<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 2, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
ASSOCIATES FIRST CAPITAL CORPORATION
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C>
DELAWARE 06-0876639
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
CHESTER D. LONGENECKER, ESQ.
EXECUTIVE VICE PRESIDENT
AND GENERAL COUNSEL
250 EAST CARPENTER FREEWAY 250 EAST CARPENTER FREEWAY
IRVING, TX 75062-2729 IRVING, TX 75062-2729
972-652-4000 972-652-4000
(Address, including zip code, and telephone (Name, address, including zip code,
number, including area code, or registrant's and telephone number, including area
principal executive offices) code, of agent for service)
</TABLE>
------------------------
Copies to:
<TABLE>
<S> <C>
DAVID P. BICKS, ESQ. TIMOTHY M. HAYES, ESQ.
LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. 250 EAST CARPENTER FREEWAY
125 WEST 55TH STREET IRVING, TX 75062-2729
NEW YORK, NY 10019
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this registration statement as determined by
market conditions.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
TITLE OF EACH AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES TO BE OFFERING AGGREGATE AMOUNT OF
TO BE REGISTERED(1) REGISTERED(2)(3) PRICE PER UNIT(2)(3) OFFERING PRICE(2)(3) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, par value $.01
per share and Warrants to purchase
Class A Common Stock(4); Debt
Securities and Warrants to purchase
Debt Securities(5)(6); Preferred
Stock, par value $.01 per share.... $1,000,000,000 $295,000
=================================================================================================================================
</TABLE>
(1) Securities registered hereunder (the "Securities") may be sold separately,
together or as units with other Securities registered hereunder. The
Securities registered hereunder include such indeterminate number of shares
of Class A Common Stock or Preferred Stock which may be issued upon
conversion of convertible debt securities or convertible Preferred Stock.
(2) Estimated in accordance with Rule 457(o) under the Securities Act of 1933,
as amended, solely for the purpose of determining the registration fee.
Accordingly, the table does not specify by each class information as to the
amount to be registered, proposed maximum offering price per unit or the
proposed maximum aggregate offering price.
(3) Not applicable pursuant to General Instruction IID of Form S-3 under the
Securities Act of 1933, as amended.
(4) Includes rights associated with and traded with the Class A Common Stock.
The value, if any, attributed to the rights is reflected in the price of the
Class A Common Stock.
(5) Any offering of Debt Securities or Warrants to purchase Debt Securities
denominated in any foreign currency or foreign currency units will be
treated as the equivalent in U.S. dollars based on the exchange rate
applicable to the purchase of such Securities from the Registrant.
(6) If any Debt Securities are issued at original issue discount, such greater
amount as may result in the initial offering prices for Securities
aggregating $1,000,000,000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
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 JUNE 2, 1998
PROSPECTUS
[ASSOCIATES LOGO]
$1,000,000,000
DEBT SECURITIES, DEBT WARRANTS, PREFERRED STOCK,
CLASS A COMMON STOCK AND STOCK WARRANTS
------------------------
Associates First Capital Corporation, a Delaware corporation (the
"Company"), may offer and sell from time to time, together or separately, (i)
its unsecured debt securities ("Debt Securities"), which may either be senior
(the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities") in priority of payment, (ii) warrants ("Debt Warrants") to purchase
Debt Securities, (iii) shares of its preferred stock, par value $.01 per share
(the "Preferred Stock"), (iv) shares of its Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), or (v) warrants ("Stock Warrants") to
purchase shares of Class A Common Stock (the Debt Securities, the Debt Warrants,
the Preferred Stock, the Class A Common Stock and the Stock Warrants are
collectively referred to herein as the "Securities"), in amounts, at prices and
on terms to be determined at the time of the offering thereof. The Debt
Securities and Debt Warrants may be sold for U.S. dollars, foreign currencies or
foreign currency units, and the principal of and any interest on the Debt
Securities may be payable in U.S. dollars, foreign currencies or foreign
currency units. The Securities offered pursuant to this Prospectus by the
Company may be issued in one or more series or issuances, the aggregate offering
price of which will not exceed $1,000,000,000 (or the equivalent thereof if Debt
Securities or Debt Warrants are denominated in one or more foreign currencies or
foreign currency units).
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement
("Prospectus Supplement") including, where applicable, (i) in the case of Debt
Securities, the specific designation, priority, aggregate principal amount, the
currency or currency unit for which the Debt Securities may be purchased, the
currency or currency unit in which the principal and any interest is payable,
the rate (or method of calculation) and time of payment or deferral of payment
of any interest, authorized denominations, maturity, offering price, any
redemption provisions, any conversion or exchange provisions or other specific
terms, (ii) in the case of Preferred Stock, the specific title, number of shares
or fractional interests therein, any dividend, liquidation, redemption,
exchange, voting, conversion and other rights, preferences and privileges, (iii)
in the case of Class A Common Stock, the aggregate number of shares offered and
(iv) in the case of Debt Warrants and Stock Warrants, the Debt Securities and
Class A Common Stock, respectively, for which each such warrant is exercisable,
the exercise price, duration, detachability and other terms of the warrants. The
Prospectus Supplement will also contain information, where applicable, about
certain United States federal income tax considerations relating to the
Securities described in the Prospectus Supplement. All or a portion of the
Securities may be issued in permanent or temporary global form. No Securities
may be sold without delivery of the applicable Prospectus Supplement describing
the method and terms of the offering of the Securities.
The Securities may be sold through underwriters or dealers or may be sold
by the Company directly or through agents designated from time to time. The
names of any underwriters or agents involved in the sale of the Securities in
respect to which this Prospectus is being delivered and their compensation will
be set forth in the Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is June , 1998
<PAGE> 3
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the offices of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison Street, Chicago, Illinois 60661; and
Seven World Trade Center, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, the
Commission maintains a Website that contains reports, and other information
regarding registrants that file electronically, such as the Company. The address
of the Commission's Website is http://www.sec.gov. The Company's Class A Common
Stock is listed on the New York Stock Exchange (the "Exchange"), and the
aforementioned reports and other information concerning the Company may be
inspected at the offices of the Exchange, 20 Broad Street, New York, New York
10005. This Prospectus does not contain all information set forth in the
Registration Statement and Exhibits thereto which the Company has filed with the
Commission under the Securities Act of 1933, as amended, (the "Securities Act"),
and to which reference is hereby made.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997, its Quarterly Report for the period ended March 31, 1998, its Current
Reports on Form 8-K dated January 20, 1998, February 10, 1998, February 12,
1998, March 2, 1998, March 3, 1998, March 19, 1998, April 8, 1998, April 13,
1998, April 14, 1998 and April 20, 1998 and the description of its Class A
Common Stock in its Registration Statement on Form 8-A dated February 23, 1996,
filed with the Commission pursuant to the Exchange Act, are hereby incorporated
by reference. All documents filed by the Company 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 the offering of the Securities offered hereby shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing such documents.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST BY SUCH PERSON, A COPY OF
ANY OR ALL OF THE DOCUMENTS DESCRIBED ABOVE, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS. REQUESTS SHOULD BE ADDRESSED TO: ASSOCIATES FIRST CAPITAL
CORPORATION, P.O. BOX 660237, DALLAS, TX 75266-0237, ATTENTION: SECRETARY (TEL.
972-652-4000).
2
<PAGE> 4
THE COMPANY
Associates First Capital Corporation (the "Company"), a Delaware
corporation, is a leading, diversified consumer and commercial finance
organization which provides finance, leasing and related services to individual
consumers and businesses in the United States and internationally. Associates
Corporation of North America ("ACONA"), a wholly-owned subsidiary, is the
principal U.S.-based operating subsidiary of the Company. Unless the context
otherwise requires, reference to the Company includes the Company and all its
subsidiaries.
In October 1989, Ford Motor Company ("Ford") acquired the Company. In May
1996, the Company made an initial public offering of 67 million shares of its
Class A Common Stock, representing a 19.3% interest in the Company. In
connection with the initial public offering, the Company issued 23,603,669
shares of Class A Common Stock to Ford in consideration for the Company's
acquisition of the Company's foreign operations, which the Company had
previously managed but not owned. In addition, the Company recharacterized the
remaining shares of common stock Ford owned into 255,881,180 shares of Class B
Common Stock, par value $.01 per share (the "Class B Common Stock") (the Class A
Common Stock and the Class B Common Stock is collectively referred to herein as
the "Common Stock"). Ford continued to own this controlling interest in the
Company's Common Stock until April 1998, when Ford converted its holdings of
Class B Common Stock into Class A Common Stock and distributed its entire
interest in the Company in the form of a dividend to its stockholders (the "Spin
Off"). Accordingly, the Company is no longer a subsidiary of Ford.
The Company's consumer finance operations consist of a variety of
specialized consumer financing products and services, including home equity
lending, personal lending, retail sales finance and credit cards. The Company's
commercial finance operations primarily provide retail financing, leasing and
wholesale financing for heavy-duty and medium-duty trucks and truck trailers,
construction, material handling and other industrial and communications
equipment, manufactured housing, recreational vehicle, and auto fleet leasing
and other commercial products and services. As part of its consumer finance and
commercial finance activities, the Company makes available to its customers
credit-related and other insurance products.
At December 31, 1997, the Company had aggregate net finance receivables of
$55.2 billion, approximately 91% of which were dispersed across the United
States and the remaining 9% of which were in foreign countries. The Company's
operations outside the United States are conducted principally in Canada and
Japan, but also include operations in the United Kingdom, Puerto Rico, Mexico,
Costa Rica and Taiwan.
At December 31, 1997, the Company had 2,265 offices worldwide. The
principal executive offices of the Company are located at 250 East Carpenter
Freeway, Irving, TX 75062-2729, and its mailing address is P.O. Box 660237,
Dallas, TX 75266-0237 (tel. 972-652-4000).
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Company for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31,
- -------------------------------- ------------------
1993 1994 1995 1996 1997 1998
- ---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
1.57 1.61 1.55 1.57 1.59 1.58
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, the term
"earnings" represents earnings before provision for income taxes, and cumulative
effect of changes in accounting principles, plus fixed charges. "Fixed charges"
represent interest expense and a portion of rentals representative of an
implicit interest factor for such rentals.
3
<PAGE> 5
APPLICATION OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities will be added
to the general funds of the Company to be applied to fund investments in, or
extensions of credit to, its subsidiaries; to reduce other outstanding
indebtedness (which may include indebtedness owed to its subsidiaries); to fund
acquisitions by the Company and its subsidiaries of other companies or finance
receivables; or for such other purposes as may be set forth in the Prospectus
Supplement. Pending such application, such net proceeds may be temporarily
invested or applied to the reduction of short-term debt. The Company expects
from time to time to continue to incur short-term and long-term debt and to
effect other financings, the amounts of which cannot now be determined.
DESCRIPTION OF THE DEBT SECURITIES
GENERAL
The Debt Securities will constitute either senior or subordinated debt of
the Company. The Debt Securities will be issued under one or more separate
indentures described below for Senior Debt Securities (each, a "Senior
Indenture") or for Subordinated Debt Securities (each, a "Subordinated
Indenture"), in each case between the Company and a banking institution
organized under the laws of the United States of America or of any State thereof
(each, a "Trustee"). The Senior Indentures and the Subordinated Indentures are
hereinafter collectively referred to as the "Indentures". The following summary
of certain provisions of the Indentures does not purport to be complete and is
qualified in its entirety by reference to the applicable Indenture, which is
filed as an exhibit to the Registration Statement. All article and section
references appearing herein are to articles and sections of the applicable
Indenture, and all capitalized terms have the meanings specified in such
Indenture.
The Company is principally a holding company whose primary sources of funds
are cash received from subsidiaries in the form of dividends and other
intercompany transfers of funds. Dividend distributions to the Company from
ACONA are currently subject to a restriction contained in one public issue of
debt maturing on March 15, 1999, which generally limits payments of cash
dividends on ACONA's common stock in any year to not more than 50% of
consolidated net earnings for such year, subject to certain exceptions. As a
holding company, the rights of any creditors of the Company to participate in
the assets of any subsidiary upon the latter's liquidation or recapitalization
will be subject to the prior claims of the subsidiary's creditors, except to the
extent that the Company may itself be a creditor with recognized claims against
the subsidiary. Accordingly, all Debt Securities will effectively be
subordinated to all existing and future obligations of the Company's
subsidiaries. At March 31, 1998, such liabilities of the Company's subsidiaries
aggregated $49.7 billion, representing 95.6% of the aggregate indebtedness of
the Company and its consolidated subsidiaries. In addition, as of March 31,
1998, approximately $2.3 billion of existing indebtedness of the Company would
have ranked pari passu with the Senior Debt Securities and senior to the
Subordinated Debt Securities.
None of the Indentures limits the amount of Debt Securities which may be
issued thereunder, and each Indenture provides that Debt Securities may be
issued thereunder up to the aggregate principal amount authorized from time to
time by the Company and may be denominated in any currency or currency unit
designated by the Company. The Indentures do not restrict the amount of debt
that may be incurred by the Company or any subsidiary. The Indentures do not
contain any covenant or other provision that is specifically intended to afford
any Holder special protection in the event of highly leveraged transactions or
any other transactions resulting in a decline in the ratings or credit quality
of the Company. Reference is made to the Prospectus Supplement which accompanies
this Prospectus for the following terms and other information to the extent
applicable with respect to the Debt Securities being offered thereby: (i) the
designation, aggregate principal amount, authorized denominations and priority
of such Debt Securities; (ii) the percentage of the principal amount at which
such Debt Securities will be issued; (iii) the currency, currencies or currency
units for which the Debt Securities may be purchased and the currency,
currencies or currency units in which the principal of and any interest on such
Debt Securities may be payable; (iv) the date on which such Debt
4
<PAGE> 6
Securities will mature; (v) the rate per annum at which such Debt Securities
will bear interest, if any, or the method of determination of such rate; (vi)
the dates on which such interest, if any, will be payable; (vii) the deferral of
payment of any interest, (viii) any conversion or exchange provisions; (ix)
whether such Debt Securities are to be issued in whole or in part in the form of
one or more global securities (each a "Global Security") and, if so, the
identity of a depositary (the "Depositary") for such Global Security or
Securities; (x) any redemption or sinking fund provisions; and (xi) any
additional or other rights, preferences, privileges, limitations and
restrictions relating to such Debt Securities.
If any of the Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Securities and such currencies or currency units
will be set forth in the Prospectus Supplement relating thereto.
The Debt Securities may be issued in fully registered form without coupons
("Fully Registered Securities"), or in a form registered as to principal only
with coupons or in bearer form with coupons. Unless otherwise specified in the
Prospectus Supplement, the Debt Securities will be only Fully Registered
Securities (sec.sec.3.01, 3.02). In addition, Debt Securities of a series may be
issuable in the form of one or more Global Securities, which will be denominated
in an amount equal to all or a portion of the aggregate principal amount of such
Debt Securities (sec.2.04). See "Global Securities" below.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. United States federal
income tax consequences and special considerations applicable to any such series
will be described in the Prospectus Supplement relating thereto.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series will be
convertible into or exchangeable for Class A Common Stock or Preferred Stock,
other securities, property, cash or obligations, or a combination of any of the
foregoing, will be summarized in the Prospectus Supplement relating to such
series. Such terms may include provisions for conversion or exchange, either on
a mandatory basis, at the option of the holder or at the option of the Company.
The number of shares of Class A Common Stock or Preferred Stock, other
securities, or the property, cash or obligations, to be received by the holders
of the Debt Securities upon conversion or exchange, will be calculated according
to the factors and at such time as are summarized in the related Prospectus
Supplement.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, the Depositary identified in the Prospectus Supplement relating to such
series. Unless and until it is exchanged in whole or in part for Debt Securities
in individually certificated form, a Global Security may not be transferred
except as a whole to a nominee of the Depositary for such Global Security, or by
a nominee of such Depositary to such Depositary, or to a successor of such
Depositary or a nominee of such successor (sec.2.04).
The specific terms of the depositary arrangement with respect to any series
of Debt Securities and the rights of and limitations on owners of beneficial
interests in a Global Security representing all or a portion of a series of Debt
Securities will be described in the Prospectus Supplement relating to such
series.
CERTAIN RESTRICTIVE PROVISIONS
None of the Indentures limits the amount of other debt which may be issued
by the Company or the amount of dividends or other payments which may be paid
with respect to, or the redemption or acquisition of, its equity securities by
the Company or its subsidiaries, but each Indenture contains a covenant that
neither the Company nor any Finance Subsidiary or Insurance Subsidiary will
create or incur any mortgage, pledge, or
5
<PAGE> 7
charge of any kind on any of its properties, except for: intercompany mortgages
or pledges from subsidiary to parent corporation or to any other Finance
Subsidiary or Insurance Subsidiary; purchase money liens or leases; acquisitions
of subsidiaries, the physical properties or assets of which are subject to
liens; liens created in the ordinary course of business by subsidiaries for
money borrowed if such subsidiaries operate in foreign countries or prior to
becoming a subsidiary had borrowed on a secured basis; sale and leaseback
arrangements upon any real property; renewals or refundings of any of the
foregoing; and certain other minor exceptions. Notwithstanding the foregoing,
the Company or any such subsidiary may incur mortgages, pledges, encumbrances,
liens or charges on indebtedness that would be otherwise prohibited if the
aggregate amount of indebtedness secured by such mortgages, pledges,
encumbrances, liens or charges, together with all other indebtedness of, or
guaranteed by, the Company and any such subsidiaries existing at such time and
secured by mortgages, pledges, encumbrances, liens or charges not expressly
excepted, does not at the time exceed 15% of the Company's consolidated net
worth. Each Indenture also contains a covenant restricting certain transactions
by the Company or its subsidiaries with any Controlling Person or Controlling
Person Subsidiary (sec.6.02).
MODIFICATION OF INDENTURES
Each Indenture, the rights and obligations of the Company and the rights of
the Holders may be modified with respect to one or more series of Debt
Securities issued under such Indenture with the consent of the Holders of not
less than 66 2/3% in principal amount of the Outstanding Debt Securities of each
such series affected by the modification or amendment. No modification of the
terms of payment of principal or interest, and no modification reducing the
percentage required for modification is effective against any Holder without his
consent. No modification of the Senior Indentures subordinating the indebtedness
evidenced by any series of Senior Debt Securities issued thereunder to any other
indebtedness of the Company is effective against any Holder of a Senior Security
issued thereunder without his consent, and no modification of the Subordinated
Indenture subordinating the indebtedness evidenced by any series of Subordinated
Debt Securities issued thereunder to any indebtedness of the Company other than
Superior Indebtedness is effective against any Holder of Subordinated Debt
Securities without his consent. For the purpose of these provisions, a holder of
an unexpired Warrant shall be deemed to be the Holder of the principal amount of
Debt Securities issuable upon exercise of such Warrant (sec.sec.6.03, 12.01).
EVENTS OF DEFAULT
Each Indenture provides that the following are Events of Default with
respect to any series of Debt Securities issued thereunder: default in the
payment of the principal of any Debt Security of such series when and as the
same shall be due and payable; default in making a sinking fund payment, if any,
when and as the same shall be due and payable by the terms of the Debt
Securities of such series; default for 30 days in the payment of any installment
of interest on any Debt Security of such series; default for 60 days after
notice in the performance of any other covenant in respect of the Debt
Securities of such series contained in the Indenture; certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Company or its property; default for 30 days in the
payment of any installment of interest on any evidence of indebtedness
(including any other series of Debt Securities issued under the same Indenture)
issued, assumed or guaranteed by the Company or default in the payment of any
principal of any such evidence of indebtedness; and any other Event of Default
provided in the applicable Board Resolution or supplemental indenture under
which such series of Debt Securities is issued (sec.8.01). An Event of Default
with respect to a particular series of Debt Securities issued under an Indenture
does not necessarily constitute an Event of Default with respect to any other
series of Debt Securities issued under such Indenture. The appropriate Trustee
may withhold notice to the Holders of any series of Debt Securities of any
default with respect to such series (except in the payment of principal or
interest) if it considers such withholding in the interests of such Holders.
If an Event of Default with respect to any series of Debt Securities shall
have occurred and be continuing, the appropriate Trustee or the Holders of not
less than 25% in aggregate principal amount of the Debt Securities of such
series may declare the principal, or in the case of discounted Debt Securities,
such portion
6
<PAGE> 8
thereof as may be described in the Prospectus Supplement accompanying this
Prospectus, of all the Debt Securities of such series to be due and payable
immediately (sec.8.01).
Within four months after the close of each fiscal year, the Company must
file with each Trustee a certificate, signed by specified officers, stating
whether or not such officers have knowledge of any default, and, if so,
specifying each such default and the nature thereof (sec.6.02).
Subject to provisions relating to its duties in case of default, a Trustee
shall be under no obligation to exercise any of its rights or powers under the
applicable Indenture at the request, order or direction of any Holders, unless
such Holders shall have offered to such Trustee reasonable indemnity (sec.9.03).
Subject to such provisions for indemnification, the Holders of a majority in
principal amount of the Debt Securities of any series may direct the time,
method and place of conducting any proceeding for any remedy available to the
appropriate Trustee, or exercising any trust or power conferred upon such
Trustee, with respect to the Debt Securities of such series (sec.8.06).
PAYMENT AND TRANSFER
Principal of, premium, if any, and interest, if any, on Fully Registered
Securities are to be payable at the Corporate Trust Office of the Trustee under
the applicable Indenture or any other office maintained by the Company for such
purposes, provided that payment of interest, if any, will be made, unless
otherwise provided in the applicable Prospectus Supplement, by check mailed to
the persons in whose names such Securities are registered at the close of
business on the day or days specified in the Prospectus Supplement accompanying
this Prospectus (sec.sec.3.08, 3.11). The principal of, premium, if any, and
interest, if any, on Debt Securities in other forms will be payable in such
manner and at such place or places as may be designated by the Company and
specified in the applicable Prospectus Supplement (sec.3.11).
Fully Registered Securities may be transferred or exchanged at the
Corporate Trust Office of the Trustee under the applicable Indenture or at any
other office or agency maintained by the Company for such purposes, subject to
the limitations in the applicable Indenture, without the payment of any service
charge except for any tax or governmental charge incidental thereto. Provisions
with respect to the transfer and exchange of Debt Securities in other forms will
be set forth in the applicable Prospectus Supplement (sec.3.05).
SENIOR DEBT SECURITIES -- SUPERIOR INDEBTEDNESS
The Senior Debt Securities will constitute part of the Superior
Indebtedness of the Company and will rank pari passu with all outstanding senior
debt. The outstanding Subordinated Indebtedness and Capital Indebtedness have
been subordinated, as to payment of principal, premium, if any, and interest, if
any, to all other liabilities of the Company, including the Senior Debt
Securities.
SUBORDINATED DEBT SECURITIES -- SUBORDINATION
The Subordinated Debt Securities will be subordinate and junior in right of
payment in all respects to all Superior Indebtedness of the Company, whether
outstanding at the date of the Subordinated Indenture or incurred after such
date. The term "Superior Indebtedness" is defined to mean (i) all obligations of
the Company which in accordance with generally accepted accounting principles
are classified as liabilities on the Company's balance sheet and (ii) guaranties
of, endorsements and other contingent obligations in respect of, or to purchase
or otherwise acquire, indebtedness of others, except other Subordinated
Indebtedness and Capital Indebtedness (sec.15.01 of the Subordinated Indenture).
"Subordinated Indebtedness" is defined to mean all Indebtedness of the Company
which is subordinate and junior in right of payment to Superior Indebtedness,
but does not include "Capital Indebtedness", which is defined to be Indebtedness
subordinate and junior to Subordinated Indebtedness and Superior Indebtedness
(sec.1.01 of the Subordinated Indenture). At March 31, 1998, Superior
Indebtedness aggregated approximately $45.0 billion. The amount of additional
Superior Indebtedness which the Company may issue is not subject to any
limitation.
Upon any distribution of assets of the Company in connection with any
dissolution, winding up, liquidation or reorganization of the Company, the
holders of all Superior Indebtedness will first be entitled to
7
<PAGE> 9
receive payment in full of principal of and interest, if any, on such Superior
Indebtedness before the Holders of Subordinated Debt Securities are entitled to
receive any payment on Subordinated Debt Securities. In the event that any
Subordinated Security is declared due and payable because of the occurrence of
an Event of Default, under circumstances when the provisions of the foregoing
sentence are not applicable, the Trustee under the Subordinated Indenture or the
Holders of Subordinated Debt Securities shall be entitled to payment only after
there shall first have been paid in full the Superior Indebtedness outstanding
at the time such Subordinated Security so becomes due and payable because of
such Event of Default (Article Fifteen of the Subordinated Indenture).
CONCERNING THE TRUSTEES
Business and other relationships (including other trusteeships) between the
Company and its affiliates and each Trustee under any Indenture pursuant to
which any of the Debt Securities to which the Prospectus Supplement accompanying
this Prospectus are described in such Prospectus Supplement.
In the event Subordinated Debt Securities are issued pursuant to a
Subordinated Indenture with a Trustee which is also a Trustee for Senior Debt
Securities pursuant to a Senior Indenture, the occurrence of any default under
such Subordinated Indenture or such Senior Indenture could create a conflicting
interest for the respective Trustee under the Trust Indenture Act of 1939, as
amended (the "1939 Act"). If such default has not been cured or waived within 90
days after such Trustee has or acquires a conflicting interest, such Trustee
generally is required by the 1939 Act to eliminate such conflicting interest or
resign as Trustee with respect to the Debt Securities issued under such Senior
Indenture or such Subordinated Indenture. In the event of the Trustee's
resignation, the Company shall promptly appoint a successor trustee with respect
to the affected securities.
DESCRIPTION OF THE DEBT WARRANTS
The following statements with respect to the Debt Warrants are summaries
of, and subject to, the detailed provisions of a Debt Warrant Agreement (the
"Debt Warrant Agreement") to be entered into by the Company and a warrant agent
to be selected at the time of issue (the "Debt Warrant Agent"), a form of which
will be filed as an exhibit to a Current Report on Form 8-K relating to any
offering of Debt Warrants.
GENERAL
The Debt Warrants, evidenced by Debt Warrant certificates (the "Debt
Warrant Certificates"), may be issued under the Debt Warrant Agreement
independently or together with any Securities offered by any Prospectus
Supplement and may be attached to or separate from such Securities. If Debt
Warrants are offered, the Prospectus Supplement will describe the terms of the
Debt Warrants, including the following: (i) the offering price, if any; (ii) the
designation, aggregate principal amount, and terms of the Debt Securities
purchasable upon exercise of the Debt Warrants; (iii) if applicable, the
designation and terms of the Securities with which the Debt Warrants are issued
and the number of Debt Warrants issued with each such Security; (iv) if
applicable, the date on and after which the Debt Warrants and the related Debt
Securities will be separately transferable; (v) the principal amount of Debt
Securities purchasable upon exercise of one Debt Warrant and the price at which
such principal amount of Debt Securities may be purchased upon such exercise;
(vi) the date on which the right to exercise the Debt Warrants shall commence
and the date on which such right shall expire; (vii) federal income tax
consequences; (viii) whether the Debt Warrants represented by the Debt Warrant
Certificates will be issued in registered or bearer form; and (ix) any other
terms of the Debt Warrants.
Debt Warrant Certificates may be exchanged for new Debt Warrant
Certificates of different denominations and may (if in registered form) be
presented for registration of transfer at the corporate trust office of the Debt
Warrant Agent or any Co-Debt Warrant Agent, which will be identified in the
Prospectus Supplement, or at such other office as may be set forth therein.
Holders of Debt Warrants do not have any of the rights of Holders of Debt
Securities (except to the extent that the consent of holders of Debt Warrants
may be required for certain modifications of the terms of the Indenture and the
series of Debt Securities issuable upon exercise
8
<PAGE> 10
of the Debt Warrants) and are not entitled to payments of principal of and
interest, if any, on such Debt Securities.
EXERCISE OF DEBT WARRANTS
Debt Warrants may be exercised by surrendering the Debt Warrant Certificate
at the corporate trust office of the Debt Warrant Agent or at the corporate
trust office of the Co-Debt Warrant Agent, if any, with the form of election to
purchase on the reverse side of the Debt Warrant Certificate properly completed
and executed, and by payment in full of the exercise price, as set forth in the
Prospectus Supplement. Upon the exercise of Debt Warrants, the Debt Warrant
Agent or Co-Debt Warrant Agent, if any, will, as soon as practicable, deliver
the Debt Securities in authorized denominations in accordance with the
instructions of the holder exercising the Debt Warrant and at the sole cost and
risk of such holder. If less than all of the Debt Warrants evidenced by the Debt
Warrant Certificate are exercised, a new Debt Warrant Certificate will be issued
for the remaining amount of Debt Warrants.
DESCRIPTION OF THE PREFERRED STOCK
The following description is a summary of certain provisions of the
authorized series of Preferred Stock and does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Company's
bylaws, the Company's Restated Certificate of Incorporation, as amended from
time to time, and the Certificate of Designations with respect to each such
series adopted by the board of directors (or a duly authorized committee
thereof) of the Company, which will be filed with the Commission in connection
with the offering of such series of Preferred Stock. The Prospectus Supplement
relating to an offering of Preferred Stock (or securities convertible into
Preferred Stock) will describe terms relevant thereto including, without
limitation, the number of shares offered, the initial offering price and market
price and dividend information.
GENERAL
Pursuant to the Company's Restated Certificate of Incorporation, the
Company is authorized to issue up to 50,000,000 shares of Preferred Stock, of
which 49,650,000 shares are available for issuance as of the date of this
Prospectus. The Preferred Stock is issuable from time to time in one or more
series and with such designations and preferences for each series as shall be
stated in the Certificate of Designations providing for the designation and
issue of each such series adopted by the board of directors of the Company. The
board of directors is authorized by the Company's Restated Certificate of
Incorporation to determine the voting, dividend, redemption and liquidation
preferences and limitations pertaining to such series. The board of directors,
without shareholder approval, may issue Preferred Stock with voting and other
rights that could adversely affect the voting power of the holders of the Common
Stock and could have certain antitakeover effects. The ability of the board of
directors to issue Preferred Stock without stockholder approval could have the
effect of delaying, deferring or preventing a change in control of the Company
or the removal of existing management. See "Certain Matters that may have an
Anti-Takeover Effect -- Provisions of the Company's Restated Certificate of
Incorporation and Bylaws" below.
Any Preferred Stock offered hereby will have the dividend, liquidation and
voting rights set forth below unless otherwise provided in the Certificate of
Designations, and described in the Prospectus Supplement, relating to a
particular series of Preferred Stock. Reference is made to the Prospectus
Supplement relating to the particular series of Preferred Stock offered thereby
for specific terms, including: (i) the designation and stated value per share of
such Preferred Stock and the number of shares offered; (ii) the amount of
liquidation preference per share; (iii) the price at which such Preferred Stock
will be issued; (iv) the dividend rate (or method of calculation), the dates on
which dividends will be payable, whether such dividends will be cumulative or
noncumulative and, if cumulative, the dates from which dividends will accrue;
(v) any redemption or sinking fund provisions; (vi) any conversion or exchange
provisions; and (vii) any additional or other rights, preferences, privileges,
limitations and restrictions relating to such series of Preferred Stock.
The Company does not currently have any shares of Preferred Stock
outstanding. However, the board of directors has reserved 350,000 shares of
Series A Preferred Stock for issuance in connection with the Rights
9
<PAGE> 11
Plan described below. See "Certain Matters That May Have an Anti-Takeover
Effect -- Rights Plan." The Preferred Stock offered hereby will be issued in one
or more series. The holders of Preferred Stock will have no preemptive rights.
Preferred Stock will be fully paid and nonassessable upon issuance against full
payment of the purchase price therefor. Unless otherwise specified in the
Certificate of Designations, and described in the Prospectus Supplement,
relating to a particular series of Preferred Stock, each series of Preferred
Stock will, with respect to dividend rights and rights on liquidation,
dissolution and winding up of the Company, rank prior to the Common Stock (the
"Junior Stock") and on a parity with each other series of Preferred Stock
offered hereby (the "Parity Stock").
DIVIDEND RIGHTS
Holders of the Preferred Stock may be entitled to receive, when, as and if
declared by the board of directors (or a duly authorized committee thereof) of
the Company, out of funds legally available therefor, cash dividends at such
rates and on such dates as are set forth in the Certificate of Designations, and
described in the Prospectus Supplement, relating to such series of Preferred
Stock. Such rate may be fixed or variable or both. Each such dividend will be
payable to the holders of record as they appear on the stock record books of the
Company on such record dates as may be fixed by the board of directors (or a
duly authorized committee thereof) of the Company. Dividends on any series of
the Preferred Stock may be cumulative or noncumulative, as provided in the
Certificate of Designations, and described in the Prospectus Supplement,
relating thereto. If the board of directors of the Company fails to declare a
dividend payable on a dividend payment date on any series of Preferred Stock for
which dividends are noncumulative, then the right to receive a dividend in
respect of the dividend period ending on such dividend payment date will be
lost, and the Company will have no obligation to pay the dividend accrued for
such period, whether or not dividends on such series are declared for any future
period. Dividends on shares of each series of Preferred Stock for which
dividends are cumulative will accrue from the date set forth in the Certificate
of Designations, and described in the applicable Prospectus Supplement, relating
to such series.
The Preferred Stock of each series may include customary provisions (i)
restricting the payment of dividends or the making of other distributions on, or
the redemption, purchase or other acquisition of, Junior Stock unless full
dividends, including, in the case of cumulative Preferred Stock, accruals, if
any, in respect of prior dividend periods, on the shares of such series of
Preferred Stock have been paid and (ii) providing for the pro rata payment of
dividends on such series and other Parity Stock when dividends have not been
paid in full upon such series and other Parity Stock.
VOTING RIGHTS
The holders of Preferred Stock of a series offered hereby will not be
entitled to vote except as provided in the Certificate of Designations and
indicated in the Prospectus Supplement relating to such series of Preferred
Stock, or as required by applicable law.
REDEMPTION
The Company will have such rights, if any, to redeem shares of Preferred
Stock, and the holders of Preferred Stock will have such rights, if any, to
cause the Company to redeem shares of Preferred Stock, as may be set forth in
the Certificate of Designations, and described in the Prospectus Supplement,
relating to a series of Preferred Stock.
CONVERSION OR EXCHANGE
The terms, if any, on which Preferred Stock of a series will be convertible
into or exchangeable for Class A Common Stock, other securities, property, cash
or obligations, or a combination of any of the foregoing, will be summarized in
the Prospectus Supplement relating to such series. Such terms may include
provisions for conversion or exchange, either on a mandatory basis, at the
option of the holder or at the option of the Company. The number of shares of
Class A Common Stock, other securities, or the property, cash or
10
<PAGE> 12
obligations, to be received by the holders of a series of Preferred Stock upon
conversion or exchange will be calculated according to the factors and at such
time as is summarized in the related Prospectus Supplement.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of each series of Preferred Stock will be
entitled to receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of Junior
Stock, liquidating distributions in the amount set forth in the Certificate of
Designations, and described in the Prospectus Supplement, relating to such
series of Preferred Stock plus an amount equal to accrued and unpaid dividends.
If, upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, the amounts payable with respect to the Preferred Stock of any
series are not paid in full, the holders of the Preferred Stock of such series
will share ratably in any such distribution of assets of the Company in
proration to the full respective preferential amounts (which may include
accumulated dividends) to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of such series of Preferred Stock will have no right or claim to any of the
remaining assets of the Company. Neither the sale of all or a portion of the
Company's assets nor the merger or consolidation of the Company into or with any
other corporation shall be deemed to be a dissolution, liquidation or winding
up, voluntarily or involuntarily, of the Company.
DESCRIPTION OF THE COMMON STOCK
The following description is a summary of certain provisions of the Common
Stock and does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Company's bylaws and Amended and Restated
Certificate of Incorporation. The Prospectus Supplement relating to any offering
of Class A Common Stock (or securities convertible into Class A Common Stock)
will describe terms relevant thereto including, without limitation, the number
of shares offered, the initial offering price and market price and dividend
information.
CLASS A COMMON STOCK
Pursuant to the Company's Amended and Restated Certificate of
Incorporation, the Company is authorized to issue up to 1,150,000,000 shares of
Class A Common Stock. As of May 29, 1998, 346,432,388 shares of Class A Common
Stock were issued and outstanding. All shares of Class A Common Stock currently
outstanding are, and shares of Class A Common Stock to be issued in connection
with any offering will be, fully paid and nonassessable.
CLASS B COMMON STOCK
Pursuant to the Company's Amended and Restated Certificate of
Incorporation, the Company is authorized to issue up to 400,000,000 shares of
Class B Common Stock. Prior to the Spin-Off of the Company by Ford, Ford owned
255,881,180 shares of Class B Common Stock, constituting all of the outstanding
Class B Common Stock. Immediately prior to the Spin-Off, Ford converted all such
shares of Class B Common Stock into Class A Common Stock. Therefore, as of May
29, 1998, no shares of Class B Common Stock were issued and outstanding. The
Company's Restated Certificate of Incorporation provides that the Company may
not reissue any shares of Class B Common Stock after such Class B Common Stock
has been converted into Class A Common Stock. Consequently, the Company has
144,118,820 shares of Class B Common Stock available for issuance. The Company
has not registered any shares of Class B Common Stock for issuance under this
Prospectus.
VOTING RIGHTS
The holders of Class A Common Stock and Class B Common Stock generally have
identical rights except that holders of Class A Common Stock are entitled to one
vote per share while holders of Class B Common Stock are entitled to five votes
per share on all matters to be voted on by stockholders. Holders of shares of
Class A Common Stock and Class B Common Stock are not entitled to cumulate their
votes in the
11
<PAGE> 13
election of directors. Generally, all matters to be voted on by stockholders
must be approved by a majority (or, in the case of election of directors, by a
plurality) of the votes entitled to be cast by all shares of Class A Common
Stock and Class B Common Stock present in person or represented by proxy, voting
together as a single class, subject to any voting rights granted to holders of
any Preferred Stock. Except as otherwise provided by law, and subject to any
voting rights granted to holders of any outstanding Preferred Stock, amendments
to the Company's Restated Certificate of Incorporation must be approved by a
majority of the combined voting power of all of Class A Common Stock and Class B
Common Stock, voting together as a single class. However, amendments to the
Company's Restated Certificate of Incorporation that would alter or change the
powers, preferences or special rights of the Class A Common Stock or the Class B
Common Stock so as to affect them adversely also must be approved by a majority
of the votes entitled to be cast by the holders of the shares affected by the
amendment, voting as a separate class. Notwithstanding the foregoing, any
amendment to the Company's Restated Certificate of Incorporation to increase or
decrease the authorized shares of any class must be approved upon the
affirmative vote of the holders of a majority of the Class A Common Stock and
Class B Common Stock, voting together as a single class.
DIVIDENDS
Holders of Common Stock will share ratably in dividends when, as and if
declared by the board of directors out of funds legally available therefor,
subject to the rights of holders of any outstanding shares of Preferred Stock.
The Company has paid regular quarterly dividends on its Common Stock of $.10 per
share in each quarter since the completion of the initial public offering of the
Company's Common Stock in May 1996. There can be no assurance that the Company
will continue to pay quarterly dividends or that, if paid, the amount of any
dividend payments will not decrease.
OTHER RIGHTS
In the event of any merger or consolidation of the Company with or into
another company in connection with which shares of Common Stock are converted
into or exchangeable for shares of stock, other securities or property
(including cash), all holders of Common Stock, regardless of class, will be
entitled to receive the same kind and amount of shares of stock and other
securities and property (including cash).
On liquidation, dissolution or winding up of the Company, after payment in
full of the amounts required to be paid to holders of Preferred Stock, all
holders of Common Stock will be entitled to share ratably in any assets
available for distribution to holders of shares of Common Stock.
No shares of Common Stock are subject to redemption or have preemptive
rights to purchase additional shares of Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Class A Common Stock is First
Chicago Trust Company of New York.
DESCRIPTION OF THE STOCK WARRANTS
The following statements with respect to the Stock Warrants are summaries
of, and subject to, the detailed provisions of a Stock Warrant Agreement (the
"Stock Warrant Agreement") to be entered into by the Company and a warrant agent
to be selected at the time of issue (the "Stock Warrant Agent"), a form of which
will be filed as an exhibit to a Current Report on Form 8-K relating to any
offering of Stock Warrants.
GENERAL
The Stock Warrants, evidenced by Stock Warrant certificates (the "Stock
Warrant Certificates"), may be issued under the Stock Warrant Agreement
independently or together with any Securities offered by any Prospectus
Supplement and may be attached to or separate from such Securities. If Stock
Warrants are offered, the Prospectus Supplement will describe the terms of the
Stock Warrants, including the following:
12
<PAGE> 14
(i) the offering price, if any; (ii) the number of shares of Class A Common
Stock purchasable upon exercise of each Stock Warrant and the initial price at
which such shares may be purchased upon exercise; (iii) if applicable, the
designation and terms of the Securities with which the Stock Warrants are issued
and the number of Stock Warrants issued with each such Security; (iv) if
applicable, the date on and after which the Stock Warrants and the related Class
A Common Stock will be separately transferable; (v) the date on which the right
to exercise the Stock Warrants shall commence and the date on which such right
shall expire; (vi) federal income tax consequences;(vii) call provisions of such
Stock Warrants, if any; (viii) whether the Stock Warrants represented by the
Stock Warrant Certificates will be issued in registered or bearer form; and (ix)
any additional or other rights, preferences, privileges, limitations and
restrictions relating to the Stock Warrants. The shares of Class A Common Stock
issuable upon the exercise of the Stock Warrants will, when issued in accordance
with the Stock Warrant Agreement, be fully paid and nonassessable.
Stock Warrant Certificates may be exchanged for new Stock Warrant
Certificates of different denominations and may (if in registered form) be
presented for registration of transfer at the corporate trust office of the
Stock Warrant Agent or any Co-Stock Warrant Agent, which will be identified in
the Prospectus Supplement, or at such other office as may be set forth therein.
Holders of Stock Warrant do not have any of the rights of holders of Class A
Common Stock (except to the extent that the consent of holders of Stock Warrant
may be required for certain modifications of the terms of the Class A Common
Stock issuable upon exercise of the Stock Warrants) and are not entitled to
dividend payments on the Class A Common Stock purchasable upon such exercise.
EXERCISE OF STOCK WARRANTS
Stock Warrants may be exercised by surrendering the Stock Warrant
Certificate at the corporate trust office of the Stock Warrant Agent or at the
corporate trust office of the Co-Stock Warrant Agent, if any, with the form of
election to purchase on the reverse side of the Stock Warrant Certificate
properly completed and executed, and by payment in full of the exercise price,
as set forth in the Prospectus Supplement. Upon the exercise of Stock Warrants,
the Stock Warrant Agent or Co-Stock Warrant Agent, if any, will, as soon as
practicable, forward a certificate representing the number of shares of Class A
Common Stock purchasable upon such exercise in accordance with the instructions
of the holder exercising the Stock Warrant and at the sole cost and risk of such
holder. If less than all of the Stock Warrants evidenced by the Stock Warrant
Certificate are exercised, a new Stock Warrant Certificate will be issued for
the remaining amount of Stock Warrants.
ANTI-DILUTION PROVISIONS
Unless otherwise specified in the applicable Prospectus Supplement, the
exercise price payable and the number of shares purchasable upon the exercise of
each Stock Warrant will be subject to adjustment in certain events, including
(i) the issuance of a stock dividend to holders of Common Stock or a
combination, subdivision or reclassification of the Common Stock; (ii) the
issuance of rights, warrants or options to all holders of Common Stock entitling
the holders thereof to subscribe for or purchase Common Stock for an aggregate
consideration per share less than the current market price per share of the
Common Stock; or (iii) any distribution by the Company to the holders of its
Common Stock of evidences of indebtedness of the Company or of assets (excluding
cash dividends or distributions payable out of capital surplus and dividends and
distributions referred to in (i) above). No fractional shares will be issued
upon exercise of Stock Warrants, but the Company will pay the cash value of any
fractional shares otherwise issuable.
CERTAIN MATTERS THAT MAY HAVE AN ANTI-TAKEOVER EFFECT
PROVISIONS OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
Certain provisions of the Company's Restated Certificate of Incorporation
and bylaws summarized below may be deemed to have an anti-takeover effect and
may delay, deter or prevent a tender offer or takeover
13
<PAGE> 15
attempt that a holder of Common Stock might consider to be in its best interest,
including attempts that might result in a premium being paid over the market
price for shares held by holders of Common Stock.
The Company's Restated Certificate of Incorporation and bylaws provide
that, subject to any rights of holders of Preferred Stock to elect additional
directors under specified circumstances, the number of directors of the Company
will not be more than 12 nor less than three, with the exact number of directors
of the Company to be fixed from time to time as provided in the bylaws. The
bylaws provide that, subject to the rights of holders of Preferred Stock to
elect additional directors under specified circumstances, the number of
directors will be fixed from time to time exclusively by resolution of the board
of directors adopted by the affirmative vote of directors constituting not less
than a majority of the total number of directors that the Company would have if
there were no vacancies on the Company's board of directors. In addition, the
Restated Certificate of Incorporation and bylaws provide that, subject to any
rights of holders of Preferred Stock, and unless the Company's board of
directors otherwise determines, any vacancies will be filled by the affirmative
vote of a majority of the remaining members of the board of directors, though
less than a quorum, or by a sole remaining director; except as otherwise
provided by law, and such vacancy may not be filled by the stockholders. As of
the date of this Prospectus, the Board of Directors has set the number of
directors at seven.
The Company's bylaws provide for an advance notice procedure for the
nomination, other than by or at the direction of the board of directors, of
candidates for election as directors as well as for other stockholder proposals
to be considered at annual meetings of stockholders. In general, notice of
intent to nominate a director or raise matters at such meetings will have to be
received in writing by the Company not less than 60 or more than 90 days prior
to the anniversary of the previous year's annual meeting of stockholders, and
must contain certain information concerning the person to be nominated or the
matters to be brought before the meeting and concerning the stockholder
submitting the proposal. The Company's Restated Certificate of Incorporation and
bylaws also provide that special meetings of stockholders may be called only by
certain specified officers of the Company or by any such officer at the request
in writing of a majority of the board of directors; special meetings of
stockholders cannot be called by stockholders. In addition, the Company's
Restated Certificate of Incorporation provides that any action required or
permitted to be taken by stockholders may be effected only at a duly called
annual or special meeting of stockholders and may not be effected by a written
consent by stockholders in lieu of such a meeting.
The Company's Restated Certificate of Incorporation also provides that the
affirmative vote of the holders of at least 75% of the voting power of all
classes of outstanding capital stock, voting together as a single class, is
required to amend, repeal or adopt any provision inconsistent with the
provisions of the Restated Certificate of Incorporation discussed above. The
Restated Certificate of Incorporation and bylaws further provide that the bylaws
may be altered, amended or repealed by the affirmative vote of directors
constituting not less than a majority of the entire board of directors (if
effected by action of the board of directors) or by the affirmative vote of the
holders of at least 75% of the total voting power of all classes of outstanding
capital stock, voting together as a single class.
RIGHTS PLAN
On April 8, 1998, the board of directors of the Company declared a dividend
of one preferred stock purchase right (a "Right") for each outstanding share of
Class A Common Stock. The Company paid the dividend on April 20, 1998 (the
"Record Date"), to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Series A Preferred Shares"), of the Company at a price of $400 per one
one-thousandth of a Series A Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the rights are set forth in a Rights
Agreement, dated as of April 13, 1998 (the "Rights Agreement"), between the
Company and First Chicago Trust Company of New York, as Rights Agent (the
"Rights Agent"), a copy of which is incorporated as an exhibit to the
registration statement to which this Prospectus forms a part.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 15% or more of
14
<PAGE> 16
the outstanding Class A Common Stock or (ii) 10 business days (or such later
date as may be determined by action of the board of directors prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding shares of Class
A Common Stock (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Class A Common Stock
certificates outstanding as of the Record Date, by such Class A Common Stock
certificates together with a copy of the Summary of Rights to Purchase Shares of
Preferred Stock, a copy of which is attached as an exhibit to the Rights
Agreement ("Summary of Rights").
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the shares of Class A Common Stock. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Class A Common Stock
certificates issued after the Record Date upon transfer or new issuances of
Class A Common Stock will contain a notation incorporating the Rights Agreement
by reference. Until the Distribution date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Class A
Common Stock outstanding as of the Record Date, even without such notation or a
copy of the Summary of Rights, will also constitute the transfer of the Rights
associated with the shares of Class A Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Class A Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on April 13, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
The Purchase Price payable, and the number of Series A Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series A
Preferred Shares, (ii) upon the grant to holders of the Series A Preferred
Shares of certain rights or warrants to subscribe for or purchase Series A
Preferred Shares at a price, or securities convertible into Series A Preferred
Shares with a conversion price, less than the then-current market price of the
Series A Preferred Shares or (iii) upon the distribution to holders of the
Series A Preferred Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Series A Preferred Shares) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights is also subject to adjustment in the event
of a stock split of the Class A Common Stock or a stock dividend on the Class A
Common Stock payable in Class A Common Stock or subdivisions, consolidations or
combinations of the Class A Common Stock occurring, in any such case, prior to
the Distribution Date.
Series A Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled, when, as and if declared
to a minimum preferential quarterly dividend payment of $1 per share but will be
entitled to an aggregate dividend of 1,000 times the dividend declared per share
of Class A Common Stock. In the event of liquidation, the holders of the Series
A Preferred Shares will be entitled to a minimum preferential liquidation
payment of $1,000 per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 1,000 times the payment made per share of
Class A Common Stock. Each Series A Preferred Share will have 1,000 votes,
voting together with the Class A Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Class A Common
Stock are exchanged, each Series A Preferred Share will be entitled to receive
1,000 times the amount received per share of Class A Common Stock. These rights
are protected by customary antidilution provisions.
Because of the nature of the Series A Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
Series A Preferred Share purchasable upon exercise of each Right should
approximate the value of one share of Class A Common Stock.
15
<PAGE> 17
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, the Rights Agreement provides that proper provision
shall be made so that each holder of a Right (other than Rights beneficially
owned by the Acquiring Person, which will thereafter be void) will thereafter
have the right to receive upon exercise of the Right at the then current
exercise price of the Right, that number of shares of Class A Common Stock
having a market value of two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, the Rights
Agreement provides that proper provision will be made so that each holder of a
Right (other than Rights beneficially owned by an Acquiring Person or certain
other transferees, which will have become void) will thereafter have the right
to receive, upon the exercise thereof of the Right at the then current exercise
price of the Right, that number of shares of common stock of the person with
whom the Company has engaged in the foregoing transaction which number of shares
at the time of such transaction will have a market value of two times the
exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Class A Common Stock or the occurrence of any event described in the preceding
paragraph, the board of directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one share of Class A Common Stock, or one
one-thousandth of a Series A Preferred Share (or of a share of a class or series
of the Company's Preferred Stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Series A Preferred Shares will be issued
(other than fractions which are integral multiples of one one-thousandth of a
Series A Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Series A Preferred Shares on the
last trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the board
of directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
For so long as Rights are then redeemable, the Company may, except with
respect to the Redemption Price, amend the Rights in any manner. After the
Rights are no longer redeemable the Company may, except with respect to the
Redemption Price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
THE DELAWARE GENERAL CORPORATION LAW
The Company is a Delaware corporation subject to Section 203 of the
Delaware Law General Corporation Law (the "Delaware Law"). Section 203 provides
that, subject to certain exceptions specified therein, a corporation shall not
engage in any business combination with any "interested stockholder" for a
three-year period following the date that such stockholder becomes an interested
stockholder unless (i) prior to such time, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares) or (iii) on or subsequent to such time, the
business combination is
16
<PAGE> 18
approved by the board of directors of the corporation and by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the interested stockholder. Except as specified in Section 203 of the Delaware
Law, an interested stockholder is defined to include (x) any person that is the
owner of 15% or more of the outstanding voting stock of the corporation, or is
an affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation, at any time within three years
immediately prior to the relevant date and (y) the affiliates and associates of
any such person. Under certain circumstances, Section 203 of the Delaware Law
makes it more difficult for an "interested stockholder" to effect various
business combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder.
REGULATORY MATTERS
Because of the nature of the businesses in which the Company operates, the
acquisition of various amounts of its equity securities may not be permitted
without regulatory approvals. While the information below is not meant to be
complete, below are certain principal regulatory thresholds.
The Company indirectly owns all of the capital stock of insurance companies
domiciled in the states of Delaware, Indiana, Nevada, Tennessee and Texas. The
respective insurance laws of these states require prior approval by the state's
insurance commissioner of any acquisition of control of a domestic insurance
company or of any company which controls a domestic insurance company. "Control"
is presumed to exist through the ownership of 10% or more of the voting
securities of a domestic insurance company or of any company which controls a
domestic insurance company. Therefore, any person owning 10% or more of the
value of the outstanding Common Stock may be presumed to have acquired control
of the Company's insurance subsidiaries unless the insurance commissioners of
Delaware, Indiana, Nevada, Tennessee and Texas, following application by such
purchaser in each such state, determine otherwise.
The United Kingdom's Insurance Companies Act 1982 requires the prior
approval by the Department of Trade and Industry of anyone proposing to become a
"controller" of an insurance company regulated under such Act. Any company or
individual that directly or indirectly exercises 10% or more of the voting power
at a general meeting of a regulated insurance company is considered a
"controller". Therefore, any person owning 10% or more of the value of the
outstanding Common Stock will be a controller of the Company's U.K.
subsidiaries, Cumberland Insurance Company Limited and Cumberland Life Insurance
Co. Limited.
The Company directly owns all of the capital stock of Associates National
Bank (Delaware) ("ANB") and indirectly owns all of the capital stock of
Associates Capital Bank, Inc. ("ACB") the deposits of which are insured by the
Federal Deposit Insurance Corporation. The federal Change in Bank Control Act
and the regulations issued thereunder require that a person (including an
individual) file a notice with the appropriate federal bank regulatory agency
prior to acquiring 10% or more of any class of voting securities of a company
that controls an insured depository institution such as ANB or ACB.
The Company indirectly owns all of the shares of stock of licensed lenders
in the states of Georgia, Hawaii, Nevada, New York, Texas and Virginia and in
the Commonwealth of Puerto Rico. The lender licensing laws of these states and
Puerto Rico require approval by the appropriate regulatory agency prior to any
acquisition of control of any company which controls a license. "Control" is
presumed to exist through the ownership of 10% or more (25% in Georgia and
Virginia) of the voting securities of a licensee or a company that controls a
licensee. Therefore any person owning 10% or more (25% in Georgia and Virginia)
of the value of the outstanding Common Stock will be presumed to have acquired
control of the Company's licensed lenders in these jurisdictions unless the
appropriate regulatory agency determines otherwise.
LIMITATIONS ON DIRECTORS' LIABILITY
The Company's Restated Certificate of Incorporation provides that no
director of the Company shall be liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases or (iv)
for any
17
<PAGE> 19
transaction from which the director derived an improper personal benefit. The
effect of these provisions will be to eliminate the rights of the Company and
its stockholders (through stockholders' derivative suits on behalf of the
Company) to recover monetary damages against a director for breach of fiduciary
duty as a director (including breaches resulting from grossly negligent
behavior), except in the situations described above.
PLAN OF DISTRIBUTION
The Company may sell the Securities: (i) through underwriters or dealers;
(ii) directly to one or more purchasers; or (iii) through agents. The Prospectus
Supplement with respect to the Securities being offered thereby sets forth the
terms of the offering of such Securities, including the name or names of any
underwriters, the purchase price of such Securities and the proceeds to the
Company from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers, and any securities exchange
on which such Securities may be listed. Only underwriters so named in the
Prospectus Supplement are deemed to be underwriters in connection with the
Securities offered thereby.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase such Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all the Securities of the series offered by the Company's Prospectus Supplement
if any of such Securities are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for the Company. Any remarketing firm will be identified and the terms of its
agreement, if any, with the Company and its compensation will be described in
the Prospectus Supplement. Remarketing firms may be deemed to be underwriters in
connection with the Securities remarketed thereby.
Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offering
and sale of the Securities in respect of which this Prospectus is delivered is
named, and any commissions payable by the Company to such agent are set forth,
in the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent is acting on a best efforts basis for the period of
its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase Securities providing for payment and delivery on a future
date specified in the Prospectus Supplement. There may be limitations on the
minimum amount which may be purchased by any such institutional investor or on
the portion of the aggregate principal amount of the particular Securities which
may be sold pursuant to such arrangements. Institutional investors to which such
offers may be made, when authorized, include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and such other institutions as may be approved by the
Company. The obligations of any such purchasers pursuant to such delayed
delivery and payment arrangements will not be subject to any conditions except
(i) the purchase by an institution of the particular Securities shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the particular
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of such Securities less the principal
amount thereof covered by such arrangements. Underwriters will not have any
responsibility in respect of the validity of such arrangements or the
performance of the Company or such institutional investors thereunder.
If any underwriter or any selling group member intends to engage in
stabilizing, syndicate short covering transactions, penalty bids or any other
transaction in connection with the offering of Securities that may
18
<PAGE> 20
stabilize, maintain, or otherwise affect the price of such Securities, such
intention and a description of such transactions will be described in the
Prospectus Supplement.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution with
respect to payments which the agents or underwriters may be required to make in
respect thereof. Agents and underwriters may engage in transactions with, or
perform services for, the Company in the ordinary course of business.
LEGAL OPINIONS
The legality of the Securities will be passed upon for the Company by
Timothy M. Hayes or Frederic C. Liskow, each an Assistant General Counsel, 250
East Carpenter Freeway, Irving, TX 75062-2729, and for any underwriters by
LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability partnership
including professional corporations, 125 West 55th Street, New York, New York
10019. Mr. Hayes and Mr. Liskow each own shares of the Company's Class A Common
Stock and have options to purchase additional shares of such Class A Common
Stock.
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of earnings, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
19
<PAGE> 21
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Filing Fee -- Securities and Exchange Commission............ $ 295,000
Accounting Fees............................................. 100,000
Legal Fees.................................................. None
Printing and Engraving...................................... *
Trustees' and Warrant Agent's Charges....................... *
Rating Agency Fees.......................................... 2,500,000
Blue Sky Fees and Expenses.................................. 250,000
Stock Exchange Listing Fee.................................. 100,000
Miscellaneous............................................... 105,000
----------
Total............................................. $4,100,000
==========
</TABLE>
- ---------------
* Estimated subject to future contingencies
ITEM 15. INDEMNIFICATION OF DIRECTOR AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the corporation's best interests, and, for criminal
proceedings, had no reasonable cause to believe his or her conduct was illegal.
A Delaware corporation may indemnify officers and directors against expenses
(including attorneys' fees) in connection with the defense or settlement of an
action by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify his or her against the
expenses which such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Restated Certificate of
Incorporation of the Company contains a provision to limit the personal
liability of the directors of the Company for violations of their fiduciary
duty. This provision eliminates each director's liability to the Company for
violations of their fiduciary duty. This provision eliminates each director's
liability to the Company or its stockholders for monetary damages except (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware Law providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
Pursuant to underwriting agreements filed as exhibits to registration
statements relating to underwritten offerings of securities, the underwriters
parties thereto have agreed to indemnify each officer and director of the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act of 1933, against certain liabilities, including liabilities
under said Act.
The directors and officers of the Company are covered by directors' and
officers' insurance policies relating to the Company and its subsidiaries.
20
<PAGE> 22
The Restated Certificate of Incorporation of the Company provides for
indemnification of the officers and directors of the Company to the full extent
permitted by applicable law.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF INSTRUMENT
------- -------------------------
<C> <S>
1.1*** -- Form of Underwriting Agreement for dollar denominated
Debt Securities and Warrants to be distributed in the
United States. Any Underwriting Agreement relating to
Securities to be distributed outside the United States or
for Securities denominated in foreign currencies or
foreign currency units or any modified Underwriting
Agreement for dollar denominated Securities to be
distributed in the United States and any selling agency
or distribution agreement with any agent will be filed as
an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1.2*** -- Form of Underwriting Agreement for Equity Securities.
4.1*** -- Associates First Capital Corporation Standard
Multiple-Series Indenture Provisions dated as of June 1,
1998.
4.2*** -- Form of Indenture for Senior Securities dated as of June
1, 1998 between the Company and The Chase Manhattan Bank,
as Trustee. The form or forms of Subordinated Securities
with respect to each particular offering will be filed as
an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4.3*** -- Form of Indenture for Subordinated Securities date as of
June 1, 1998 between the Company and The Chase Manhattan
Bank, as Trustee. The form or forms of Subordinated
Securities with respect to each particular offering will
be filed as an exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
4.4* -- Form of Indenture for Senior Securities between the
Company and one or more banking institutions to be
qualified as Trustee pursuant to Section 305(b)(2) of the
Trust Indenture Act of 1939. The form or forms of Senior
Securities with respect to each particular offering will
be filed as an exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
4.5** -- Form of Indenture for Subordinated Securities between the
Company and one or more banking institutions to be
qualified as Trustee pursuant to Section 305(b)(2) of the
Trust Indenture Act of 1939. The form or forms of such
Senior Securities with respect to each particular
offering will be filed as an exhibit to a Current Report
on Form 8-K and incorporated herein by reference.
4.6 -- The form of Warrant Agreement for Debt Securities to be
entered into between the Company and the Warrant Agent
(including form of Warrant Certificate) will be filed as
an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4.7 -- The form of Warrant Agreement for Class A Common Stock to
be entered into between the Company and the Warrant Agent
(including form of Warrant Certificate) will be filed as
an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4.8+ -- Rights Agreement, dated as of April 13, 1998, between the
Company and First Chicago Trust Company of New York as
Rights Agent.
5++ -- Opinion and consent of Timothy M. Hayes.
</TABLE>
21
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF INSTRUMENT
------- -------------------------
<C> <S>
12 -- The computation of ratio of earnings to fixed charges for
the five fiscal years ended December 31, 1997 is
incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997.
The computation of ratio of earnings to fixed charges for
the three-month period ended March 31, 1998 is
incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998.
23++ -- Consent of Coopers & Lybrand L.L.P. The consents of
Timothy M. Hayes and Frederic C. Liskow are included in
the opinion referred to in Exhibit 5 above.
24++ -- Powers of Attorney.
25.1*** -- Form T-1, Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank,
Trustee, under the Indenture dated as of June 1, 1998,
pursuant to which Senior Securities may be issued.
25.2*** -- Form T-1, Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank,
Trustee, under the Indenture dated as of June 1, 1998,
pursuant to which Subordinated Securities may be issued.
</TABLE>
- ---------------
* Incorporated by reference to exhibit 4.2, except for name of Trustee.
** Incorporated by reference to exhibit 4.3, except for name of Trustee.
*** To be filed by amendment.
+ Incorporated by reference to be the Company's Current Report on Form 8-K
dated April 8, 1998.
++ Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to 424(b) of the Act if, in the aggregate,
the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
22
<PAGE> 24
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered to which remain unsold at the
termination of the offering.
(4) That, for the purposes of determining any liability under the Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
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 being offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of
the Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Irving, Texas, on the 2nd day of June, 1998.
ASSOCIATES FIRST CAPITAL CORPORATION
By: /s/ JOHN F. STILLO
------------------------------------
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
KEITH W. HUGHES* Chairman of the Board, Chief
- --------------------------------------------------- Executive Officer and a
(Keith W. Hughes) Director
HAROLD D. MARSHALL* President, Chief Operating
- --------------------------------------------------- Officer and a Director
(Harold D. Marshall)
J. CARTER BACOT* Director
- ---------------------------------------------------
(J. Carter Bacot)
ERIC S. DOBKIN* Director
- ---------------------------------------------------
(Eric S. Dobkin)
ROY A. GUTHRIE* Executive Vice President, Chief
- --------------------------------------------------- Financial Officer and a
(Roy A. Guthrie) Director
WILLIAM M. ISAAC* Director
- ---------------------------------------------------
(William M. Isaac)
H. JAMES TOFFEY* Director
- ---------------------------------------------------
(H. James Toffey)
/s/ JOHN F. STILLO Senior Vice President,
- --------------------------------------------------- Comptroller and Principal
(John F. Stillo) Accounting Officer
</TABLE>
- ---------------
* By signing his name hereto, John F. Stillo signs this document on behalf of
each persons indicated above pursuant to powers of attorney duly executed by
such persons.
By: /s/ JOHN F. STILLO
----------------------------------
Attorney-in-fact
June 2, 1998
25
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF INSTRUMENT
------- -------------------------
<C> <S>
1.1*** -- Form of Underwriting Agreement for dollar denominated
Debt Securities and Warrants to be distributed in the
United States. Any Underwriting Agreement relating to
Securities to be distributed outside the United States or
for Securities denominated in foreign currencies or
foreign currency units or any modified Underwriting
Agreement for dollar denominated Securities to be
distributed in the United States and any selling agency
or distribution agreement with any agent will be filed as
an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1.2*** -- Form of Underwriting Agreement for Equity Securities.
4.1*** -- Associates First Capital Corporation Standard
Multiple-Series Indenture Provisions dated as of June 1,
1998.
4.2*** -- Form of Indenture for Senior Securities dated as of June
1, 1998 between the Company and The Chase Manhattan Bank,
as Trustee. The form or forms of Senior Securities with
respect to each particular offering will be filed as an
exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4.3*** -- Form of Indenture for Subordinated Securities date as of
June 1, 1998 between the Company and The Chase Manhattan
Bank, as Trustee. The form or forms of Subordinated
Securities with respect to each particular offering will
be filed as an exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
4.4* -- Form of Indenture for Senior Securities between the
Company and one or more banking institutions to be
qualified as Trustee pursuant to Section 305(b)(2) of the
Trust Indenture Act of 1939. The form or forms of Senior
Securities with respect to each particular offering will
be filed as an exhibit to a Current Report on Form 8-K
and incorporated herein by reference.
4.5** -- Form of Indenture for Subordinated Securities between the
Company and one or more banking institutions to be
qualified as Trustee pursuant to Section 305(b)(2) of the
Trust Indenture Act of 1939. The form or forms of such
Senior Securities with respect to each particular
offering will be filed as an exhibit to a Current Report
on Form 8-K and incorporated herein by reference.
4.6 -- The Form of Warrant Agreement for Debt Securities to be
entered into between the Company and the Warrant Agent
(including form of Warrant Certificate) will be filed as
an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4.7 -- The Form of Warrant Agreement for Class A Common Stock to
be entered into between the Company and the Warrant Agent
(including form of Warrant Certificate) will be filed as
an exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4.8+ -- Rights Agreement dated as of April 13, 1998 between the
Company and First Chicago Trust Company of New York as
Rights Agent.
5++ -- Opinion and consent of Timothy M. Hayes.
12 -- The computation of ratio of earnings to fixed charges for
the five fiscal years ended December 31, 1997 is
incorporated by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997.
The computation of ratio of earnings to fixed charges for
the three-month period ended March 31, 1998 is
incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998.
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF INSTRUMENT
------- -------------------------
<C> <S>
23++ -- Consent of Coopers & Lybrand L.L.P. The consents of
Timothy M. Hayes and Frederic C. Liskow are included in
the opinion referred to in Exhibit 5 above.
24++ -- Powers of Attorney.
25.1*** -- Form T-1, Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank,
Trustee, under the Indenture dated as of June 1, 1998,
pursuant to which Senior Securities may be issued.
25.2*** -- Form T-1, Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank,
Trustee, under the Indenture dated as of June 1, 1998,
pursuant to which Subordinated Securities may be issued.
</TABLE>
- ---------------
* Incorporated by reference to exhibit 4.2, except for name of Trustee.
** Incorporated by reference to exhibit 4.3, except for name of Trustee.
*** To be filed by amendment.
+ Incorporated by reference to the Company's Current Report on Form 8-K dated
April 8, 1998.
++ Filed herewith.
27
<PAGE> 1
[ASSOCIATES FIRST CAPITAL CORPORATION LETTERHEAD]
EXHIBIT 5
June 2, 1998
Associates First Capital Corporation
250 E. Carpenter Freeway
Irving, TX 75062-2729
Ladies and Gentlemen:
I am Vice President and Assistant General Counsel of Associates First
Capital Corporation, a Delaware corporation (the "Company") and I have advised
the Company in connection with the registration, pursuant to a Registration
Statement (the Registration Statement) on Form S-3 being filed with the
Securities and Exchange Commission under the Securities Act of 1933 (the
"Act"), to be offered from time to time by the Company of up to $1,000,000,000
of the Company's debt securities ("Debt Securities"), warrants to purchase Debt
Securities, preferred stock ("Preferred Stock"), rights to purchase Preferred
Stock, Class A Common Stock (the "Common Stock") and warrants to purchase
Common Stock, (collectively, the "Offered Securities"), on the terms to be
determined at the time of the offering.
In connection with the filing of the Registration Statement, you have
requested my opinion concerning certain corporate matters.
When the terms of any class or series of the Offered Securities have been
authorized by appropriate action of the Company and have been issued and sold,
and payment received for such Offered Securities, as described in the
Registration Statement, the Prospectus and the applicable Prospectus Supplement
and, with respect to the Debt Securities, such Debt Securities have been duly
executed, authenticated and delivered in accordance with the applicable
indenture or supplemental indenture, then (i) the Offered Securities will be
legally issued and, with respect to shares of Common Stock and Preferred Stock,
fully paid and nonassessable and (ii) the Debt Securities will be validly
authorized and issued and binding obligations of the Company.
I hereby consent that the foregoing opinion may be filed as an exhibit to
the above referenced Registration Statement. I further consent to the use of my
name in the Registration Statement and the Prospectus related thereto.
By his signature below, Frederic C. Liskow hereby consents to the use of
his name in the Registration Statement and the Prospectus related thereto.
Very truly yours,
/s/ TIMOTHY M. HAYES
-----------------------------
Timothy M. Hayes
Assistant General Counsel
Consent
/s/ FREDERIC C. LISKOW
- -----------------------------
Frederic C. Liskow
Assistant General Counsel
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Associates First Capital Corporation on Form S-3 (File No. 333- ) of our
report dated January 20, 1998, on our audits of the consolidated financial
statements of Associates First Capital Corporation as of December 31, 1997 and
1996, and for the years ended December 31, 1997, 1996, and 1995. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Dallas, Texas
May 29, 1998
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or a
director of Associates First Capital Corporation, which corporation proposes to
file with the Securities and Exchange Commission, Washington, D.C., a
Registration Statement pursuant to the provisions of the Securities Act of 1933,
as amended, with respect to the issue and sale of certain securities of the
Company bearing such name or designation and having such terms and to be in such
form as may be selected by the responsible officers of the Company, has made,
constituted and appointed and by these presents, does hereby make, constitute
and appoint TIMOTHY M. HAYES, ROY A. GUTHRIE, CHESTER D. LONGENECKER AND JOHN F.
STILLO, and each of them, his true and lawful attorneys, for him and in his
name, place and stead, and in his office and capacity as aforesaid, to sign and
file said Registration Statement and any and all amendments or post-effective
amendments thereto and any and all other documents to be signed and filed with
the Securities and Exchange Commission in connection therewith, hereby granted
to said TIMOTHY M. HAYES, ROY A. GUTHRIE, CHESTER D. LONGENECKER AND JOHN F.
STILLO, and each of them, full power and authority to do and perform each and
every act and thing whatsoever requisite and necessary to be done in the
premises, as fully, to all intents and purposes, as he might or could do if
personally present, hereby ratifying and confirming in all respects all that
said TIMOTHY M. HAYES, ROY A. GUTHRIE, CHESTER D. LONGENECKER AND JOHN F.
STILLO, or any of them, as said attorneys, may or shall lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 7th day of
April, 1998.
SIGNATURE: /s/ KEITH W. HUGHES
--------------------------------------
(Keith W. Hughes)
Chairman of the Board,
Chief Executive Officer and Director
/s/ HAROLD D. MARSHALL
- -------------------------------------------------
(Harold D. Marshall)
President, Chief Operating
Officer and a Director
/s/ J. CARTER BACOT
- -------------------------------------------------
(J. Carter Bacot)
Director
/s/ ERIC S. DOBKIN
- -------------------------------------------------
(Eric S. Dobkin)
Director
/s/ ROY A. GUTHRIE
- -------------------------------------------------
(Roy A. Guthrie)
Executive Vice President, Chief
Financial Officer and a
Director
/s/ WILLIAM M. ISAAC
- -------------------------------------------------
(William M. Isaac)
Director
/s/ H. JAMES TOFFEY
- -------------------------------------------------
(H. James Toffey)
Director
