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FORM OF NOTICE OF IMPORTANT TAX INFORMATION
The tax information is provided in connection with the prospectus of First Security Group, Inc. (“First Security”), dated ________, 2013 (the “Rights Offering Prospectus”).
Under the United States federal income tax laws, dividend payments that may be made by First Security on shares of its common stock, par value $0.01 (the “Common Stock”), issued upon the exercise of non-transferable subscription Rights (the “Subscription Rights”) may be subject to backup withholding. Generally, such payments will be subject to backup withholding unless the holder (i) is exempt from backup withholding or (ii) furnishes the payer with its correct taxpayer identification number (“TIN”) and certifies, under penalties of perjury, that the number provided is correct and provides certain other certifications. Each holder that exercises Subscription Rights and wants to avoid backup withholding must, unless an exemption applies, provide the Subscription Agent, as First Security's agent in respect of the exercised Subscription Rights (the “Requester”), with such holder's correct TIN (or with a certification that such holder is awaiting a TIN) and certain other certifications by completing Substitute Form W-9 below.
Certain holders (including, among others, corporations and certain foreign individuals) are exempt from these backup withholding and reporting requirements. In general, in order for a foreign holder to qualify as an exempt recipient, that holder must submit a properly completed Form W-8, Certificate of Foreign Status (instead of a Substitute Form W-9), signed under penalties of perjury, attesting to such holder's foreign status. Such Form W-8 may be obtained from Registrar and Transfer Company, the Subscription Agent. Although a foreign holder may be exempt from backup withholding, payments of dividends may be subject to withholding tax, currently at a 30% rate (or, if certain tax treaties apply, such applicable lower rate). Exempt U.S. holders should indicate their exempt status on Substitute Form W-9 to avoid possible erroneous backup withholding. See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional instructions. Holders are urged to consult their tax consultants to determine whether they are exempt from withholding and reporting requirements.
If backup withholding applies, First Security or the Subscription Agent, as the case may be, will be required to withhold (currently at a 28% rate) on any dividend payments made to a holder that exercises Subscription Rights. Backup withholding is not an additional tax. Rather, the amount of backup withholding can be credited against the U.S. federal income tax liability of the holder subject to backup withholding, provided that the required information is provided to the Internal Revenue Service (“IRS”). If backup withholding results in an overpayment of taxes, a refund may be obtained.
A holder that exercises Subscription Rights is required to give the Subscription Agent the TIN of the record owner of the Subscription Rights. If such record owner is an individual, the TIN is generally the taxpayer's social security number. For most other entities, the TIN is the employer identification number. If the Subscription Rights are in more than one name or are not in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional guidelines on which number to report. If the Subscription Agent is not provided with the correct TIN in connection with such payments, the holder may be subject to a penalty imposed by the IRS.
If you do not have a TIN, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for instructions on applying for a TIN, write “Applied For” in the space for the TIN in part 1 of the Substitute Form W-9 and, under penalties of perjury, sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number set forth herein. If you do not provide your TIN to the Subscription Agent within 60 days, backup withholding will begin and continue until you furnish your TIN to the Subscription Agent. Please note that writing “Applied For” on the form means that you have already applied for a TIN or that you intend to apply for one in the near future.
SUBSTITUTE | Part 1 - Taxpayer Identification Number - ENTER YOUR TIN IN THE BOX AT RIGHT. (For most individuals, this is your social security number. If you do not have a TIN, see Obtaining a Number in the enclosed Guidelines) CERTIFY BY SIGNING AND DATING BELOW | ||||
Social Security Number | |||||
Form W-9 | OR | ||||
Employer Identification Number | |||||
(if awaiting TIN, write "Applied For") | |||||
Department of the Treasury Internal Revenue Service | Note: if the account is more than one name, see the chart in the enclosed Guidelines to determine which number to give the payer. | ||||
Payer's Request for Taxpayer Identification Number (“TIN”) and Certification | PART 2 - Payees Exempt from Backup Withholding - See the enclosed Guidelines and complete as instructed therein. | ||||
PART 3 - Certification - Under penalties of perjury, I certify that: | |||||
(1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and | |||||
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and | |||||
(3) I am a U.S. person (including a U.S. resident client). | |||||
Certification Instructions - You must cross out item (2) of Part 3 above if you have been notified by the IRS that you are subject to backup withholding because you failed to report all interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2) of Part 2. (Also see instructions in the enclosed Guidelines). The IRS does not require your consent to any provision of this document other than the certifications required to avoid backup withholding. | |||||
Name (please print) | |||||
Street Address | |||||
City, State and Zip Code | |||||
Telephone Number | |||||
Signature | Date | ||||
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE “APPLIED FOR” INSTEAD OF A TIN IN THE SUBSTITUTE FORM W-9 | |||||
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER | ||||
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number to the Exchange Agent, 28% of all reportable payments made to me will be withheld, but will be refunded to me if I provide a certified taxpayer identification number within 60 days. | ||||
Signature | Date | |||
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 28% OF ANY PAYMENTS OF DIVIDENDS MADE TO YOU. IN ADDITION, FAILURE TO PROVIDE SUCH INFORMATION MAY RESULT IN A PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION. | ||||
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer - Social Security Numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.
For this type of account: | Give the same and SOCIAL SECURITY number of - | For this type of account: | Give the Name and EMPLOYER IDENTIFICATION number of - | ||
1. | An individual's account | The individual | 8. | Sole proprietorship account | The owner (4) |
2. | Two or more individuals (joint account) | The actual owner of the account or, if combined funds, the first individual on the account(1) | 9. | A valid trust, estate of pension trust | The legal entity(5) |
3. | Husband and wife (joint account) | The actual owner of the account or if joint funds, the first individual on the account(1) | 10. | Corporate account | The corporation |
4. | Custodian account of a minor (Uniform Gift to Minors Act) | The minor(2) | 11. | Religious, charitable, or education organization account | The organization |
5. | Adult and minor (joint account) | The adult or, if the minor is the only contributor, the minor(1) | 12. | Partnership account held in the name of the business | The partnership |
6. | Account in the name of guardian or committee for a designated ward, minor, or incompetent person | The ward, minor of incompetent person(3) | 13. | Association, club, or other tax exempt organization | The organization |
7a. | The usual revocable savings trust account (grantor is also trustee) | The grantor-trustee(1) | 14. | A broker or registered nominee | The broker or nominee |
b. | So-called trust account that is not a legal or valid trust under state law | The actual owner(1) | 15. | Account with the Department of Agriculture in the name of a public entity (such as a state of local government, school district, or prison) that receives agricultural program payments | The public entity |
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number.
(4) You must show your individual name, but you may also enter your business or “doing business as” name. You may use either your social security number or employer identification number (if you have one).
(5) List first and circle the name of the legal trust, estate, or pension trust. Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.
NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
Obtaining a Number
If you do not have a taxpayer identification number or if you do not know your number, obtain Form SS-5, Application for Social Security Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service (the “IRS”) and apply for a number. Section references in these guidelines refer to sections under the Internal Revenue Code of 1986, as amended.
Payees specifically exempted from backup withholding include:
• | An organization exempt from tax under Section 501(a), an individual retirement account (“IRA”), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2). |
• | The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or wholly - owned agency or instrumentality of any one or more of the foregoing. |
• | An international organization or any agency or instrumentality thereof. |
• | A foreign government or any political subdivision, agency or instrumentality thereof. |
Payees that may be exempt from backup withholding include:
• | A corporation. |
• | A financial institution. |
• | A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. |
• | A real estate investment trust. |
• | A common trust fund operated by a bank under Section 584(a). |
• | An entity registered at all times during the tax year under the Investment Company Act of 1940, as amended. |
• | A middleman known in the investment community as a nominee or custodian. |
• | A futures commission merchant registered with the Commodity Futures Trading Commission. |
• | A foreign central bank of issue. |
• | A trust exempt from tax under Section 664 or described in Section 4947. |
Payments of dividends and patronage dividends not generally subject to backup withholding include the following:
• | Payments to nonresident aliens subject to withholding under Section 1441. |
• | Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident alien partner. |
• | Payments of patronage dividends where the amount received is not paid in money. |
• | Payments made by certain foreign organizations |
• | Section 404(k) payments made by an ESOP. |
Payments of interest not generally subject to backup withholding include the following:
• | Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. |
• | Payments of tax-exempt interest (including exempt-interest dividends under Section 852). |
• | Payments described in Section 6049(6)(5) to nonresident aliens. |
• | Payments on tax-free covenant bonds under Section 1451. |
• | Payments made by certain foreign organizations. |
• | Mortgage or student loan interest paid to you. |
Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” IN PART 2 OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, which are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under Section 6041, 6041A,
6045, 6050A and 605N.
Privacy Act Notice. - Section 6109 requires most recipients of dividend, interest, or certain other income to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of tax returns. The IRS may also provide this information to the Department of Justice for civil and criminal litigation and to cities, states and the District of Columbia to carry out their tax laws. The IRS may also disclose this information to other countries under a tax treaty, or to Federal and state agencies to enforce Federal nontax criminal laws and to combat terrorism. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold a portion of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. - If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause or not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. - If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. - Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
(4) Misuse of Taxpayer Identification Numbers. - If the Requester discloses or uses taxpayer identification numbers in violation of federal law, the Requester may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.