securities of such series, and (d) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers or employees). Prior to the termination of any such
Extension Period, the Company may further extend such Extension Period, provided
that such extension does not cause such Extension Period to extend beyond the
Stated Maturity of the principal of such Securities. Upon termination of any
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Company shall give the Trustee, the Property Trustee and the Administrative
Trustees of the FBS Trust holding Securities of such series notice of its
election of any Extension Period (or an extension thereof) at least five
Business Days prior to the earlier of (i) the next succeeding date on which
Distributions on the Capital Securities of such FBS Trust would be payable
except for the election to begin or extend such Extension Period or (ii) the
date the Administrative Trustees of such FBS Trust are required to give notice
to any automated quotation system or to holders of such Capital Securities of
the record date or the date such Distributions are payable, but in any event not
less than five Business Days prior to such record date.
The Trustee shall promptly give notice of the Company's election to begin
any such Extension Period to the Holders of the Outstanding Securities of such
series.
-35-
<PAGE>
Section 3.12. Right of Set-Off.
[RESERVED]
Section 3.13. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States Federal, state and local tax purposes it is intended that such
Security constitute indebtedness.
Section 3.14. Shortening or Extension of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, the Company shall have the right to
(i) shorten the Stated Maturity of the principal of the Securities of such
series at any time to any date not earlier than the first date on which the
Company has the right to redeem the Securities of such series, and (ii) extend
the Stated Maturity of the principal of the Securities of such series at any
time at its election for one or more periods, but in no event to a date later
than the 49th anniversary of the first Interest Payment Date following the
Original Issue Date of the Securities of such series; provided that, if the
Company elects to exercise its right to extend the Stated Maturity of the
principal of the Securities of such series pursuant to clause (ii) above, at the
time such election is made and at the time of extension (A) the Company is not
in bankruptcy, otherwise insolvent or in liquidation, (B) the Company is not in
default in the payment of any interest or principal on such Securities, (C) in
the case of any series of Securities issued to an FBS Trust, such FBS Trust is
not in arrears on payments of Distributions on the Capital Securities issued by
such FBS Trust and no deferred Distributions are accumulated and (D) such
Securities are rated not less than BBB- by S&P or Baa3 by Moody's or the
equivalent by any other nationally recognized statistical rating organization.
In the event the Company elects to shorten or extend the Stated Maturity of the
Securities of any series, it shall give notice to the Trustee, and the Trustee
shall give notice of such shortening or extension to the Holders thereof no less
than 30 and no more than 60 days prior to the effectiveness thereof.
Section 3.15. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the
-36-
<PAGE>
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year of the date of deposit, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of Clause (B) (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in trust for
such purpose an amount in the currency or currencies in which the Securities of
such series are payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest (including any Additional
Interest) to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
-37-
<PAGE>
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
Section 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension Period); or
-38-
<PAGE>
(2) default in the payment of the principal of (or premium, if any, on) any
Security of that series at its Maturity; or
(3) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance of which or the breach of which is
elsewhere in this Section 5.1 specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default
or breach and requiring it to be remedied; or
(4) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(5) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit for creditors, or the admission by
it in writing of its inability to pay its debts generally as they become due and
its willingness to be adjudicated a bankrupt, or the taking of corporate action
by the Company in furtherance of any such action; or
(6) any other Event of Default provided with respect to Securities of that
series.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or 5.1(5)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are
-39-
<PAGE>
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, in the case of the Securities of a series
issued to an FBS Trust, if, upon an Event of Default, the Trustee or the Holders
of not less than 25% in principal amount of the Outstanding Securities of that
series fail to declare the principal of all the Securities of that series to be
immediately due and payable, the holders of at least 25% in aggregate
liquidation amount of the corresponding series of Capital Securities then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration such principal amount (or specified
portion thereof) of and the accrued interest (including any Additional Interest)
on all the Securities of such series shall become immediately due and payable.
Payment of principal and interest (including any Additional Interest) on such
Securities shall remain subordinated to the extent provided in Article XIII
notwithstanding that such amount shall become immediately due and payable as
herein provided. If an Event of Default specified in Section 5.1(4) or 5.1(5)
with respect to Securities of any series at the time Outstanding occurs, the
principal amount of all the Securities of that series (or, if the Securities of
that series are Discount Securities, such portion of the principal amount of
such Securities as may be specified by the terms of that series) shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A) all overdue installments of interest (including any Additional
Interest) on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of acceleration
and interest thereon at the rate borne by the Securities, and
(C) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel; and
-40-
<PAGE>
(2) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which has
become due solely by such acceleration, have been cured or waived as provided in
Section 5.13.
In the case of Securities of a series issued to an FBS Trust, the holders
of a majority in aggregate Liquidation Amount (as defined in the Trust Agreement
under which such FBS Trust is formed) of the related series of Capital
Securities issued by such FBS Trust shall also have the right to rescind and
annul such declaration and its consequences by written notice to the Company and
the Trustee subject to the satisfaction of the conditions set forth in
Clauses (1) and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial
-41-
<PAGE>
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities of
any series shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing and
unpaid in respect to the Securities and to file such other papers or documents
as may be necessary or advisable and to take any and all actions as are
authorized under the Trust Indenture Act in order to have the claims of the
Holders and any predecessor to the Trustee under Section 6.7 allowed in any such
judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
-42-
<PAGE>
Section 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing the Trustee and any predecessor Trustee
under Section 6.7, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
Section 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due
and unpaid upon such series of Securities for principal (and premium, if any)
and interest (including any Additional Interest), in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such series of
Securities for principal (and premium, if any) and interest (including any
Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section 5.7. Limitation on Suits.
No Holder of any Securities of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or for the
appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
-43-
<PAGE>
(2) the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request:
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest; Direct Action by Holders of Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7)
interest (including any Additional Interest) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder. In the case of Securities of a series issued to an FBS Trust, any holder
of the corresponding series of Capital Securities issued by such FBS Trust shall
have the right, upon the occurrence of an Event of Default described in Section
5.1(1) or 5.1(2), to institute a suit directly against the Company for
enforcement of payment to such holder of principal of (premium, if any) and
(subject to Section 3.7) interest (including any Additional Interest) on the
Securities having a principal amount equal to the aggregate Liquidation Amount
(as defined in the Trust Agreement under which such FBS Trust is formed) of such
Capital Securities of the corresponding series held by such holder.
-44-
<PAGE>
Section 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Capital Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee, such Holder or such holder of Capital
Securities, then and in every such case the Company, the Trustee, the Holders
and such holder of Capital Securities shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee, the
Holders and the holders of Capital Securities shall continue as though no such
proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.6, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Capital Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Capital Securities
by Section 5.8 may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Holders or the holders of Capital Securities, as
the case may be.
Section 5.12. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that:
-45-
<PAGE>
(1) such direction shall not be in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, determine that the proceeding so directed
would be unjustly prejudicial to the Holders not joining in any such direction
or would involve the Trustee in personal liability.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series and, in the case of any Securities of a
series issued to an FBS Trust, the holders of Capital Securities issued by such
FBS Trust may waive any past default hereunder and its consequences with respect
to such series except a default:
(1) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series or, in the case of a waiver by holders of Capital
Securities issued by such FBS Trust, by all holders of Capital Securities issued
by such FBS Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as
-46-
<PAGE>
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities of any series, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest (including any Additional
Interest) on any Security on or after the respective Stated Maturities expressed
in such Security.
Section 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default;
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture.
-47-
<PAGE>
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
Holders pursuant to Section 5.12 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture with respect
to the Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
6.1.
Section 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Securities
Register, notice of such default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest (including any Additional
Interest) on any Security of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or
-48-
<PAGE>
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of Securities of
such series; and provided, further, that, in the case of any default of the
character specified in Section 5.1(3), no such notice to Holders of Securities
of such series shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.
Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall
-49-
<PAGE>
determine to make such inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
Section 6.7. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time compensation for all services
rendered by it hereunder in such amounts as the Company and the Trustee shall
agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
-50-
<PAGE>
(2) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense (including the reasonable compensation and the
expenses and disbursements of its agents and counsel) incurred without
negligence or bad faith, arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. This indemnification shall survive the termination of this
Agreement.
To secure the Company's payment obligations in this Section 6.7, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such lien
shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor statute.
Section 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of said Section 301(b).
Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the United
States of America or of any State or Territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority, or
(b) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
-51-
<PAGE>
rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section 6.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
6.9, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article VI. Neither the Company nor any Person directly or
indirectly controlling, controlled by or under common control with the Company
shall serve as Trustee for the Securities of any series issued hereunder.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and shall fail
to resign after written request therefor by the Company or by any such Holder,
or
-52-
<PAGE>
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to all Securities, or (ii)
subject to Section 5.14, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee with respect to the Securities of
that or those series. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and supersede
the successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities of such series as their names and addresses appear in the
Securities Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument
-53-
<PAGE>
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) or (b) of this Section 6.11, as the case may be.
-54-
<PAGE>
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article VI.
Section 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VI, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation
-55-
<PAGE>
organized and doing business under the laws of the United States of America, or
of any State or Territory or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 6.14 the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 6.14, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 6.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 1.6 to all Holders
of Securities of the series with respect to which such Authenticating Agent will
serve. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provision of this Section 6.14.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.14, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment with respect to one or more series is made pursuant to
this Section 6.14, the Securities of such series may have endorsed thereon, in
addition to
-56-
<PAGE>
the Trustee's certificate of authentication, an alternative certificate of
authentication in the following form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
WILMINGTON TRUST COMPANY,
As Trustee
By:_________________________
As Authenticating Agent
By:_________________________
Authorized Officer
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after January 15 and July 15 in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of January 1 and July 1 of such year, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished,
excluding from any such list names and addresses received by the Trustee in its
capacity as Securities Registrar.
Section 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee
-57-
<PAGE>
may destroy any list furnished to it as provided in Section 7.1 upon receipt of
a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 15 in each calendar year,
commencing with the first July 15 after the first issuance of Securities under
this Indenture.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any stock exchange.
Section 7.4. Reports by Company.
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall continue to file with the Commission and provide the
Trustee with the annual reports and the information, documents and other reports
which are
-58-
<PAGE>
specified in Sections 13 and 15(d) of the Exchange Act. The Company also shall
comply with the other provisions of Trust Indenture Act Section 314(a).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(1) in case the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State or the District of Columbia, and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of (and premium,
if any) and interest (including any Additional Interest) on all the Securities
and the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) in the case of the Securities of a series issued to an FBS Trust, such
consolidation, merger, conveyance, transfer or lease is permitted under the
related Trust Agreement and related FBS Guarantee and does not give rise to any
breach or violation of the related Trust Agreement or related FBS Guarantee; and
(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and any such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee, subject to Section 6.1,
may rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
-59-
<PAGE>
Section 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; and in the event of any such
conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication pursuant to such provisions and
any Securities which such successor Person thereafter shall cause to be signed
and delivered to the Trustee on its behalf for the purpose pursuant to such
provisions. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
provided, however, that the form and terms of Securities of any series may
-60-
<PAGE>
be established by a Board Resolution, as set forth in the Officers' Certificate
delivered to the Trustee pursuant to Section 3.1, without entering into a
supplemental indenture for all purposes hereunder, for any of the following
purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to establish the form or terms of Securities of any series as permitted
by Sections 2.1 or 3.1; or
(4) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are
expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(5) to add any additional Events of Default for the benefit of the Holders
of all or any series of Securities (and if such additional Events of Default are
to be for the benefit of less than all series of Securities, stating that such
additional Events of Default are expressly being included solely for the benefit
of such series); or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such provision;
or
(7) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities of any series in any
material respect or, in the case of the Securities of a series issued to an FBS
Trust and for so long as any of the corresponding series of Capital Securities
issued by such FBS Trust shall remain outstanding, the holders of such Capital
Securities; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
-61-
<PAGE>
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) except to the extent permitted by Section 3.11 or as otherwise
specified as contemplated by Section 2.1 or Section 3.1 with respect to the
deferral of the payment of interest on the Securities of any series, change the
Stated Maturity of the principal of, or any installment of interest (including
any Additional Interest) on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or reduce any premium payable upon the
redemption thereof, or reduce the amount of principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2, or change the place of payment where, or the
coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Securities
of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or Section
10.5, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Security affected thereby; or
-62-
<PAGE>
(4) modify the provisions in Article XIII of this Indenture with respect to
the subordination of Outstanding Securities of any series in a manner adverse to
the Holders thereof;
provided, further, that, in the case of the Securities of a series issued to an
FBS Trust, so long as any of the corresponding series of Capital Securities
issued by such FBS Trust remains outstanding, (i) no such amendment shall be
made that adversely affects the holders of such Capital Securities in any
material respect, and no termination of this Indenture shall occur, and no
waiver of any Event of Default or compliance with any covenant under this
Indenture shall be effective, without the prior consent of the holders of at
least a majority of the aggregate liquidation preference of such Capital
Securities then outstanding unless and until the principal (and premium, if any)
of the Securities of such series and all accrued and, subject to Section 3.7,
unpaid interest (including any Additional Interest) thereon have been paid in
full and (ii) no amendment shall be made to Section 5.8 of this Indenture that
would impair the rights of the holders of Capital Securities provided therein
without the prior consent of the holders of each Capital Security then
outstanding unless and until the principal (and premium, if any) of the
Securities of such series and all accrued and (subject to Section 3.7) unpaid
interest (including any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or Capital Securities, or
which modifies the rights of the Holders of Securities or holders of Capital
Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under this Indenture of the Holders of
Securities or holders of Capital Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional series of Securities created by
any supplemental indenture permitted by this Article or the modifications
thereby of any series of Securities previously created by this Indenture, the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture, and that all conditions precedent have been
complied with. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
-63-
<PAGE>
Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX or
delivery to the Trustee of the Officers' Certificate pursuant to Section 3.1
hereof (which Officers' Certificate shall have the effect of a supplemental
indenture for all purposes hereunder), this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article IX and every
Officers' Certificate delivered to the trustee pursuant to Section 3.1 hereof
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX or delivery to the Trustee of
the Officers' Certificate pursuant to Section 3.1 hereof (which Officers'
Certificate shall have the effect of a supplemental indenture for all purposes
hereunder) may, and shall if required by the Company, bear a notation in form
approved by the Company as to any matter provided for in such supplemental
indenture or such Officers' Certificate. If the Company shall so determine, new
Securities of any series so modified as to conform, in the opinion of the
Company, to any such supplemental indenture or such Officers's Certificate may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of such Securities and this Indenture.
-64-
<PAGE>
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment and an office or agency where Securities of that
series may be surrendered for transfer or exchange and where notices and demands
to or upon the Company in respect of the Securities of that series and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation and any change in
the location of any such office or agency.
Section 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m. New York City time on each due date of the principal of or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal and
premium (if any) or interest,
-65-
<PAGE>
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 10.3, that such
Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest:
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(4) comply with the provisions of the Trust Indenture Act applicable to it
as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request to the Company,
or (if then held by the Company) shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the
-66-
<PAGE>
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
Section 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each calendar year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company shall
be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. For the purpose of this Section 10.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
Section 10.5. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition provided pursuant to Sections 3.1, 9.1(3), or 9.1(4) with respect
to the Securities of any series, if before or after the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
Section 10.6. Additional Sums.
In the case of the Securities of a series issued to an FBS Trust, so long
as no Event of Default has occurred and is continuing and except as otherwise
specified as contemplated by Section 2.1 or Section 3.1, in the event that
(i) such FBS Trust is the Holder of all of the Outstanding Securities of such
series, (ii) a Tax Event in respect of such FBS Trust shall have occurred and be
continuing and (iii) the Company shall not have (A) redeemed the Securities of
such series pursuant to Section 11.7(b) or (B) terminated such FBS Trust
pursuant to Section 9.2(b) of the related Trust Agreement, the Company shall pay
to such FBS Trust (and its permitted successors
-67-
<PAGE>
or assigns under the related Trust Agreement) for so long as such FBS Trust (or
its permitted successor or assignee) is the registered holder of any Securities
of such series, such additional amounts as may be necessary in order that the
amount of Distributions (including any Additional Amounts (as defined in such
Trust Agreement)) then due and payable by such FBS Trust on the related Capital
Securities and Common Securities that at any time remain outstanding in
accordance with the terms thereof shall not be reduced as a result of any
Additional Taxes (the "Additional Sums"). Whenever in this Indenture or the
Securities there is a reference in any context to the payment of principal of or
interest on the Securities, such mention shall be deemed to include mention of
the payments of the Additional Sums provided for in this paragraph to the extent
that, in such context, Additional Sums are, were or would be payable in respect
thereof pursuant to the provisions of this paragraph and express mention of the
payment of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the payment
of interest pursuant to Section 3.11 or the Securities shall not defer the
payment of any Additional Sums that may be due and payable.
Section 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities of any
series that it shall not, and it shall not permit any Subsidiary of the Company
to, (a) declare or pay any dividends or distributions on, or redeem purchase,
acquire or make a liquidation payment with respect to, any shares of the
Company's capital stock (which includes common and preferred stock), or (b) make
any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company (including Securities
other than the Securities of such series) that rank pari passu with or junior in
interest to the Securities of such series or make any guarantee payments with
respect to any guarantee by the Company of debt securities of any subsidiary of
the Company (including FBS Guarantees other than the FBS Guarantee related to
the Capital Securities issued by the FBS Trust holding Securities of such
series) if such guarantee ranks pari passu with or junior in interest to the
Securities (other than (a) dividends or distributions in Common Stock of the
Company, (b) any declaration of a dividend in connection with the implementation
of a rights plan or the issuance of stock under any such plan or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the FBS
Guarantee related to the Capital Securities issued by the FBS Trust holding
Securities of such series, and (d) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers or employees) if at such time (i) there shall have
occurred any event of which the Company has actual knowledge that (A) with the
giving of notice or the lapse of time or both, would constitute an Event of
Default with respect to the Securities of such series and (B) in respect of
which the
-68-
<PAGE>
Company shall not have taken reasonable steps to cure, (ii) if the Securities of
such series are held by an FBS Trust, the Company shall be in default with
respect to its payment of any obligations under the FBS Guarantee relating to
the Capital Securities issued by such FBS Trust or (iii) the Company shall have
given notice of its election to begin an Extension Period with respect to the
Securities of such series as provided herein and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be continuing.
The Company also covenants with each Holder of Securities of a series
issued to an FBS Trust (i) to maintain directly or indirectly 100% ownership of
the Common Securities of such FBS Trust; provided, however, that any permitted
successor of the Company hereunder may succeed to the Company's ownership of
such Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate
such FBS Trust, except (a) in connection with a distribution of the Securities
of such series to the holders of Trust Securities in liquidation of such FBS
Trust or (b) in connection with certain mergers, consolidations or amalgamations
permitted by the related Trust Agreement and (iii) to use its reasonable
efforts, consistent with the terms and provisions of such Trust Agreement, to
cause such FBS Trust to remain classified as a grantor trust and not an
association taxable as a corporation for United States federal income tax
purposes.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of This Article.
Redemption of Securities of any series (whether by operation of a sinking
fund or otherwise) as permitted or required by any form of Security issued
pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of such series shall be
subject to partial redemption only in the amount of $100,000 or, in the case of
the Securities of a series issued to an FBS Trust, $100,000, or integral
multiples of $1,000 in excess thereof.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of less than all of the Securities of any particular series and
having the same terms, the Company shall, not less than 30 nor more than 60 days
prior to the Redemption Date (unless a shorter notice shall be satisfactory to
the Trustee), notify
-69-
<PAGE>
the Trustee of such date and of the principal amount of Securities of that
series to be redeemed. In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities, the Company shall furnish the Trustee with an Officers' Certificate
and an Opinion of Counsel evidencing compliance with such restriction.
Section 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security of such series, provided that
the portion of the principal amount of any Security not redeemed shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed. If the
Company shall so direct, Securities registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall state:
(a) the Redemption Date;
-70-
<PAGE>
(b) the Redemption Price;
(c) if less than all Outstanding Securities of such particular series and
having the same terms are to be redeemed, the identification (and, in the case
of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Security or portion thereof, and that interest thereon,
if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price; and
(f) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
Section 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m. New York City time on the Redemption Date specified in
the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company is
acting as its own Paying Agent, the Company will segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and any accrued interest (including Additional Interest) on, all the
Securities which are to be redeemed on that date.
Section 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4, the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the applicable Redemption Price. On presentation and surrender
of such Securities at a Place of Payment in said notice specified, the said
securities or the
-71-
<PAGE>
specified portions thereof shall be paid and redeemed by the Company at the
applicable Redemption Price, together with accrued interest (including any
Additional Interest) to the Redemption Date; provided, however, that, unless
otherwise specified as contemplated by Section 3.1, installments of interest
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.7.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Security or Securities of the same series, of
authorized denominations, in aggregate principal amount equal to the portion of
the Security not redeemed so presented and having the same Original Issue Date,
Stated Maturity and terms. If a Global Security is so surrendered, such new
Security will also be a new Global Security.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 11.7. Right of Redemption of Securities Initially Issued to an FBS
Trust.
In the case of the Securities of a series initially issued to an FBS Trust,
except as otherwise specified as contemplated by Section 3.1, the Company, at
its option, may redeem such Securities (i) on or after the date five years after
the Original Issue Date of such Securities, in whole at any time or in part from
time to time, or (ii) upon the occurrence and during the continuation of a Tax
Event, at any time within 90 days following the occurrence of such Tax Event in
respect of such FBS Trust, in whole (but not in part), in each case at a
Redemption Price equal to 100% of the principal amount thereof.
ARTICLE XII
SINKING FUNDS
Section 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
-72-
<PAGE>
The minimum amount of any sinking fund payment provided for by the terms of
any Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any sinking fund payment in excess of such minimum amount which is
permitted to be made by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment". If provided for by the terms
of any Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.2. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of such Securities.
Section 12.2. Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund payment with
respect to any Securities of a series in cash, the Company may at its option, at
any time no more than 16 months and no less than 30 days prior to the date on
which such sinking fund payment is due, deliver to the Trustee Securities of
such series (together with the unmatured coupons, if any, appertaining thereto)
theretofore purchased or otherwise acquired by the Company, except Securities of
such series that have been redeemed through the application of mandatory or
optional sinking fund payments pursuant to the terms of the Securities of such
series, accompanied by a Company Order instructing the Trustee to credit such
obligations and stating that the Securities of such series were originally
issued by the Company by way of bona fide sale or other negotiation for value;
provided that the Securities to be so credited have not been previously so
credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the redemption price for such Securities, as
specified in the Securities so to be redeemed, for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
Section 12.3. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which the
Securities of such series are payable (except as provided pursuant to Section
3.1) and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 12.2 and will also deliver to the
Trustee any Securities to be so delivered. Such Officers' Certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date. In the case of the failure of the Company
to deliver such Officers' Certificate (or, as required by this Indenture, the
Securities and coupons, if any, specified in such Officers' Certificate), the
sinking fund payment due
-73-
<PAGE>
on the succeeding sinking fund payment date for such series shall be paid
entirely in cash and shall be sufficient to redeem the principal amount of the
Securities of such series subject to a mandatory sinking fund payment without
the right to deliver or credit securities as provided in Section 12.2 and
without the right to make the optional sinking fund payment with respect to such
series at such time.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with respect
to the Securities of any particular series shall be applied by the Trustee (or
by the Company if the Company is acting as its own Paying Agent) on the sinking
fund payment date on which such payment is made (or, if such payment is made
before a sinking fund payment date, on the sinking fund payment date immediately
following the date of such payment) to the redemption of Securities of such
series at the Redemption Price specified in such Securities with respect to the
sinking fund. Any sinking fund moneys not so applied or allocated by the
Trustee (or, if the Company is acting as its own Paying Agent, segregated and
held in trust by the Company as provided in Section 10.3) for such series and
together with such payment (or such amount so segregated) shall be applied in
accordance with the provisions of this Section 12.3. Any and all sinking fund
moneys with respect to the Securities of any particular series held by the
Trustee (or if the Company is acting as its own Paying Agent, segregated and
held in trust as provided in Section 10.3) on the last sinking fund payment date
with respect to Securities of such series and not held for the payment or
redemption of particular Securities of such series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent),
together with other moneys, if necessary, to be deposited (or segregated)
sufficient for the purpose, to the payment of the principal of the Securities of
such series at Maturity. The Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 11.3 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 11.4. Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Section 11.6. On or before each sinking fund
payment date, the Company shall pay to the Trustee (or, if the Company is acting
as its own Paying Agent, the Company shall segregate and hold in trust as
provided in Section 10.3) in cash a sum in the currency in which Securities of
such series are payable (except as provided pursuant to Section 3.1) equal to
the principal and any interest accrued to the Redemption Date for Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a series
with sinking fund moneys or mail any notice of redemption of Securities of such
series by operation of the sinking fund for such series during the continuance
of a default in payment of interest, if any, on any Securities of such series or
of any Event of Default (other than an Event of Default occurring as a
consequence of this
-74-
<PAGE>
paragraph) with respect to the Securities of such series, except that if the
notice of redemption shall have been provided in accordance with the provisions
hereof, the Trustee (or the Company, if the Company is then acting as its own
Paying Agent) shall redeem such Securities if cash sufficient for that purpose
shall be deposited with the Trustee (or segregated by the Company) for that
purpose in accordance with the terms of this Article XII. Except as aforesaid,
any moneys in the sinking fund for such series at the time when any such default
or Event of Default shall occur and any moneys thereafter paid into such sinking
fund shall, during the continuance of such default or Event of Default, be held
as security for the payment of the Securities and coupons, if any, of such
series; provided, however, that in case such default or Event of Default shall
have been cured or waived herein, such moneys shall thereafter be applied on the
next sinking fund payment date for the Securities of such series on which such
moneys may be applied pursuant to the provisions of this Section 12.3.
ARTICLE XIII. SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior and Subordinated Debt.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article XIII, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
amounts then due and payable in respect of all Senior and Subordinated Debt.
Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), then the holders of Senior and
Subordinated Debt shall be entitled to receive payment in full of Allocable
Amounts of such Senior and Subordinated Debt, or provision shall be made for
such payment in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior and Subordinated Debt, before the Holders of the
Securities are entitled to receive or retain any payment or distribution of any
kind or character, whether in cash, property or securities (including any
payment or distribution which may be payable or deliverable by reason of the
payment of any other Debt of the Company subordinated to the payment of the
Securities, such payment or distribution being hereinafter referred to as a
"Junior Subordinated Payment"), on account of principal of (or premium, if any)
or interest (including any Additional Interest) on the Securities or on account
of the purchase or other acquisition of Securities by the
-75-
<PAGE>
Company or any Subsidiary and to that end the holders of Senior and Subordinated
Debt shall be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, including any Junior Subordinated Payment, which may be payable or
deliverable in respect of the Securities in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this Section
13.2, the Trustee or the Holder of any Security shall have received any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, including any Junior Subordinated Payment, before
all Allocable Amounts of all Senior and Subordinated Debt are paid in full or
payment thereof is provided for in cash or cash equivalents or otherwise in a
manner satisfactory to the holders of Senior and Subordinated Debt, and if such
fact shall, at or prior to the time of such payment or distribution, have been
made known to the Trustee or, as the case may be, such Holder, then and in such
event such payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the Company
for application to the payment of all Allocable Amounts of all Senior and
Subordinated Debt remaining unpaid, to the extent necessary to pay all Allocable
Amounts of all Senior and Subordinated Debt in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior and
Subordinated Debt.
For purposes of this Article XIII only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which securities are subordinated in
right of payment to all then outstanding Senior and Subordinated Debt to
substantially the same extent as the Securities are so subordinated as provided
in this Article XIII. The consolidation of the Company with, or the merger of
the Company into, another Person or the liquidation or dissolution of the
Company following the sale of all or substantially all of its properties and
assets as an entirety to another Person upon the terms and conditions set forth
in Article VIII shall not be deemed a Proceeding for the purposes of this
Section 13.2 if the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by sale such properties and
assets as an entirety, as the case may be, shall, as a part of such
consolidation, merger, or sale comply with the conditions set forth in Article
VIII.
Section 13.3. Prior Payment to Senior and Subordinated Debt Upon Acceleration
of Securities.
-76-
<PAGE>
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of the Senior and
Subordinated Debt outstanding at the time such Securities so become due and
payable shall be entitled to receive payment in full of all Allocable Amounts
due on or in respect of such Senior and Subordinated Debt (including any amounts
due upon acceleration), or provision shall be made for such payment in cash or
cash equivalents or otherwise in a manner satisfactory to the holders of Senior
and Subordinated Debt, before the Holders of the Securities are entitled to
receive any payment or distribution of any kind or character, whether in cash,
properties or securities (including any Junior Subordinated Payment) by the
Company on account of the principal of (or premium, if any) or interest
(including any Additional Interest) on the Securities or on account of the
purchase or other acquisition of Securities by the Company or any Subsidiary;
provided, however, that nothing in this Section 13.3 shall prevent the
satisfaction of any sinking fund payment in accordance with this Indenture or as
otherwise specified as contemplated by Section 3.1 for the Securities of any
series by delivering and crediting pursuant to Section 12.2 or as otherwise
specified as contemplated by Section 3.1 for the Securities of any series
Securities which have been acquired (upon redemption or otherwise) prior to such
declaration of acceleration.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.3, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section 13.3 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section 13.4. No Payment When Senior and Subordinated Debt in Default.
(a) In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on any Senior and Subordinated
Debt, or in the event that any event of default with respect to any Senior and
Subordinated Debt shall have occurred and be continuing and shall have resulted
in such Senior and Subordinated Debt becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist and such acceleration shall have been rescinded or
annulled, or (b) in the event any judicial proceeding shall be pending with
respect to any such default in payment or such event or default, then no payment
or distribution of any kind or character, whether in cash, properties or
securities (including any Junior Subordinated Payment) shall be made by the
Company on account of principal of (or
-77-
<PAGE>
premium, if any) or interest (including any Additional Interest), if any, on the
Securities or on account of the purchase or other acquisition of Securities by
the Company or any Subsidiary, in each case unless and until all Allocable
Amounts of such Senior and Subordinated Debt are paid in full; provided,
however, that nothing in this Section 13.4 shall prevent the satisfaction of any
sinking fund payment in accordance with this Indenture or as otherwise specified
as contemplated by Section 3.1 for the Securities of any series by delivering
and crediting pursuant to Section 12.2 or as otherwise specified as contemplated
by Section 3.1 for the Securities of any series Securities which have been
acquired (upon redemption or otherwise) prior to such default in payment or
event of default.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.4, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section 13.4 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section 13.5. Payment Permitted If No Default.
Nothing contained in this Article XIII or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any Proceeding referred to in Section 13.2 or under the
conditions described in Sections 13.3 and 13.4, from making payments at any time
of principal of (and premium, if any) or interest (including Additional
Interest) on the Securities, or (b) the application by the Trustee of any money
deposited with it hereunder to the payment of or on account of the principal of
(and premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article XIII.
Section 13.6. Subrogation to Rights of Holders of Senior and Subordinated Debt.
Subject to the payment in full of all amounts due or to become due on all
Senior and Subordinated Debt, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior and
Subordinated Debt, the Holders of the Securities shall be subrogated to the
extent of the payments or distributions made to the holders of such Senior and
Subordinated Debt pursuant to the provisions of this Article XIII (equally and
ratably with the
-78-
<PAGE>
holders of all indebtedness of the Company which by its express terms is
subordinated to Senior and Subordinated Debt of the Company to substantially the
same extent as the Securities are subordinated to the Senior and Subordinated
Debt and is entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior and Subordinated Debt) to the
rights of the holders of such Senior and Subordinated Debt to receive payments
and distributions of cash, property and securities applicable to the Senior and
Subordinated Debt until the principal of (and premium, if any) and interest on
the Securities shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior and Subordinated Debt of
any cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article XIII to the holders of
Senior and Subordinated Debt by Holders of the Securities or the Trustee, shall,
as among the Company, its creditors other than holders of Senior and
Subordinated Debt, and the Holders of the Securities, be deemed to be a payment
or distribution by the Company to or on account of the Senior and Subordinated
Debt.
Section 13.7. Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior and Subordinated Debt on the other hand.
Nothing contained in this Article XIII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Company and the
Holders of the Securities, the obligations of the Company, which are absolute
and unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior and Subordinated Debt; or (c) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture including, without
limitation, filing and voting claims in any Proceeding, subject to the rights,
if any, under this Article XIII of the holders of Senior and Subordinated Debt
to receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
Section 13.8. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article
-79-
<PAGE>
XIII and appoints the Trustee his or her attorney-in-fact for any and all such
purposes.
Section 13.9. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior and Subordinated
Debt to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior and Subordinated Debt may, at any time and from
to time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior and Subordinated Debt, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior and Subordinated Debt, or otherwise amend or supplement in any
manner Senior and Subordinated Debt or any instrument evidencing the same or any
agreement under which Senior and Subordinated Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior and Subordinated Debt; (iii) release any Person liable
in any manner for the collection of Senior and Subordinated Debt; and
(iv) exercise or refrain from exercising any rights against the Company and any
other Person.
Section 13.10. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article XIII or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior and Subordinated Debt or from any trustee, agent
or representative therefor; provided, however, that if the Trustee shall not
have received the notice provided for in this Section 13.10 at least two
Business Days prior to the date upon which by the terms hereof any monies may
become payable for any purpose
-80-
<PAGE>
(including, without limitation, the payment of the principal of (and premium, if
any) or interest (including any Additional Interest) on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received and shall not be affected by any notice
to the contrary which may be received by it within two Business Days prior to
such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior and Subordinated Debt (or a trustee therefor) to
establish that such notice has been given by a holder of Senior and Subordinated
Debt (or a trustee therefor). In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior and Subordinated Debt to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior and Subordinated Debt held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 13.11. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article XIII, the Trustee, subject to the provisions of Section 6.1, and
the Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior and
Subordinated Debt and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XIII.
Section 13.12. Trustee Not Fiduciary for Holders of Senior and Subordinated
Debt.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior and Subordinated Debt
and shall not be liable to any such holders if it shall in good faith mistakenly
pay over or distribute to Holders of Securities or to the Company or to any
other Person cash, property or securities to which any holders of Senior and
Subordinated Debt shall be entitled by virtue of this Article or otherwise.
-81-
<PAGE>
Section 13.13. Rights of Trustee as Holder of Senior and Subordinated Debt;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XIII with respect to any Senior and Subordinated Debt
which may at any time be held by it, to the same extent as any other holder of
Senior and Subordinated Debt, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder.
Section 13.14. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article XIII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XIII in addition to or in place of the Trustee.
Section 13.15. Certain Conversions or Exchanges Deemed Payment.
For the purposes of this Article XIII only, (a) the issuance and delivery
of junior securities upon conversion or exchange of Securities shall not be
deemed to constitute a payment or distribution on account of the principal of
(or premium, if any) or interest (including any Additional Interest) on
Securities or on account of the purchase or other acquisition of Securities, and
(b) the payment, issuance or delivery of cash, property or securities (other
than junior securities) upon conversion or exchange of a Security shall be
deemed to constitute payment on account of the principal of such security. For
the purposes of this Section 13.15, the term "junior securities" means (i)
shares of any stock of any class of the Company and (ii) securities of the
Company which are subordinated in right of payment to all Senior and
Subordinated Debt which may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article XIII.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-82-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
FIRST BANK SYSTEM, INC.
By:______________________________
Its:_____________________________
Attest:
By ____________________________
Its ________________________
WILMINGTON TRUST COMPANY,
as Trustee
By:______________________________
Its:_____________________________
Attest:
By ____________________________
Its ________________________
-83-
<PAGE>
Exhibit 4.2
CERTIFICATE OF TRUST
OF
FBS CAPITAL I
THIS CERTIFICATE OF TRUST of FBS CAPITAL I (the "Trust"), dated as of
October 31, 1996, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. ((S)) 3801 et seq.).
1. Name. The name of the business trust being formed hereby is FBS Capital
I.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are Wilmington
Trust Company, Rodney Square North, 1100 North Market, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Trustee
By:_____________________________________
Name:
Title:
________________________________________
DAVID J. PARRIN, not in his individual
capacity but solely as Administrative Trustee
________________________________________
SUSAN E. LESTER, not in her individual
capacity but solely as Administrative Trustee
________________________________________
LEE R. MITAU, not in his individual
capacity but solely as Administrative
Trustee
<PAGE>
Exhibit 4.3
TRUST AGREEMENT OF
FBS CAPITAL I
This TRUST AGREEMENT of FBS CAPITAL I (the "Trust"), dated as of
October 31, 1996, among (i) First Bank System, Inc., a Delaware corporation
(the "Depositor"), (ii) Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee of the Trust,
and (iii), Lee R. Mitau, Susan E. Lester and David J. Parrin, each an individual
employed by the Depositor, not in their individual capacities but solely as
administrative trustees of the Trust (each of such trustees in (ii) and (iii) a
"Trustee" and collectively, the "Trustees"). The Depositor and the Trustees
hereby agree as follows:
1. The Trust created hereby shall be known as "FBS Capital I", in
which name the Trustees, or the Depositor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S) 3801 et seq. (the "Business Trust Act"), and
that this document constitutes the governing instrument of the Trust. The
Trustees hereby are authorized and directed to execute and file a certificate of
trust with the Secretary of State of the State of Delaware in accordance with
the provisions of the Business Trust Act.
<PAGE>
3. The Depositor and the Trustees will enter into an Amended and
Restated Trust Agreement, satisfactory to each such party and substantially in
the form to be included as an exhibit to the 1933 Act Registration Statement
referred to below, to provide for the contemplated operation of the Trust
created hereby and the issuance of the Preferred Securities and Common
Securities referred to therein. Prior to the execution and delivery of such
Amended and Restated Trust Agreement, the Trustees shall not have any duty or
obligation hereunder or with respect of the trust estate, except as otherwise
required by applicable law or as may be necessary to obtain prior to such
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.
4. The Trustees hereby authorize and direct the Depositor (i) to
file with the Securities and Exchange Commission (the "Commission") and execute,
in each case on behalf of the Trust, (a) a Registration Statement on Form S-3
(the "1933 Act Registration Statement"), including any pre-effective or post-
effective amendments to the 1933 Act Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities of the Trust and certain other securities and (b) a Registration
Statement on Form 8-A (the "1934 Act Registration Statement") (including all
pre-effective and post-effective amendments thereto) relating to the
registration of the Preferred Securities of the Trust under Section 12(b) of the
Securities Exchange Act of 1934, as amended; (ii) to file with the New York
Stock Exchange (the "Exchange") and execute on behalf of the Trust a listing
application and all other applications, statements, certificates,
-2-
<PAGE>
agreements and other instruments as shall be necessary or desirable to cause the
Preferred Securities to be listed on the Exchange and (iii) to file and execute
on behalf of the Trust such applications, reports, surety bonds, irrevocable
consents, appointments of attorney for service of process and other papers and
documents as shall be necessary or desirable to register the Preferred
Securities under the securities or blue sky laws of such jurisdictions as the
Depositor, on behalf of the Trust, may deem necessary or desirable. In the event
that any filing referred to above is required by the rules and regulations of
the Commission, the Exchange or state securities or blue sky laws, to be
executed on behalf of the Trust by one or more of the Trustees, each of the
Trustees, in its or his capacity as Trustee of the Trust, is hereby authorized
and, to the extent so required, directed to join in any such filing and to
execute on behalf of the Trust any and all of the foregoing, it being understood
that Wilmington Trust Company in its capacity as Trustee of the Trust, shall not
be required to join in any such filing or execute on behalf of the Trust any
such document unless required by the rules and regulations of the Commission,
the Exchange or state securities or blue sky laws. In connection with the
filings referred to above, the Depositor and Lee R. Mitau, Susan E. Lester and
David J. Parrin, each an administrative trustee, solely in their capacities as
Trustees of the Trust, hereby constitutes and appoints Lee R. Mitau, Susan E.
Lester and David J. Parrin, each of them, as its or his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the Depositor or such Trustee or in the Depositor's or such
Trustee's name, place and stead, in any and all capacities, to sign
-3-
<PAGE>
any and all amendments (including post-effective amendments) to any such filings
(including the 1933 Act Registration Statement and the 1934 Act Registration
Statement) and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Commission, the Exchange and administrators of
state securities or blue sky laws, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as the Depositor or such Trustee might or could do in
person, thereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their respective substitute or substitutes, shall do
or cause to be done by virtue thereof.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be four (4) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall be either a natural person who is a
resident of the State of Delaware, or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustees may resign upon thirty days prior written notice to
Depositor.
-4-
<PAGE>
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
IN WITNESS THEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.
FIRST BANK SYSTEM, INC., __________________________________
as Depositor DAVID J. PARRIN, not in his
individual capacity but solely as
Administrative Trustee
By:______________________________________
Name:
Title: __________________________________
SUSAN E. LESTER, not in her
individual capacity but solely as
Administrative Trustee
WILMINGTON TRUST COMPANY, __________________________________
not in its individual capacity but solely LEE R. MITAU, not in his
as Trustee individual capacity but solely as
Administrative Trustee
By:______________________________________
Name:
Title:
-5-
<PAGE>
________________________________________________________________________________
GUARANTEE AGREEMENT
BETWEEN
FIRST BANK SYSTEM, INC.
(AS GUARANTOR)
AND
WILMINGTON TRUST COMPANY
(AS TRUSTEE)
DATED AS OF
NOVEMBER 26, 1996
________________________________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of 1939, as amended Guarantee Agreement
- --------------------------------- -------------------
<S> <C>
310(a). 4.1(a)
310(b). 4.1(c), 2.8
310(c). Inapplicable
311(a). 2.2(b)
311(b). 2.2(b)
311(c). Inapplicable
312(a). 2.2(a)
312(b). 2.2(b)
313. 2.3
314(a). 2.4
314(b). Inapplicable
314(c). 2.5
314(d). Inapplicable
314(e). 1.1, 2.5, 3.2
314(f). 2.1, 3.2
315(a). 3.1(d)
315(b). 2.7
315(c). 3.1
315(d). 3.1(d)
316(a). 1.1, 2.6, 5.4
316(b). 5.3
316(c). 9.2
317(a). Inapplicable
317(b). Inapplicable
318(a). 2.1(b)
318(b). 2.1
318(c). 2.1(a)
</TABLE>
- ----------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS 1
Section 1.1. Definitions 1
ARTICLE II. TRUST INDENTURE ACT 3
Section 2.1. Trust Indenture Act; Application 3
Section 2.2. List of Holders 4
Section 2.3. Reports by the Guarantee Trustee 4
Section 2.4. Periodic Reports to Guarantee Trustee 4
Section 2.5. Evidence of Compliance with Conditions Precedent 4
Section 2.6. Events of Default; Waiver 4
Section 2.7. Event of Default; Notice 4
Section 2.8. Conflicting Interests 5
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE 5
Section 3.1. Powers and Duties of the Guarantee Trustee 5
Section 3.2. Certain Rights of Guarantee Trustee 6
Section 3.3. Indemnity 8
ARTICLE IV. GUARANTEE TRUSTEE 8
Section 4.1. Guarantee Trustee; Eligibility 8
Section 4.2. Appointment, Removal and Resignation of the
Guarantee Trustee 8
ARTICLE V. GUARANTEE 8
Section 5.1. Guarantee 8
Section 5.2. Waiver of Notice and Demand 9
Section 5.3. Obligations Not Affected 9
Section 5.4. Rights of Holders 10
Section 5.5. Guarantee of Payment 10
Section 5.6. Subrogation 10
Section 5.7. Independent Obligations 10
ARTICLE VI. COVENANTS AND SUBORDINATION 11
Section 6.1. Subordination 11
Section 6.2. Pari Passu Guarantees 11
ARTICLE VII. CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS 11
Section 7.1. Guarantor May Consolidate, Etc., Only on Certain Terms 11
Section 7.2. Successor Guarantor Substituted 12
ARTICLE VIII. TERMINATION 12
Section 8.1. Termination 12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX. MISCELLANEOUS 12
Section 9.1. Successors and Assigns 12
Section 9.2. Amendments 12
Section 9.3. Notices 12
Section 9.4. Benefit 13
Section 9.5. Interpretation 13
Section 9.6. Governing Law 14
</TABLE>
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of November 26, 1996, is executed and
delivered by FIRST BANK SYSTEM, INC., a Delaware corporation (the "Guarantor")
having its principal office at 601 Second Avenue South, Minneapolis, Minnesota
55402, and Wilmington Trust Company, a Delaware banking corporation, as trustee
(the "Guarantee Trustee"), for the benefit of the Holders from time to time of
the Capital Securities (as defined herein) of FBS Capital I, a Delaware
statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
November 26, 1996 (the "Trust Agreement") among the Guarantor, as Depositor,
the Property Trustee and the Delaware Trustee named therein and the Holders from
time to time of undivided beneficial interests in the assets of the Trust, the
Trust is issuing $300,000,000 aggregate Liquidation Amount (as defined in the
Trust Agreement) of its 8.09% Capital Securities, Liquidation Amount $1,000 per
Capital Security (the "Capital Securities") representing preferred undivided
beneficial interests in the assets of the Trust and having the terms set forth
in the Trust Agreement;
WHEREAS, the Capital Securities will be issued by the Trust and the
proceeds thereof, together with the proceeds from the issuance of the Trust's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets; and
WHEREAS, as incentive for the Holders to purchase Capital Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Capital Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Capital
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement and
pursuant to Section 5.1 hereof extends the Guarantee for the benefit of the
Holders from time to time of the Capital Securities.
ARTICLE 1. DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement and the Indenture (as
defined herein), each as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of the
Guarantor shall not be deemed to be an Affiliate of the Trust. For the purposes
of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Board of Directors" means either the board of directors of the Guarantor
or any committee of that board duly authorized to act hereunder.
<PAGE>
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Exchange Guarantee" means a guarantee issued by the Guarantor pursuant to
the Exchange Guarantee Agreement and registered under the Securities Act
pursuant to the Guarantee Exchange and Registration Rights Agreement.
"Exchange Guarantee Agreement" means a guarantee agreement substantially
similar to this Guarantee Agreement, to be entered into by the Guarantor and the
Guarantee Trustee pursuant to the Guarantee Exchange and Registration Rights
Agreement.
"Guarantee" has the meaning set forth in Section 5.1.
"Guarantee Exchange and Registration Rights Agreement" means an agreement
dated November 26, 1996 among the Guarantor, the Trust and certain Purchasers
named therein.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or
made by or on behalf of the Trust: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Capital Securities,
to the extent the Trust shall have funds on hand available therefor at such
time, (ii) the applicable Redemption Price (as defined in the Trust Agreement),
to the extent the Trust shall have funds on hand available therefor at such
time, and (iii) upon a voluntary or involuntary termination, winding up or
liquidation of the Trust, unless Debentures are distributed to the Holders, the
lesser of (a) the aggregate of the Liquidation Distribution (as defined in the
Trust Agreement) and (b) the amount of assets of the Trust remaining available
for distribution to Holders of Capital Securities.
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Trust, of any Capital Securities; provided, however, that in determining whether
the holders of the requisite percentage of Capital Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor or the
Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
November 15, 1996, as supplemented and amended between the Guarantor and
Wilmington Trust Company, as trustee.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Capital Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the Liquidation Amount of all then outstanding
Capital Securities issued by the Trust.
-2-
<PAGE>
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman or a Vice Chairman of the Board of Directors of such
Person or the President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each officer, such
condition or covenant has been complied with.
"Other Guarantees" means any guarantees similar to the Guarantee issued,
from time to time, by the Guarantor on behalf of holders of one or more series
of capital securities issued by one or more FBS Trusts (as defined in the
Indenture) other than the Trust.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer of the Corporate Trust Department of the Guarantee Trustee and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
-3-
<PAGE>
SECTION 2.2. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before January 15 and July 15 of each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of a date not more than 15
days prior to the delivery thereof, and (b) at such other times as the Guarantee
Trustee may request in writing, within 30 days after the receipt by the
Guarantor of any such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished, in each case to the extent such
information is in the possession or control of the Guarantor and is not
identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than July 15 of each year, commencing July 15, 1997, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act, in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Capital Securities
may, by vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Guarantee Trustee, unless such
defaults have been cured before the giving of such notice, provided, that,
except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee
-4-
<PAGE>
shall be protected in withholding such notice if and so long as the Board of
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained written notice, of such Event of
Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee for the benefit
of the Holders, and the Guarantee Trustee shall not transfer this Guarantee to
any Person except (i) the Guarantee Trustee shall enter into the Exchange
Guarantee Agreement, if and when required by the Guarantee Exchange and
Registration Rights Agreement, and to exchange the Guarantee for an Exchange
Guarantee in an exchange registered under the Securities Act pursuant to the
provisions of the Guarantee Exchange and Registration Rights Agreement or (ii)
to a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
-5-
<PAGE>
determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions that
by any provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document reasonably believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an
-6-
<PAGE>
Officers' Certificate which, upon receipt of such request from the
Guarantee Trustee, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or opinion. Such legal
counsel may be legal counsel to the Guarantor or any of its Affiliates and
may be one of its employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Guarantee Agreement from any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (C) shall be
protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
-7-
<PAGE>
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without negligence or
bad faith on the part of the Guarantee Trustee, arising out of or in connection
with the acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee: Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(a) of the Trust Indenture Act. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority, then, for the purposes of this
Section 4.1(a)(ii) and to the extent permitted by the Trust Indenture Act,
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
-8-
<PAGE>
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by or on behalf of the Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Trust may have or assert other than the
defense of payment (the "Guarantee"). The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Trust to pay such amounts to the
Holders.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Guarantee Trustee, Trust or
any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital Securities
or the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Trust granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization,
-9-
<PAGE>
arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee will be
deposited with the Guarantee Trustee to be held for the benefit of the Holders;
(ii) the Guarantee Trustee has the right to enforce this Guarantee on behalf of
the Holders; (iii) the Holders of a Majority in Liquidation Amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder
may institute a legal proceeding directly against the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection. This
Guarantee will not be discharged except by payment of the Guarantee Payments in
full (without duplication of amounts theretofore paid by the Trust) or upon
distribution of Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to the Holders by the Guarantor
under this Guarantee Agreement and shall have the right to waive payment by the
Trust pursuant to Section 5.1; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Trust with respect to the Capital Securities and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee
-10-
<PAGE>
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
The obligations of the Guarantor under this Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in
right of payment to all Senior and Subordinated Debt (as defined in the
Indenture) in the same manner as Debentures (as defined in the Trust Agreement).
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee shall rank pari passu
with the obligations of the Guarantor under all Other Guarantees.
ARTICLE VII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Guarantor May Consolidate, Etc., Only on Certain Terms.
The Guarantor shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Guarantor
or convey, transfer or lease its properties and assets substantially as an
entirety to the Guarantor, unless:
(1) in case the Guarantor shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Guarantor is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Guarantor substantially as an
entirety shall be a corporation, partnership or trust organized and existing
under the laws of the United States of America or any State or the District of
Columbia, and shall expressly assume the Guarantor's obligations under this
Guarantee;
(2) immediately after giving effect thereto, no Event of Default, and no
event which, after notice or lapse of time, or both, would become an Event of
Default, shall have happened and be continuing;
(3) such consolidation, merger, conveyance, transfer or lease is permitted
under the Trust Agreement and the Indenture and does not give rise to any breach
or violation of the Trust Agreement or the Indenture; and
(4) the Guarantor has delivered to the Guarantee Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and assumption of the Guarantor's
obligations under this Guarantee Agreement comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with; and the Guarantee Trustee, subject to Section 3.1 hereof, may
rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 7.1.
-11-
<PAGE>
SECTION 7.2. Successor Guarantor Substituted.
Upon any consolidation or merger by the Guarantor with or into any other
Person, or any conveyance, transfer or lease by the Guarantor of its properties
and assets substantially as an entirety to any Person in accordance with Section
7.1, the successor Person formed by such consolidation or into which the
Guarantor is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Guarantor under this Guarantee Agreement with the same effect as if such
successor Person had been named as the Guarantor herein; and in the event of any
such conveyance, transfer or lease the Guarantor shall be discharged from all
obligations and covenants under this Guarantee Agreement.
ARTICLE VIII. TERMINATION
SECTION 8.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon the earliest of (i) the execution of the Exchange Guarantee
Agreement and the consummation of the exchange of the Guarantee for the Exchange
Guarantee pursuant to the Guarantee Exchange and Registration Rights Agreement,
(ii) full payment of the applicable Redemption Price of all Capital Securities,
(iii) the distribution of Debentures to the Holders in exchange for all of the
Capital Securities or (iv) full payment of the amounts payable in accordance
with the Trust Agreement upon liquidation of the Trust. Notwithstanding the
foregoing clauses (ii) through (iv), this Guarantee Agreement will continue to
be effective or will be reinstated if it has been terminated pursuant to one of
such clauses (ii) through (iv), as the case may be, if at any time any Holder
must restore payment of any sums paid with respect to Capital Securities or this
Guarantee Agreement.
ARTICLE IX. MISCELLANEOUS
SECTION 9.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VII hereof and
Article VIII of the Indenture, the Guarantor shall not assign its obligations
hereunder.
SECTION 9.2. Amendments.
Except with respect to any changes which do not adversely affect the rights
of the Holders in any material respect (in which case no vote will be required),
this Guarantee Agreement may not be amended without the prior approval of the
Holders of not less than a Majority in Liquidation Amount of the Capital
Securities. The provisions of Article VI of the Trust Agreement concerning
meetings of the Holders shall apply to the giving of such approval.
SECTION 9.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
-12-
<PAGE>
(a) if given to the Guarantor, to the address set forth below or such other
address, facsimile number or to the attention of such other Person as the
Guarantor may give notice to the Holders:
First Bank System, Inc.
601 Second Avenue South
Minneapolis, Minnesota 55402
Facsimile No.: (612) 973-0965
Attention: Treasurer
(b) if given to the Trust, in care of the Guarantee Trustee, at the Trust's
(and the Guarantee Trustee's) address set forth below or such other address as
the Guarantee Trustee on behalf of the Trust may give notice to the Holders:
FBS Capital I
c/o First Bank System, Inc.
601 Second Avenue South
Minneapolis, Minnesota 55402
Facsimile No.: (612) 973-0965
Attention: Treasurer
with a copy to:
Wilmington Trust Company
1100 North Market
Wilmington, Delaware 19890
Facsimile No.: (302) 651-1000
Attention: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on the books and
records of the Trust.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4. Benefit.
This Guarantee is solely for the benefit of the Holders and is not
separately transferable from the Capital Securities, except that it shall be
exchanged, if at all, for an Exchange Guarantee in an exchange registered under
the Securities Act pursuant to the provisions of the Guarantee Exchange and
Registration Rights Agreement.
SECTION 9.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
-13-
<PAGE>
(a) capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections are
to Articles and Sections of this Guarantee Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include the
masculine, feminine and neuter genders.
SECTION 9.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
-14-
<PAGE>
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
FIRST BANK SYSTEM, INC.
By: ___________________________________
Name: David P. Grandstrand
Title: Senior Vice President and Treasurer
WILMINGTON TRUST COMPANY
as Guarantee Trustee
By: ___________________________________
Name:
Title:
<PAGE>
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------------------
1996 1995 1994 1993 1992 1991
(DOLLARS IN MILLIONS) ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings
1. Net income from
continuing operations
before cumulative
effect............... $ 568.4 $ 568.1 $ 313.5 $ 360.7 $ 213.0 $ 263.4
2. Applicable income
taxes................ 355.0 334.3 191.8 198.6 115.7 30.3
-------- -------- -------- -------- -------- --------
3. Income before taxes
(1 + 2).............. $ 923.4 $ 902.4 $ 505.3 $ 559.3 $ 328.7 $ 293.7
======== ======== ======== ======== ======== ========
4. Fixed charges:
a. Interest expense
excluding interest
on deposits......... $ 332.0 $ 398.3 $ 271.4 $ 148.0 $ 155.4 $ 228.3
b. Portion of rents
representative of
interest and
amortization of debt
expense............. 21.0 29.0 30.2 34.8 36.7 34.4
-------- -------- -------- -------- -------- --------
c. Fixed charges
excluding interest
on deposits (4a +
4b)................. 353.0 427.3 301.6 182.8 192.1 262.7
d. Interest on
deposits............ 507.1 706.7 597.3 648.3 797.7 1,125.9
-------- -------- -------- -------- -------- --------
e. Fixed charges
including interest
on deposits (4c +
4d)................. $ 860.1 $1,134.0 $ 898.9 $ 831.1 $ 989.8 $1,388.6
======== ======== ======== ======== ======== ========
5. Amortization of
interest capitalized. $ -- $ -- $ -- $ -- $ .3 $ .3
6. Earnings excluding
interest on deposits
(3 + 4c + 5)......... 1,276.4 1,329.7 806.9 742.1 521.1 556.7
7. Earnings including
interest on deposits
(3 + 4e + 5)......... 1,783.5 2,036.4 1,404.2 1,390.4 1,318.8 1,682.6
8. Fixed charges
excluding interest on
deposits (4c)........ 353.0 427.3 301.6 182.8 192.1 262.7
9. Fixed charges
including interest on
deposits (4e)........ 860.1 1,134.0 898.9 831.1 989.8 1,388.6
Ratio of Earnings to
Fixed Charges:
10. Excluding interest
on deposits (line 6 /
line 8).............. 3.62 3.11 2.68 4.06 2.71 2.12
11. Including interest
on deposits (line 7 /
line 9).............. 2.07 1.80 1.56 1.67 1.33 1.21
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the capital "Experts" in the
Registration Statement (Form S-4) and related Prospectus of First Bank System,
Inc. for the registration of $300 million of Capital Securities and to the
incorporation by reference therein of our report dated January 9, 1996 (except
for Note C, as to which the date is February 16, 1996), with respect to the
consolidated financial statements of First Bank System, Inc. included in its
Annual Report (Form 10-K) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
November 25, 1996
<PAGE>
EXHIBIT 24
PAGE 1 OF 2 OF POWER OF ATTORNEY TO FIRST BANK SYSTEM, INC. REGISTRATION
STATEMENT ON FORM S-4.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Lee R. Mitau, Susan E. Lester and David
J. Parrin, and each of them, his or her true and lawful attorneys-in-fact and
agents, each acting alone, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign a Registration Statement on Form S-4 of First Bank System,
Inc., and any and all amendments thereto, including post-effective amendments,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, each acting alone, or the substitutes for such attorneys-
in-fact and agents, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John F. Grundhofer Chairman, President, Chief November 27, 1996
____________________________________ Executive Officer and
John F. Grundhofer Director (principal
executive officer)
/s/ Susan E. Lester Executive Vice President and November 27, 1996
____________________________________ Chief Financial Officer
Susan E. Lester (principal financial
officer)
/s/ David J. Parrin Senior Vice President and November 27, 1996
____________________________________ Controller (principal
David J. Parrin accounting officer)
/s/ Arthur D. Collins, Jr. Director November 27, 1996
____________________________________
Arthur D. Collins, Jr.
/s/ Peter H. Coors Director November 27, 1996
____________________________________
Peter H. Coors
/s/ Roger L. Hale Director November 27, 1996
____________________________________
Roger L. Hale
/s/ Delbert W. Johnson Director November 27, 1996
____________________________________
Delbert W. Johnson
/s/ Norman M. Jones Director November 27, 1996
____________________________________
Norman M. Jones
/s/ Richard L. Knowlton Director November 27, 1996
____________________________________
Richard L. Knowlton
/s/ Jerry W. Levin Director November 27, 1996
____________________________________
Jerry W. Levin
</TABLE>
<PAGE>
PAGE 2 OF 2 OF POWER OF ATTORNEY TO FIRST BANK SYSTEM, INC. REGISTRATION
STATEMENT ON FORM S-4.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Kenneth A. Macke Director November 27, 1996
____________________________________
Kenneth A. Macke
Director November 27, 1996
____________________________________
Marilyn Carlson Nelson
/s/ Edward J. Phillips Director November 27, 1996
____________________________________
Edward J. Phillips
/s/ James J. Renier Director November 27, 1996
____________________________________
James J. Renier
/s/ S. Walter Richey Director November 27, 1996
____________________________________
S. Walter Richey
Director November 27, 1996
____________________________________
Richard L. Robinson
/s/ Richard L. Schall Director November 27, 1996
____________________________________
Richard L. Schall
Director November 27, 1996
____________________________________
Walter Scott, Jr.
</TABLE>
