<PAGE>
As filed with the Securities and Exchange Commission on September 8, 1997
Registration No. 333-34181
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.
(Exact name of registrant as specified in its charter)
New York 13-3261323
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
350 Park Avenue
New York, NY 10022
(212) 826-0100
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
------------------------
Bruce E. Stern, Esq.
General Counsel and Secretary
Financial Security Assurance Holdings Ltd.
350 Park Avenue
New York, New York 10022
(212) 826-0100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copies to:
William H. Widen, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019-7475
------------------------
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 and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<CAPTION>
Proposed
Maximum Proposed
Title of Each Class of Offering Maximum Amount of
Securities to be Amounts to be Price Aggregate Registration
Registered Registered(1)(2) Per Unit(3) Offering Price Fee
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Debt Securities
Common Stock
TOTAL................. $250,000,000 100% $250,000,000 $75,757.58
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Includes such indeterminate principal amount of Debt Securities and such
indeterminate number of Shares of Common Stock, as may from time to time be
issued at indeterminate prices.
(2) In United States dollars or the equivalent thereof in one or more foreign
denominated currencies or currency units if Debt Securities are issued with
principal amounts denominated in one or more foreign or composite currencies
as shall be designated by the Company.
(3) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933 and exclusive
of accrued interest and dividends, if any.
------------------------
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>
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.
<PAGE>
SUBJECT TO COMPLETION DATED , 1997
PRELIMINARY PROSPECTUS
US $250,000,000
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Debt Securities
Common Stock
Financial Security Assurance Holdings Ltd., a New York corporation (the
"Company"), may offer from time to time (a) its unsecured debt securities, in
one or more series, which may be either senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt Securities"
and, together with the Senior Debt Securities, the "Debt Securities"); and (b)
shares of its Common Stock, par value $.01 per share (the "Common Stock"). The
Debt Securities and Common Stock (collectively, the "Securities") will be
offered in amounts, at prices and on terms to be determined at the time any such
Securities are to be offered. The Securities will have an aggregate initial
offering price of up to $250,000,000 or the equivalent thereof in U.S. dollars
if any Securities are denominated in a foreign currency or in currency units.
Specific terms of the particular Debt Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement (the "Prospectus Supplement"), which will describe, without
limitation and where applicable, the following: (a) in the case of the Debt
Securities, the specific designation, aggregate principal amount, denominations,
maturity, premium, if any, interest rate (which may be fixed or variable) or
method of calculation of interest and premium, if any, place or places where
principal, premium, if any, and interest will be payable, any terms of
redemption, any sinking fund provisions, terms for any conversion or exchange
into other Securities, initial public offering or purchase price, methods of
distribution and other special terms, and (b) in the case of Common Stock, the
number of shares offered, initial public offering or purchase price, methods of
distribution and other special terms.
The Prospectus Supplement will also contain information, as applicable,
about certain United States Federal income tax considerations relating to the
Securities.
The Securities may be sold to or through underwriters, through dealers or
agents or directly to purchasers. See "Plan of Distribution". The names of any
underwriters, dealers or agents involved in the sale of Securities in respect of
which this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them will be set forth in the Prospectus Supplement.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a 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 , 1997
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. The 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.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER RULED
UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT.
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus and the applicable Prospectus
Supplement, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any agent,
underwriter or dealer. This Prospectus and the Prospectus Supplement do not
constitute an offer to sell or a solicitation of an offer to buy any securities
to which they relate in any jurisdiction in which it is unlawful to make such an
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to 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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and proxy
and information statements and other information concerning the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the following regional offices of the Commission: Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661, 14th Floor, and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
at prescribed rates, or may be viewed by visiting the Commission's web site at
http://www.sec.gov. Reports, proxy statements and other information concerning
the Company may also be inspected at the offices of the New York Stock Exchange,
Inc. at 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act")
with respect to the securities offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. In addition, certain documents filed by the Company with the
Commission have been incorporated by reference in this Prospectus. See
"Incorporation of Certain Documents by Reference." Statements contained herein
concerning the provisions of any document do not purport to be complete, and in
each instance are qualified in all respects by reference to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
(2) The Company's Quarterly Report on Form 10-Q for each of the first
two calendar quarters of 1997.
(3) The description of the Common Stock of the Company contained in the
Company's Registration Statement on Form 8-A declared effective by the
Commission on May 6, 1994, and any amendment or report filed for the purpose
of updating such description.
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the foregoing documents). Any such request should
be directed to: Bruce E. Stern, Esq., Financial Security Assurance Holdings
Ltd., 350 Park Avenue, New York, New York 10022 (telephone: (212) 826-0100).
THE COMPANY
Financial Security Assurance Holdings Ltd. (the "Company"), through its
wholly owned subsidiary, Financial Security Assurance Inc. ("FSA"), is primarily
engaged in the business of providing financial guaranty insurance on
asset-backed securities and municipal bonds. FSA was the first insurance company
organized to insure asset-backed obligations and has been a leading insurer of
asset-backed obligations (based on number of transactions insured) since its
inception in 1985. FSA expanded the focus of its business in 1990 to include
financial guaranty insurance of municipal obligations. For the six months ended
June 30, 1997, FSA had gross premiums written of $132.1 million, of which 49%
related to insurance of asset-backed obligations and 51% related to insurance of
municipal obligations. At June 30, 1997, FSA had net insurance in force of
$102.5 billion, of which 69% represented insurance of municipal obligations and
31% represented insurance of asset-backed obligations.
Financial guaranty insurance written by FSA typically guarantees scheduled
payments on an issuer's obligations. In the case of a payment default on an
insured obligation, FSA is generally required to pay the principal, interest or
other amounts due in accordance with the obligations' original payment schedule
or, at its option, to pay such amounts on an accelerated basis. FSA's
underwriting policy is to insure asset-backed and municipal obligations that
would otherwise be investment grade without the benefit of FSA's insurance. The
asset-backed obligations insured by FSA are generally issued in structured
transactions backed by pools of assets such as residential mortgage loans,
consumer or trade receivables, securities or other assets having an
ascertainable cash flow or market value. The municipal obligations insured by
FSA consist primarily of general obligation bonds supported by the issuers'
taxing power and special revenue bonds and other special obligations of state
and local governments supported by the issuers' ability to impose and collect
fees and charges for public services or specific projects.
The Company's business objective is to remain a leading insurer of
asset-backed obligations and to become a more prominent insurer of municipal
obligations. The Company's acquisition of Capital Guaranty Corporation
("Capital Guaranty") in December 1995 increased the Company's presence in the
insured
3
<PAGE>
municipal bond sector. The Company believes that the demand for its
financial guaranty insurance will grow over the long term in response to
anticipated growth in insured asset-backed and municipal obligations. The
Company expects continued growth in the insurance of asset-backed obligations,
due in part to the continued expansion of asset securitization outside of the
residential mortgage sector. In the long term, the Company also expects
continued growth in the insurance of municipal obligations, due in part to
increased issuance of municipal bonds to finance repairs and improvements to the
nation's infrastructure and increased municipal bond purchases by individuals
who generally purchase insured obligations. In addition the percentage of new
domestic municipal bond volume which is insured has increased each year since
1986, to 46% for the year ending 1996 according to published sources. The
company maintains offices in New York City, San Francisco, Dallas, London,
Paris, Madrid and Sydney, and expects soon to open an office in Singapore. In
addition to its domestic business, the Company pursues international
opportunities and currently operates in the European and Pacific Rim markets.
The Company was the first financial guaranty insurance company to insure
obligations in international markets.
The Company expects to continue to emphasize a diversified insured portfolio
characterized by insurance of both asset-backed and municipal obligations, with
a broad geographic distribution and a variety of revenue sources and transaction
structures.
The claims-paying ability of FSA is rated "Aaa" by Moody's Investors
Service, Inc. and "AAA" by Standard & Poor's Ratings Services ("S&P"), Fitch
Investors Service, L.P., Nippon Investors Services and S&P (Australia) Pty. Ltd.
FSA is licensed to engage in the financial guaranty insurance business in
all 50 states, the District of Columbia and Puerto Rico.
The principal executive offices of the Company are located at 350 Park
Avenue, New York, New York 10022. The telephone number at that location is (212)
826-0100.
USE OF PROCEEDS
Unless otherwise stated in the applicable Prospectus Supplement, the net
proceeds to the Company from the sale of the Securities will be used for general
corporate purposes of the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated. Earnings represent consolidated income
before income taxes and fixed charges. Fixed charges consist of interest and
one-third of rental expense which is deemed representative of the interest
factor for such rental expense. The ratio for 1993 is considered not
meaningful because of the significant loss incurred by the Company in that
year. The Company had no capitalized interest for the periods presented.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to fixed charges..... 31.1 N/M 51.2 70.0 35.2 32.7 39.5
</TABLE>
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities offered hereby are to be issued in one or more
series under a Senior Indenture, as supplemented from time to time (as so
supplemented, the "Senior Indenture"), between the Company and a trustee to be
named in the applicable Prospectus Supplement (the "Senior Indenture
Trustee"). The Subordinated Debt Securities offered hereby are to be issued in
one or more series under a Subordinated Indenture, as supplemented from time
to time (as so supplemented, the "Subordinated Indenture" and, together with
the Senior Indenture, the "Indentures"), between the Company and a trustee to
be named in the applicable Prospectus Supplement (the "Subordinated Indenture
Trustee" and, together with the Senior Indenture Trustee, the "Trustees").
Copies of the Senior Indenture and the form of the Subordinated Indenture have
been filed as exhibits to the Registration Statement of which this Prospectus
forms a part.
The statements herein relating to the Debt Securities and the following
summaries of certain provisions of the Indentures do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indentures (as they may be amended or supplemented from time
to time) and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Whenever particular sections or defined terms of the Indentures (as they
may be amended or supplemented from time to time) are referred to herein or in a
Prospectus Supplement, such sections or defined terms are incorporated herein or
therein by reference.
General
The Debt Securities will be direct and unsecured obligations of the Company.
The Senior Debt Securities will rank equally and ratably with all other
unsecured and unsubordinated obligations of the Company. The Subordinated Debt
Securities will be subordinate and junior in right of payment to the extent and
in the manner set forth in the Subordinated Indenture to all Senior Debt (as
defined below) of the Company. See "-Subordination under the Subordinated
Indenture". As a non-operating holding company, most of the assets of the
Company are owned by the Company's subsidiaries, and the Company relies
primarily on dividends or other payments from such subsidiaries to meet its
obligations for payment of principal and interest on its outstanding debt
obligations. Accordingly, the Debt Securities will be effectively subordinated
to all existing and future liabilities of the Company's subsidiaries. In
addition, the payment of dividends or other amounts by the Company's insurance
company subsidiary, Financial Security Assurance Inc., is limited under the
applicable insurance laws and regulations of the State of New York. The
Indentures do not limit the aggregate amount of Debt Securities that may be
issued thereunder. Except as otherwise provided in the applicable Prospectus
Supplement, the Indentures, as they apply to any series of Debt Securities, do
not limit the incurrence or issuance of other secured or unsecured debt of the
Company, whether under either of the Indentures or any other indenture that the
Company may enter into in the future or otherwise.
The Debt Securities will be issuable in one or more series pursuant to an
indenture supplemental to the Senior Indenture or the Subordinated Indenture, as
the case may be, or in accordance with a resolution of the Company's Board of
Directors or a committee thereof.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Debt Securities (to the extent such terms
are applicable to such Debt Securities): (1) the title of the Debt Securities;
(2) any limit upon the aggregate principal amount of the Debt Securities; (3)
the date or dates on which the principal of the Debt Securities is payable;
(4) the rate or rates, if any, at which the Debt Securities shall bear
interest, the interest payment dates on which any such interest shall be
payable, the right, if any, of the Company to defer or extend an interest
payment date, or the method by which any of the foregoing shall be determined;
(5) the place or places where, subject to the terms of the Indenture, the
principal of and premium, if any, and interest on the Debt Securities will be
payable; (6) any period or periods within or date or dates on which, the price
or prices at which and the terms and conditions upon which Debt Securities may
be redeemed, in whole or in part, at the option of the Company pursuant to any
sinking fund or otherwise; (7) the obligation, if any, of the Company to
redeem, purchase or repay the Debt Securities pursuant to any sinking fund,
amortization or analogous provisions or at the option of a Holder thereof and
the period or periods within which, the price or prices at which, the currency
or currencies (including currency unit or units) in which and the other terms
and conditions upon which the Debt Securities shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation; (8) the
denominations in which any Debt Securities shall be issuable if other than
denominations of $1,000 and any integral multiple thereof; (9) if other than
in U.S. Dollars, the currency or currencies (including currency unit or units)
in which the principal of (and premium, if any) and interest, if any, on the
Debt Securities shall be payable, or in which the Debt Securities
5
<PAGE>
shall be denominated; (10) any additions, modifications or deletions, in the
Events of Default or covenants of the Company specified in the Indenture with
respect to the Debt Securities; (11) if other than the principal amount
thereof, the portion of the principal amount of Debt Securities that shall be
payable upon declaration of acceleration of the maturity thereof; (12) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the Debt Securities and the manner in which such amounts
will be determined; (13) the issuance of a temporary Global Security
representing all of the Debt Securities of such series and exchange of such
temporary Global Security for definitive Debt Securities of such series; (14)
whether the Debt Securities of the series shall be issued in whole or in part
in the form of one or more Global Securities and, in such case, the Depositary
for such Global Securities, and the circumstances under which any such
Registered Global Security may be registered for transfer or exchange, or
authenticated and delivered, in the name of a Person other than such
Depositary or its nominee, if other than as set forth in the Indentures; (15)
the appointment of any paying agent, transfer agent or registrars; (16) the
terms and conditions of any obligation or right of the Company to convert or
exchange the Subordinated Debt Securities into other Securities or at the
option of a Holder thereof; (17) the relative degree, if any, to which the
Debt Securities of any series shall be senior to or subordinated to other
series of Debt Securities in right of payment, whether such other series of
Debt Securities are outstanding or not; and (18) any other terms of the Debt
Securities not inconsistent with the provisions of the Indentures. (Section
2.03).
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. Certain federal income tax consequences and
special considerations applicable to any such Debt Securities will be described
in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, certain federal income tax considerations, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units will be set forth in the applicable Prospectus
Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Debt Securities, special federal
income tax, accounting and other considerations applicable thereto will be
described in the applicable Prospectus Supplement.
Denominations, Registration, Payment and Transfer
Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. Debt Securities of
any series will be exchangeable for other Debt Securities of the same issue and
series, of any authorized denominations, of a like aggregate principal amount.
Debt Securities may be presented for exchange as provided above, and may
be presented for registration of transfer (with the form of transfer endorsed
thereon, or a satisfactory written instrument of transfer, duly executed), at
the office of the registrar or at the office of any transfer agent designated
by the Company for such purpose with respect to any series of Debt Securities
and referred to in an applicable Prospectus Supplement, without service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. The Company will appoint the Trustees as registrars under the
Indentures. If the applicable Prospectus Supplement refers to any transfer
agents or paying agents (in addition to the registrar) initially designated by
the Company with respect to any series of Debt Securities, the Company may at
any time rescind the designation of any such transfer agent or paying agent or
approve a change in the location through which any such transfer agent or
paying agent acts. The Company may at any time designate additional transfer
agents or paying agents with respect to any series of Debt Securities.
Neither the Company nor the Trustees shall be required to exchange or
register a transfer of (a) any Debt Securities of any series for a period of 15
days preceding the first mailing of notice of redemption for such series to be
redeemed, or (b) any Debt Securities selected, called or being called for
redemption except, in the case of any Debt Security to be redeemed in part, the
portion thereof not so to be redeemed.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Debt Securities will
be made at the office of the Trustee for such Debt
6
<PAGE>
Securities in the City of New York or at the office of such paying agent or
paying agents as the Company may designate from time to time in an applicable
Prospectus Supplement, except that at the option of the Company payment of any
interest may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the register. Unless otherwise
indicated in an applicable Prospectus Supplement, payment of any interest on
Debt Securities will be made to the person in whose name such Debt Security is
registered at the close of business on any record date for such interest,
except in the case of defaulted interest.
Global Debt Securities
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Debt Securities that will be deposited with, or on
behalf of, a depositary (the "Depositary") identified in the Prospectus
Supplement relating to such series. Global Debt Securities may be issued only in
fully registered form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for the individual Debt Securities
represented thereby, a Global Debt Security may not be transferred except as a
whole by the Depositary for such Global Debt Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee to a successor
Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will generally
apply to depositary arrangements.
Upon the issuance of a Global Debt Security, and the deposit of such Global
Debt Security with or on behalf of the Depositary, the Depositary for such
Global Debt Security or its nominee will credit on its book-entry registration
and transfer system, the respective principal amounts of the individual Debt
Securities represented by such Global Debt Security to the accounts of persons
that have accounts with such Depositary ("Participants"). Such accounts shall be
designated by the dealers, underwriters or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Global Debt
Security will be limited to Participants or persons that may hold interests
through Participants. Ownership of beneficial interests in such Global Debt
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Debt Security.
So long as the Depositary for a Global Debt Security, or its nominee, is
the registered owner of such Global Debt Security, such Depositary or such
nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Global Debt Security for all purposes
under the Indenture governing such Debt Securities. Except as provided below,
owners of beneficial interests in a Global Debt Security will not be entitled
to have any of the individual Debt Securities of the series represented by
such Global Debt Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Debt Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the Indenture governing such Debt Securities.
Payments of principal of (and premium, if any) and interest on individual
Debt Securities represented by a Global Debt Security registered in the name of
a Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the registered owner of the Global Debt Security
representing such Debt Securities. None of the Company, the Trustee for such
Debt Securities, any paying agent, or the Securities registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership interest
of the Global Debt Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Debt Security representing any of such Debt
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of such Global Debt Security for such Debt Securities as shown on the
records of such Depositary or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such Global Debt
Security held through such
7
<PAGE>
Participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in `street name'. Such payments will be
the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Debt Securities is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not appointed
by the Company within 90 days, the Company will issue individual Debt Securities
of such series in exchange for the Global Debt Security representing such series
of Debt Securities. In addition, the Company may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities, determine not to have any Debt Securities of
such series represented by one or more Global Debt Securities and, in such
event, will issue individual Debt Securities of such series in exchange for the
Global Debt Security or Securities representing such series of Debt Securities.
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Debt Security representing
Debt Securities of such series may, on terms acceptable to the Company, the
Trustee and the Depositary for such Global Debt Security, receive individual
Debt Securities of such series in exchange for such beneficial interests,
subject to any limitations described in the Prospectus Supplement relating to
such Debt Securities. In any such instance, an owner of a beneficial interest in
a Global Debt Security will be entitled to physical delivery of individual Debt
Securities of the series represented by such Global Debt Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name. Individual Debt Securities of such series so issued will
be issued in denominations, unless otherwise specified by the Company, of $1,000
and integral multiples thereof.
CERTAIN COVENANTS OF THE COMPANY
Limitations on Liens. Under the Senior Indenture, so long as Senior Debt
Securities are outstanding, the Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, issue, assume, incur or
guarantee any indebtedness for borrowed money which is secured by a Mortgage
of any nature on any of the present or future capital stock of any Restricted
Subsidiary unless the Senior Debt Securities then outstanding shall be secured
equally and ratably with, or prior to, such other secured debt so long as it
is outstanding. (Section 3.06)
Limitations on Disposition of Stock of Restricted Subsidiaries. Under the
Senior and Subordinated Indentures, so long as Debt Securities are
outstanding, the Company will not, and will not permit any Subsidiary to,
sell, transfer or otherwise dispose of any shares of capital stock of any
Restricted Subsidiary except for (i) a sale, transfer or other disposition of
any capital stock of any Restricted Subsidiary to a wholly owned Subsidiary of
the Company or such Subsidiary; (ii) a sale, transfer or other disposition of
the entire capital stock of any Restricted Subsidiary for at least fair value
(as determined by the Board of Directors of the Company acting in good faith);
or (iii) a sale, transfer or other disposition of the capital stock of any
Restricted Subsidiary for at least fair value (as determined by the Board of
Directors of the Company acting in good faith) if, after giving effect
thereto, the Company and its Subsidiaries would own more than 80% of the
issued and outstanding Voting Stock of such Restricted Subsidiary. (Section
3.07)
Consolidation, Merger, Sale or Conveyance
Under the Senior and Subordinated Indentures, so long as Debt Securities are
outstanding, the Company will not consolidate with or merge into any other
corporation or convey, transfer or lease its properties or assets as an entirety
or substantially as an entirety to any person, unless (i) the successor or
purchaser is a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia; (ii) such
successor or purchaser shall expressly assume, by supplemental indenture
satisfactory in form to the related Trustee, the due and punctual payment of the
principal of, premium, if any, and interest on all the Debt Securities and the
performance and observance of every covenant and condition of the Company under
the related Indenture; and (iii) immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing under the related Indenture. (Section 9.01)
8
<PAGE>
Certain Definitions
The covenants and other provisions relating to the Debt Securities are to be
read in conjunction with the definitions contained in the Senior and
Subordinated Indentures, certain of which are substantially to the following
effect:
"Debt Securities" means all unsecured debt securities, notes or other
evidences of indebtedness issued in one or more series that the Company may
issue from time to time in accordance with the terms of the related Indentures.
"Mortgage" means any mortgage, pledge, lien, security interest or other
encumbrance.
"Restricted Subsidiary" means Financial Security Assurance Inc. and any
successor to all or substantially all of its business, provided that such
successor is a Subsidiary.
"Subsidiary" means a corporation more than 50% of the outstanding Voting
Stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
"Voting Stock" means, with respect to any Subsidiary, stock of any class or
classes (or equivalent interests), if the holders of the stock of such class or
classes (or equivalent interests) are ordinarily, in the absence of
contingencies, entitled to vote for the election of the directors (or persons
performing similar functions) of such corporation, even though the right so to
vote has been suspended by the happening of such a contingency.
Events of Default
Any one of the following events will constitute an Event of Default with
regard to any series of Debt Securities under each of the Indentures: (i)
default continued for 30 days in payment of any installment of interest on any
of the Debt Securities when due; (ii) default in payment of all or any part of
the principal of the Debt Securities when due and payable either at maturity,
upon any redemption, by declaration or otherwise; (iii) default continued for
60 days after notice of such default in performance of any covenant or
warranty of the Indenture by the Company in respect of the Debt Securities;
(iv) certain events of default with respect to indebtedness of the Company
(other than the Debt Securities or non-recourse obligations of the Company) in
an aggregate principal amount in excess of $10,000,000 which default shall
consist of the failure to make any payment at maturity or shall have resulted
in the acceleration of the maturity of such indebtedness; (v) certain events
of bankruptcy, insolvency, or reorganization of the Company or any Restricted
Subsidiary; or (vi) any other Event of Default provided in the supplemental
indenture or resolution of the Board of Directors under which such series of
Debt Securities is issued or in the form of Debt Security for such series.
(Section 5.01) The Company is required to file with the Trustee annually a
written statement as to the fulfillment of certain of its obligations under
the Indenture. (Section 3.05)
Each Indenture provides that the Trustee may withhold notice to the holders
of Debt Securities of any default (except in payment of principal of or premium,
if any, or interest on the Debt Securities) if the Trustee considers it in the
interest of the holders of the Debt Securities to do so. (Section 5.11)
Each Indenture provides that (a) if an Event of Default described in clause
(i) or (ii) above shall have occurred and be continuing with regard to the Debt
Securities of any series, either the Trustee or the holders of 25% in aggregate
principal amount of the Debt Securities of that series then outstanding (each
such series acting as a separate class) may declare the principal (or, if Debt
Securities of such series are original issue discount Debt Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all Debt Securities of such series and interest accrued thereon, if any, to
be due and payable immediately and (b) if an Event of Default described in
clause (iii), (iv) or (v) above shall have occurred and be continuing, either
the Trustee or the holders of 25% in aggregate principal amount of all Debt
Securities (or in the case of an Event of Default described in clause (iii)
above, all series affected by such Event of Default) then outstanding (voting as
a single class) may declare the principal (or, if Debt Securities of such series
are original issue discount Debt Securities, such portion of the principal
amount as may be specified in the terms of that series) of all Debt Securities
(in the case of clause (iii) above, limited to all series affected) then
outstanding and interest accrued thereon, if any, to be due and payable
immediately. Upon certain conditions, such declaration by the holders of Debt
Securities of any series may be annulled and past defaults which have
9
<PAGE>
been cured may be waived by (a) with respect to clauses (i) or (ii) the
holders of a majority in aggregate principal amount of Debt Securities of such
series (each such series voting as a separate class) then outstanding and (b)
with respect to clauses (iii), (iv) or (v) above, the holders of a majority in
aggregate principal amount of the Debt Securities of all series (in the case
of clause (iii) above, limited to all series affected by such default) then
outstanding (voting as a single class). (Section 5.01) Prior to a declaration
of acceleration of maturity of the Debt Securities of any series, the holders
of a majority in aggregate principal amount of the Debt Securities of each
series voting separately or all series voting as a single class, depending on
the nature of the Event of Default, may waive any Event of Default, and its
consequences, except a default in the payment of the principal of or premium,
if any, or interest on any of the Debt Securities of such series or in respect
of a covenant or provision of the Indenture which cannot be modified or
amended without the consent of the holder of each Debt Security of such series
affected. (Section 5.10)
Subject to the provisions of each Indenture relating to the duties of the
Trustee, the Trustee shall be under no obligation to exercise any of its rights
or powers under the relative Indenture at the request, order or direction of any
of the holders of Debt Securities, unless such holders shall have offered the
Trustee reasonable indemnity. (Section 6.02) Subject to such provision for
indemnification, the holders of a majority in aggregate principal amount of the
Debt Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee. (Section 5.09)
Defeasance and Covenant Defeasance
Except as may otherwise be provided in the applicable Prospectus
Supplement with respect to the Debt Securities of any series, each Indenture
provides that, subject to certain conditions, the Company may elect either (i)
to be discharged from any and all obligations with respect to the Debt
Securities (except for the obligations to register the transfer or exchange of
the Debt Securities, to replace temporary or mutilated, defaced, destroyed,
lost or stolen Debt Securities, to maintain an office or agency for the
payment of principal and interest in respect of the Debt Securities, to
appoint a paying agent and, if the Company elects to act as the paying agent,
to hold moneys for such payment in trust) ("Defeasance") or (ii) to be
released from its obligations with respect to the Debt Securities under
Sections 3.06 and 3.07 of the Indenture (being the sections of the Indenture
captioned "Limitations on Liens" and "Limitations on Disposition of Stock of
Restricted Subsidiaries" see "Certain Covenants of the Company") ("Covenant
Defeasance"), upon the deposit with the Trustee (or another qualifying
trustee) irrevocably in trust for such purpose, of money and/or United States
government obligations in an amount which, in the opinion of a nationally
recognized firm of independent public accountants delivered to such trustee,
would be sufficient to pay the principal of and premium, if any, and interest
on the Debt Securities on the scheduled due dates therefor. (Sections 13.01
through 13.04)
Each Indenture provides that, to effect Defeasance or Covenant Defeasance,
the Company must deliver to the Trustee an opinion of counsel to the effect that
Defeasance or Covenant Defeasance, as the case may be, will not cause the
holders of the Debt Securities to recognize income, gain or loss for federal
income tax purposes. In addition, in the case of Defeasance, such opinion of
counsel must state that a private letter ruling or a revenue ruling to the same
effect has been issued by the United States Internal Revenue Service or state
that since the date of the Indenture there has been a change in the applicable
federal income tax law or the interpretation thereof to the same effect.
(Section 13.04)
With respect to the Subordinated Indenture, in order to be discharged as
described above, no default in the payment of principal of (or premium, if any)
or interest on any Senior Debt shall have occurred and be continuing or no Event
of Default with respect to the Senior Debt shall have occurred and be continuing
and shall have resulted in such Senior Debt becoming or being declared due and
payable prior to the date it would have become due and payable.
Modification and Waiver
Each Indenture provides that the Company may enter into a supplemental
indenture or indentures for the purpose of adding to, changing or eliminating
any of the provisions of such Indenture or of any supplemental indentures or of
modifying the rights of the holders of Debt Securities issued thereunder if
approved in writing signed by the holders of not less than a majority in
aggregate principal amount of all outstanding Debt Securities affected thereby
voting as one class; provided that the consent of each holder of Debt Securities
affected thereby is required for any modification or alteration which (i)
extends the final
10
<PAGE>
maturity of any Debt Securities, or reduces the principal amount thereof, or
reduces the rate or extends the time of payment of interest thereon, or
reduces any amount payable on redemption thereof or impairs or affects the
right of any holder of Debt Securities to institute suit for the payment
thereof, (ii) reduces the percentage in aggregate principal amount, the
consent of the holders of which is required for any such supplemental
indenture or (iii) modifies any provision with respect to the subordination of
Debt Securities of any series in a manner adverse to the holders thereof.
(Section 8.02) The holders of at least a majority in aggregate principal
amount of the outstanding Debt Securities of all series (including the Debt
Securities) voting as one class may waive compliance by the Company with
certain covenants contained in each Indenture. (Section 3.08)
Subordination under the Subordinated Indenture
In the Subordinated Indenture, the Company has covenanted and agreed that
any Subordinated Debt Securities issued thereunder will be subordinate and
junior in right of payment to all Senior Debt to the extent provided in the
Subordinated Indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any
bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of the Company, the
holders of the Senior Debt will first be entitled to receive payment in full
of principal of (and premium, if any) and interest, if any, on such Senior
Debt before the holders of Subordinated Debt Securities will be entitled to
receive or retain any payment in respect of the principal of (and premium, if
any) or interest, if any, on the Subordinated Debt Securities. (Section 14.01
and 14.02)
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration) before the holders of
Subordinated Debt Securities will be entitled to receive any payment upon the
principal of (or premium, if any) or interest, if any, or the Subordinated Debt
Securities. (Section 14.03)
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Debt, or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default. (Section 14.04)
The Subordinated Indenture defines "Senior Debt" as the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on or prior to the date of the
Subordinated Indenture or thereafter incurred, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are not superior in right of payment to the
Subordinated Debt Securities or to other Debt which is PARI PASSU with, or
subordinated to, the Subordinated Debt Securities; provided, however, that
Senior Debt shall not be deemed to include (i) any Debt of the Company which
when incurred and without respect to any election under Section 1111(b) of the
Bankruptcy code was without recourse to the Company, (ii) any Debt of the
Company to any of its subsidiaries, (iii) Debt to any employee of the Company,
(iv) any liability for taxes, (v) indebtedness or monetary obligations to trade
taxes and (v) indebtedness or monetary obligations to trade creditors or assumed
by the Company or any of its subsidiaries in the ordinary course of business in
connection with the obtaining of materials or services. As used in the
proceeding sentence the term "Debt" means with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed; (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses; (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person; (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business); (v) every capital lease obligation of such Person;
and (vi) every obligation of the type referred to in clauses (i) through (v) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
11
<PAGE>
The Subordinated Indenture places no limitation on the amount of additional
Senior Debt that may be incurred by the Company. The Company may from time to
time incur additional indebtedness constituting Senior Debt.
The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Subordinated Debt
Securities, may be changed prior to such issuance. Any such change would be
described in the Prospectus Supplement relating to such Subordinated Debt
Securities.
Conversion or Exchange
The Subordinated Debt Securities of any series may be convertible or
exchangeable into Common Stock or other Securities. The specific terms and
conditions on which Subordinated Debt Securities of any series may be so
converted or exchanged will be set forth in the applicable Prospectus
Supplement. Such terms may include the conversion or exchange price, provisions
for conversion or exchange, either mandatory, at the option of the holder, or at
the option of the Company, and provisions under which the number of shares of
Common Stock or other Securities to be received by the holders of Subordinated
Debt Securities would be calculated as of a time and in the manner stated in the
applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
The Company's Certificate of Incorporation authorizes the issuance of
50,000,000 shares of Common Stock, par value $.01 per share. At July 31st, 1997,
there were outstanding 31,016,527 shares of Common Stock of the Company
(includes 1,127,883 shares of Common Stock owned by a trust on behalf of the
Company and excludes 1,259,774 shares of Common Stock actually held in
treasury).
The following description of the common stock of the Company is subject to
the detailed provisions of the Company's Certificate of Incorporation and
by-laws as currently in effect (the "Bylaws"). This description does not purport
to be complete or to give full effect to the terms of the provisions of
statutory or common law and is subject to, and qualified in its entirety by
reference to, the Certificate of Incorporation and the Bylaws, each of which has
been filed as an exhibit to or will be incorporated by reference in the
Registration Statement of which this Prospectus is a part.
The amount of dividends payable in the future will be reviewed periodically
by the Board of Directors in light of the Company's earnings, financial
condition and capital and other cash requirements. It is the policy of the Board
of Directors that FSA Holding retain an adequate portion of its earnings to
support the growth of its business. There is no requirement or assurance that
dividends will be paid.
Most of the operations of the Company are conducted through FSA. FSA's
ability to declare and pay dividends to Capital Guaranty which in turn declares
and pays dividends to the Company, is dependent on FSA's financial condition,
results of operations, cash requirements and other related factors and is also
subject to restrictions contained in the insurance laws and related regulations
of New York and other states.
The Company will ordinarily be required to withhold United States federal
income taxes in the amount of 30% of any dividends paid to non-United States
shareholders not otherwise subject to United States federal income taxation,
unless a tax treaty between the United States and the country of the
shareholder's residence provides for withholding at a reduced rate.
The Common Stock is traded on the New York Stock Exchange under the symbol
FSA. The transfer agent for the Common Stock is The Bank of New York.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell Securities to investors directly or
through agents or dealers. Any such underwriter, agent or dealer involved in the
offer and sale of the Securities will be named in an applicable Prospectus
Supplement.
12
<PAGE>
Offers and sales of Securities hereunder may be effected at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as its agents to offer and sell the Securities
upon the terms and conditions set forth in any Prospectus Supplement. If
Securities are sold by means of an underwritten offering, the Company will
execute an underwriting agreement with an underwriter or underwriters at the
time an agreement for such sale is reached, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, the
respective amounts underwritten and the terms of the transaction, including
commissions, discounts and any other compensation of the underwriters and
dealers, if any, will be set forth in the applicable Prospectus Supplement
which will be used by the underwriters to make resales of the Securities in
respect of which this Prospectus is being delivered to the public. If any
underwriter or underwriters are utilized in the sale of the Securities, unless
otherwise set forth in the applicable Prospectus Supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject to
certain conditions precedent and that the underwriters with respect to a sale
of Securities will be obligated to purchase all such Securities if any are
purchased.
In connection with the sale of Securities, underwriters may be deemed to
have received compensation from the Company in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of
Securities for whom they may act as agent. Underwriters may sell Securities to
or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
(which may be changed from time to time) from the purchasers for whom they may
act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers, will be set forth
in an applicable Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters under the Securities Act, and any discounts and commissions
received by them and any profit realized by them on resale of the Securities may
be deemed to be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements with the
Company to indemnification against and contribution toward certain civil
liabilities, including liabilities, under the Securities Act, and to
reimbursement by the Company for certain expenses.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to such
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale. The
name of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company and
the sale thereof may be made by the Company directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such
transaction will be set forth in the Prospectus Supplement relating thereto.
The Securities may or may not be listed on a national securities exchange or
a foreign securities exchange. Certain series of the Securities will be a new
issue and will not have an established trading market. No assurances can be
given that there will be a market for any of the Securities.
Agents, underwriters and dealers may be customers of, engage in transactions
with or perform services for, the Company and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Securities being
offered hereby will be passed upon for the Company by Bruce E. Stern, Esq.,
General Counsel of the Company, and for any underwriters of agents by counsel to
be named in the Prospectus Supplement.
13
<PAGE>
EXPERTS
The consolidated financial statements and the related financial
statement schedule of the Company appearing or incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, have
been audited by Coopers & Lybrand L.L.P., independent accountants, as set forth
in their reports thereon dated January 24, 1997 incorporated by reference or
included therein and incorporated herein by reference. Such consolidated
financial statements and financial statement schedule are incorporated herein
by reference in reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the Securities being registered, other than
underwriting discounts and commissions:
<TABLE>
<S> <C>
Registration................................................................... $75,757.58
Trustee Fees................................................................... 7,500.00
Printing....................................................................... 30,000.00
Accounting Fees................................................................ 30,000.00
Legal Fees..................................................................... 80,000.00
Rating Agency Fees............................................................. 60,000.00
Blue Sky Fees and Expense...................................................... 20,000.00
Miscellaneous.................................................................. $ 2,000.00
----------
----------
$305,257.58
</TABLE>
Item 15. Indemnification of Officers and Directors.
Pursuant to the New York Business Corporation Law (the "NYBCL"), the Company
has the power to indemnify certain persons, including its officers and
directors, under stated circumstances and subject to certain limitations in
connection with services performed in good faith for the Company.
Under the Company Bylaws, any person made or threatened to be made a party
to any civil or criminal action or proceeding by reason of the fact that he or
she or his or her testator or intestate is or was a director or officer of the
Company, or served any other corporation or entity of any type or kind, domestic
or foreign, in any capacity, at the request of the Company, shall be indemnified
against judgments, fines, amounts paid in settlement and reasonable expenses,
unless (i) his or her acts were committed in bad faith or were the result of his
or her active and deliberate dishonesty and were material to such action or
proceedings or (ii) he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled.
The indemnification provided in the NYBCL is not exclusive of any other
rights to which a director or officer may be entitled, whether contained in the
certificate of incorporation or bylaws or, when authorized by the certificate of
incorporation or the bylaws, a shareholders' or directors' resolution or an
indemnification agreement, except that no indemnification may be made in any
case if a judgment or other final adjudication adverse to the director or
officer establishes that his or her acts were committed in bad faith or where
the result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that he or she personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled.
The Company maintains directors' and officers' liability insurance which
insures against liabilities that directors or officers of the Company may incur
in such capacities.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<C> <S>
1.01. Form of Underwriting Agreement.*
4.01. Form of Trust Indenture (previously filed).
4.02. Form of Subordinated Indenture (previously filed).
5.01. Opinion of Bruce E. Stern, Esq. (previously filed).
12.01. Computation of Ratios of Earnings to Fixed Charges (previously
filed).
</TABLE>
15
<PAGE>
<TABLE>
<C> <S>
23.01. Consent of Coopers & Lybrand L.L.P. (previously filed).
23.02. Consent of Bruce E. Stern, Esq. (contained in Exhibit 5.01).
24.01. Powers of Attorney (previously filed).
25.01. Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act
of 1939, as amended, of the Senior Indenture Trustee under the Senior Indenture.
25.02. Statement of Eligibility and Qualification on Form T-1 of the Subordinated Indenture
Trustee under the Subordinated Indenture.*
</TABLE>
- ------------------------
* To be filed by a report on Form 8-K pursuant to Item 601 of Regulation S-K.
Item 17. Undertakings.
(A) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in said 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.
(D) Rule 415 Offering
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;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end
16
<PAGE>
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, however, that paragraphs
(a)(1)(i) and (1)(ii) do not apply if 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 such registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(E) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee under subsection (a)
of Section 310 of the Trust Indenture Act (the "Act") in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in New York, New York, on
September 8, 1997.
FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.,
By: *
---------------------------
Robert P. Cochran President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<S> <C> <C>
President, Chief Executive
* Officer and Director
- ------------------------------ (principal executive September 8, 1997
Robert P. Cochran officer)
* Chief Financial Officer
- ------------------------------ (principal financial September 8, 1997
John A. Harrison officer)
* Controller (principal
- ------------------------------ accounting officer) September 8, 1997
Jeffrey S. Joseph
* Chairman, Director
- ------------------------------ September 8, 1997
John J. Byrne
* Vice Chairman, Director
- ------------------------------ September 8, 1997
Michael Djordjevich
* Director
- ------------------------------ September 8, 1997
Robert N. Downey
* Director
- ------------------------------ September 8, 1997
Anthony M. Frank
* Director
- ------------------------------ September 8, 1997
Toshiki Kaneda
* Director
- ------------------------------ September 8, 1997
K. Thomas Kemp
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<S> <C> <C>
* Director
- ------------------------------ September 8, 1997
David O. Maxwell
* Director
- ------------------------------ September 8, 1997
James M. Osterhoff
* Director
- ------------------------------ September 8, 1997
James H. Ozanne
* Director
- ------------------------------ September 8, 1997
Staats M. Pellett, Jr.
* Director
- ------------------------------ September 8, 1997
Richard A. Post
* Director
- ------------------------------ September 8 ,1997
Roger K. Taylor
* Director
- ------------------------------ September 8, 1997
Allan L. Waters
* Director
- ------------------------------ September 8, 1997
Howard M. Zelikow
</TABLE>
* Bruce E. Stern, by signing his name hereto, does hereby execute this
Amendment to the Registration Statement on behalf of the directors and
officers of Financial Security Assurance Holdings Ltd. indicated above by
asterisks, pursuant to powers of attorney duly executed by such directors
and officers and filed as Exhibit 24.1 to the Registration Statement.
By: /s/ Bruce E. Stern
----------------------------
Bruce E. Stern
Attorney-in-Fact
19
<PAGE>
TABLE OF CONTENTS
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 3
The Company................................................................. 3
Use of Proceeds............................................................. 4
Ratio of Earnings to Fixed Charges.......................................... 4
Description of Debt Securities.............................................. 5
Description of Common Stock................................................. 12
Plan of Distribution........................................................ 12
Legal Matters............................................................... 13
Experts..................................................................... 14
<PAGE>
Exhibit 25.01
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM T-1
--------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------
FIRST UNION NATIONAL BANK
(Exact name of trustee as specified in its charter)
United States National Bank 56-0900030
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union National Bank
230 South Tryon Street, 9th Floor
Charlotte, North Carolina 28288-1179
(Address of principal (Zip Code)
executive offices)
Same as above
(Name, address and telephone number, including
area code, of trustee's agent for service)
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
(Exact name of obliger as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
13-3261323
(I.R.S. employer identification no.)
Bruce E. Stern, Esquire
General Counsel and Secretary
Financial Security Assurance Holdings Ltd.
350 Park Avenue
New York, New York 10022
(212) 826-0100
(Address, including zip code, of principal executive offices)
--------------------
US $250,000,000
Financial Security Assurance Holdings Ltd.
Debt Securities
Common Stock
(Title of the indenture securities)
------------------------------------------------
<PAGE>
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 15 are not required
herein.
16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union National Bank
as now in effect, which contain the authority to commence business
and a grant of powers to exercise corporate trust powers.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association.
2
<PAGE>
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in exhibits (1) or (2) above.
4. A copy of the existing By-laws of the trustee, or instruments
corresponding thereto.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939. Included at Page 4 of this Form T-1
Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union National Bank, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Charlotte, and State of North Carolina, on the 29th day of August, 1997.
FIRST UNION NATIONAL BANK
(trustee)
By: /s/ Shaun K. Bednasek
----------------------------
Its: Assistant Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended, and
in connection with the proposed issuance by Financial Security Assurance
Holdings LTD. of its Debt Securities Common Stock, First Union National Bank as
the trustee herein named, hereby consents that reports of examinations of said
Trustee by Federal, State, Territorial or District authorities may be furnished
by such authorities to the Securities and Exchange Commission upon requests
therefor.
FIRST UNION NATIONAL BANK
By: /s/ Pablo de la Canal
----------------------
Name: Pablo de la Canal
Title: Vice President
Dated: August 29th, 1997
4
<PAGE>
Charter No. 15650
FIRST UNION NATIONAL BANK
ARTICLES OF ASSOCIATION
(as amended effective June 5, 1997)
For the purpose of organizing an Association to carry on the business of banking
under the laws of the United States, the undersigned do enter into the following
Articles of Association:
FIRST. The title of this Association shall be FIRST UNION NATIONAL BANK.
SECOND. The main office of the Association shall be in Charlotte, County
of Mecklenburg, State of North Carolina. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five directors, the exact number of
directors within such minimum and maximum limits to be fixed and determined from
time to time by resolution of a majority of the full Board of Directors or by
resolution of the shareholders at any annual or special meeting thereof. Unless
otherwise provided by the laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number thereof, may be
filled by action of the Board of Directors.
FOURTH. The annual meeting of the shareholders for the election of
directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office or such other place as the Board
of Directors may designate, on the day of each year specified therefor in the
By-Laws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the Board of
Directors.
Nominations for election to the Board of Directors may be made by the
Board of Directors or by any stockholder of any outstanding class of capital
stock of the bank entitled to vote for election of directors. Nominations, other
than those made by or on behalf of the existing management of the bank, shall be
made in writing and shall be delivered or mailed to the President of the bank
and to the Comptroller of the Currency, Washington, D.C., not less than 14
<PAGE>
days nor more than 50 days prior to any meeting of stockholders called for the
election of directors, provided, however, that if less than 21 days' notice of
the meeting is given to shareholders, such nomination shall be mailed or
delivered to the President of the Bank and to the Comptroller of the Currency
not later than the close of business on the seventh day following the day on
which the notice of meeting was mailed. Such notification shall contain the
following information to the extent known to the notifying shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the total number of shares of capital stock of the bank
that will be voted for each proposed nominee; (d) the name and residence address
of the notifying shareholder; and (e) the number of shares of capital stock of
the bank owned by the notifying shareholder. Nominations not made in accordance
herewith may, in his discretion, be disregarded by the Chairman of the meeting,
and upon his instructions, the vote tellers may disregard all votes cast for
each such nominee.
FIFTH. The authorized amount of capital stock of this Association shall be
7,500,000 shares of common stock of the par value of Fifteen Dollars ($15.00)
each, but said capital stock may be increased or decreased from time to time in
accordance with the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares
thereof, each shareholder shall be entitled to subscribe for such additional
shares in proportion to the number of shares of said capital stock owned by him
at the time the increase is authorized by the shareholders, unless another time
subsequent to the date of the shareholder's meeting is specified in a resolution
adopted by the shareholders at the time the increase is authorized. The Board of
Directors shall have the power to prescribe a reasonable period of time within
which the preemptive rights to subscribe to the new shares of capital stock must
be exercised.
The Association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The Board of Directors shall appoint one of its members President
of this Association, who shall be Chairman of the Board, unless the Board
appoints another director to be the Chairman. The Board of Directors shall have
the power to appoint one or more Vice Presidents; and to appoint a cashier or
such other officers and employees as may be required to transact the business of
this Association.
The Board of Directors shall have the power to define the duties of the
officers and employees of the Association, to fix the salaries to be paid to
them;
2
<PAGE>
to dismiss them, to require bonds from them and to fix the penalty thereof; to
regulate the manner in which any increase of the capital of the Association
shall be made; to manage and administer the business and affairs of the
Association; to make all By-Laws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of Charlotte,
North Carolina, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association to
any other location, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall
be given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.
TENTH. Each director and executive officer of this Association shall be
indemnified by the association against liability in any proceeding (including
without limitation a proceeding brought by or on behalf of the Association
itself) arising out of his status as such or his activities in either of the
foregoing capacities, except for any liability incurred on account of activities
which were at the time taken known or believed by such person to be clearly in
conflict with the best interests of the Association. Liabilities incurred by a
director or executive officer of the Association in defending a proceeding shall
be paid by the Association in advance of the final disposition of such
proceeding upon receipt of an undertaking by the director or executive officer
to repay such amount if it shall be determined, as provided in the last
paragraph of this Article Tenth, that he is not entitled to be indemnified by
the Association against such liabilities.
3
<PAGE>
The indemnity against liability in the preceding paragraph of this Article
Tenth, including liabilities incurred in defending a proceeding, shall be
automatic and self-operative.
Any director, officer or employee of this Association who serves at the
request of the Association as a director, officer, employee or agent of a
charitable, not-for-profit, religious, educational or hospital corporation,
partnership, joint venture, trust or other enterprise, or a trade association,
or as a trustee or administrator under an employee benefit plan, or who serves
at the request of the Association as a director, officer or employee of a
business corporation in connection with the administration of an estate or trust
by the Association, shall have the right to be indemnified by the Association,
subject to the provisions set forth in the following paragraph of this Article
Tenth, against liabilities in any manner arising out of or attributable to such
status or activities in any such capacity, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of the Association, or
of the corporation, partnership, joint venture, trust, enterprise, Association
or plan being served by such person.
In the case of all persons except the directors and executive officers of
the Association, the determination of whether a person is entitled to
indemnification under the preceding paragraph of this Article Tenth shall be
made by and in the sole discretion of the Chief Executive Officer of the
Association. In the case of the directors and executive officers of the
Association, the indemnity against liability in the preceding paragraph of this
Article Tenth shall be automatic and self-operative.
For purposes of this Article Tenth of these Articles of Association only,
the following terms shall have the meanings indicated:
(a) "Association" means First Union National Bank and its direct and
indirect wholly-owned subsidiaries.
(b) "Director" means an individual who is or was a director of the
Association.
(c) "Executive officer" means an officer of the Association who by
resolution of the Board of Directors of the Association has been determined to
be an executive officer of the Association for purposes of Regulation O of the
Federal Reserve Board.
4
<PAGE>
(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses, including counsel fees and expenses,
incurred with respect to a proceeding.
(e) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "Proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
The Association shall have no obligation to indemnify any person for an
amount paid in settlement of a proceeding unless the Association consents in
writing to such settlement.
The right to indemnification herein provided for shall apply to persons
who are directors, officers, or employees of banks or other entities that are
hereafter merged or otherwise combined with the Association only after the
effective date of such merger or other combination and only as to their status
and activities after such date.
The right to indemnification herein provided for shall inure to the
benefit of the heirs and legal representatives of any person entitled to such
right.
No revocation of, change in, or adoption of any resolution or provision in
the Articles of Association or By-laws of the Association inconsistent with,
this Article Tenth shall adversely affect the rights of any director, officer,
or employee of the association with respect to (i) any proceeding commenced or
threatened prior to such revocation, change, or adoption, or (ii) any proceeding
arising out of any act or omission occurring prior to such revocation, change,
or adoption, in either case, without the written consent of such director,
officer, or employee.
The rights hereunder shall be in addition to and not exclusive of any
other rights to which a director, officer, or employee of the Association may be
entitled under any statute, agreement, insurance policy, or otherwise.
The Association shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, or employee of the
Association, or is or was serving at the request of the Association as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, trade association, employee benefit plan, or other enterprise,
against any
5
<PAGE>
liability asserted against such director, officer, or employee in any such
capacity, or arising out of their status as such, whether or not the Association
would have the power to indemnify such director, officer, or employee against
such liability, excluding insurance coverage for a formal order assessing civil
money penalties against an Association director or employee.
Notwithstanding anything to the contrary provided herein, no person shall
have a right to indemnification with respect to any liability (i) incurred in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which proceeding or action results in a final order assessing civil money
penalties or requiring affirmative action by an individual or individuals in the
form of payments to the Association, (ii) to the extent such person is entitled
to receive payment therefor under any insurance policy or from any corporation,
partnership, joint venture, trust, trade association, employee benefit plan, or
other enterprise other than the Association, or (iii) to the extent that a court
of competent jurisdiction determines that such indemnification is void or
prohibited under state or federal law.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of holders of a
greater amount of stock is required by law, and in that case, by the vote of the
holders of such greater amount.
6
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------
Washington, DC 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No. 15650)
is a National Banking Association formed under the laws of the United States and
is authorized thereunder to transact the business of banking on the date of this
Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department in the City of
Washington and District of Columbia, this
16th day of June, 1997.
[SEAL] /s/ Eugene A. Ludwig
--------------------------------------------
Comptroller of the Currency
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------
Washington, DC 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that the
attached document is a true and complete copy on file in this Office of the
Charter Certificate issued May 1, 1968, Chartering "Queen City National Bank,"
Charlotte, North Carolina (Charter No. 15650) "First Union National Bank."
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
Office of the Comptroller of The Currency to
be affixed to these presents at the Treasury
Department, in the City of Washington and
District of Columbia, this 13th day of June,
1997.
[SEAL] /s/ Eugene A. Ludwig
--------------------------------------------
Comptroller of the Currency
<PAGE>
Comptroller of the Currency
TREASURY DEPARTMENT OF THE UNITED STATES
Washington, D.C.
Whereas, satisfactory evidence has been presented to the Comptroller of
the Currency that "QUEEN CITY NATIONAL BANK", located in CHARLOTTE, State of
NORTH CAROLINA, has complied with all provisions of the statutes of the United
States required to be complied with before being authorized to commence the
business of banking as a National Banking Association;
Now, therefore, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
In testimony whereof, witness my signature
and seal of office this 1st day of MAY, 1968
/s/ Eugene A. Ludwig
Charter No. 15650. Comptroller of the Currency
<PAGE>
April 1, 1968
Mr. C. C. Cameron, President
First Union National Bank of
North Carolina
P.O. Box 10498
Charlotte, North Carolina 28201
Dear Mr. Cameron:
This will confirm our telegram of today's date advising that this
office has approved the merger of First Union National Bank of North Carolina,
Charlotte, North Carolina, and The National Bank of Alamance of Graham, Graham,
North Carolina, into Queen City National Bank (organizing), Charlotte, North
Carolina, under the charter of the latter and with the title "First Union
National Bank of North Carolina."
It should be understood that this merger may not be consummated
before the 30th day after this date.
Very truly yours,
[ILLEGIBLE]
Deputy Comptroller of the Currency
<PAGE>
FIRST UNION NATIONAL BANK
Resolution Designating Members of General Trust Subcommittees
June 17, 1997
WHEREAS, First Union National Bank of Florida and First Union National Bank of
Georgia have been merged into this Bank; and
WHEREAS, First Union National Bank of Washington, D. C., First Union National
Bank of Maryland, First Union National Bank of Virginia, First Union National
Bank of South Carolina, First Union National Bank of Tennessee and First Union
Bank of Connecticut are scheduled to merge into this Bank on July 31, 1997; and
WHEREAS, this Bank as well as each of the above-listed merging Banks have
established the following committees of officers to administer specified aspects
of the exercise of each of the Banks' fiduciary powers: Investment Policy
Committee, Personal Trust Administration Committee, Account Review Committee,
and Corporate and Institutional Accounts Committee; and
WHEREAS, it is necessary that the members of said committees of the merged and
merging Banks be appointed as members of said committees of this Bank;
NOW, THEREFORE, BE IT RESOLVED, that the members of each of the Investment
Policy Committees, Personal Trust Administration Committees, Account Review
Committees, and Corporate and Institutional Accounts Committees, respectively,
of the prior First Union National Banks of Florida and Georgia be and they
hereby are appointed as members of the same committee of this Bank effective as
of June 5, 1997; and
FURTHER RESOLVED, that effective as of the effective date of the merger of First
Union National Bank of Washington, D. C., First Union National Bank of Maryland,
First Union National Bank of Virginia, First Union National Bank of Tennessee,
First Union National Bank of South Carolina, and First Union Bank of Connecticut
into the Bank, which is expected to be July 31, 1997, the members of each of the
Investment Policy Committees, Personal Trust Administration Committees, Account
Review Committees, and Corporate and Institutional Accounts Committees,
respectively, of the those Banks, as such committees are constituted on the
effective date of the merger, be and they hereby are appointed as members of the
same committee of this Bank.
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------
Washington, DC 20219
Certificate of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No. 15650),
was granted, under the hand and seal of the Comptroller, the right to act in all
fiduciary capacities authorized under the provisions of the Act of Congress
approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the authority
so granted remains in full force and effect on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department in the City of
Washington and District of Columbia, this
16th day of June, 1997.
[SEAL] /s/ Eugene A. Ludwig
--------------------------------------------
Comptroller of the Currency
<PAGE>
BY-LAWS OF
FIRST UNION NATIONAL BANK*
As Amended
Various Amendments
prior to 1985
April 16, 1985
October 21, 1986
December 15, 1993
December 13, 1995
May 22, 1996
May 21, 1997
June 17, 1997
*Effective as of June 5, 1997, the name of First Union National Bank of North
Carolina changed to First Union National Bank.
<PAGE>
BY-LAWS OF
FIRST UNION NATIONAL BANK
ARTICLE I
Meetings of Shareholders
Section 1.1 Annual Meeting. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday of February
in each year, commencing with the year 1996, except that the Board of Directors
may, from time to time and upon passage of a resolution specifically setting
forth its' reasons, set such other date for such meeting during the month of
February as the Board of Directors may deem necessary or appropriate; provided,
however, that if an annual meeting would otherwise fall on a legal holiday, then
such annual meeting shall be held on the second business day following such
legal holiday. The holders of a majority of the outstanding shares entitled to
vote which are represented at any meeting of the shareholders may choose persons
to act as Chairman and as Secretary of the meeting.
Section 1.2 Special Meetings. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
any time by the Board of Directors or by any three or more shareholders owning,
in the aggregate, not less than ten percent of the stock of the Association.
Every such special meeting, unless otherwise provided by law, shall be called by
mailing, postage prepaid, not less than ten days prior to the date fixed for
such meeting, to each shareholder at his address appearing on the books of the
Association, a notice stating the purpose of the meeting.
Section 1.3 Nominations for Directors. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any stockholder
of any outstanding class of capital stock of the bank entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the bank, shall be made in writing and shall be delivered
or mailed to the President of the Bank and to the Comptroller of the Currency,
Washington, D. C., not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors, provided however,
that if less than 21 days' notice of such meeting is given to shareholders, such
nomination shall be mailed or delivered to the President of
2
<PAGE>
the Bank and to the Comptroller of the Currency not later than the close of
business on the seventh day following the day on which the notice of meeting was
mailed. Such notification shall contain the following information to the extent
known to the notifying shareholder: (a) the name and address of each proposed
nominee; (b) the principal occupation of each proposed nominee; (c) the total
number of shares of capital stock of the bank that will be voted for each
proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of the bank owned by
the notifying shareholder. Nominations not made in accordance herewith may, in
his discretion, be disregarded by the chairman of the meeting, and upon his
instructions, the vote tellers may disregard all votes cast for each such
nominee.
Section 1.4 Judges of Election. The Board may at any time appoint from
among the shareholders three or more persons to serve as Judges of Election at
any meeting of shareholders; to act as judges and tellers with respect to all
votes by ballot at such meeting and to file with the Secretary of the meeting a
Certificate under their hands, certifying the result thereof.
Section 1.5 Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this Association shall act as proxy. Proxies shall be valid only for one
meeting, to be specified therein, and any adjournments of such meeting. Proxies
shall be dated and shall be filed with the records of the meeting.
Section 1.6 Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
Section 2.1 Board of Directors. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
3
<PAGE>
Section 2.2 Number. The Board shall consist of not less than five nor more
than twenty-five directors, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a majority
of the full Board or by resolution of the shareholders at any meeting thereof;
provided, however, that a majority of the full Board of Directors may not
increase the number of directors to a number which, (1) exceeds by more than two
the number of directors last elected by shareholders where such number was
fifteen or less, and (2) to a number which exceeds by more than four the number
of directors last elected by shareholders where such number was sixteen or more,
but in no event shall the number of directors exceed twenty-five.
Section 2.3 Organization Meeting. The Secretary of the meeting upon
receiving the certificate of the judges, of the result of any election, shall
notify the directors-elect of their election and of the time at which they are
required to meet at the Main Office of the Association for the purpose of
organizing the new Board and electing and appointing officers of the Association
for the succeeding year. Such meeting shall be held as soon thereafter as
practicable. If, at the time fixed for such meeting, there shall not be a quorum
present, the directors present may adjourn the meeting from time to time, until
a quorum is obtained.
Section 2.4 Regular Meetings. Regular meetings of the Board of Directors
shall be held at such place and time as may be designated by resolution of the
Board of Directors. Upon adoption of such resolution, no further notice of such
meeting dates or the places or times thereof shall be required. Upon the failure
of the Board of Directors to adopt such a resolution, regular meetings of the
Board of Directors shall be held, without notice, on the third Tuesday in
February, April, June, August, October and December, commencing with the year
1997, at the main office or at such other place and time as may be designated by
the Board of Directors. When any regular meeting of the Board would otherwise
fall on a holiday, the meeting shall be held on the next business day unless the
Board shall designate some other day.
Section 2.5 Special Meetings. Special meetings of the Board of Directors
may be called by the President of the Association, or at the request of three
(3) or more directors. Each member of the Board of Directors shall be given
notice stating the time and place, by telegram, letter, or in person, of each
such special meeting.
Section 2.6 Quorum. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a less
4
<PAGE>
number may adjourn any meeting, from time to time, and the meeting may be held,
as adjourned, without further notice.
Section 2.7 Vacancies. When any vacancy occurs among the directors, the
remaining members of the Board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the Board, or at a special meeting called for that purpose.
Section 2.8 Advisory Boards. The Board of Directors may appoint an
Advisory Board or Boards in such place or places as the Board of Directors may
determine. Each such Advisory Board shall consist of as many persons as the
Board of Directors may determine. The duties of each Advisory Board shall be to
consult and advise with the Board of Directors and senior officers of the Bank
with regard to the best interests of the Association and to perform such other
duties as the Board of Directors may lawfully delegate.
ARTICLE III
Committees of the Board
Section 3.1 The Board of Directors, by resolution adopted by a majority of
the number of directors fixed by these By-Laws, may designate two or more
directors to constitute an Executive Committee and other committees, each of
which, to the extent authorized by law and provided in such resolution, shall
have and may exercise all of the authority of the Board of Directors and the
management of the Association. The designation of any committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or any member of the Board of Directors by law. The Board of Directors
reserves to itself alone the power to act on (1) dissolution, merger or
consolidation, or disposition of substantially all corporate property, (2)
designation of committees or filling vacancies on the Board of Directors or on a
committee of the Board (except as hereinafter provided), (3) adoption, amendment
or repeal of By-laws, (4) amendment or repeal of any resolution of the Board
which by its terms is not so amendable or repealable, and (5) declaration of
dividends, issuance of stock, or recommendations to stockholders of any action
requiring stockholder approval.
The Board of Directors or the Chairman of the Board of Directors of the
Association may change the membership of any committee at any time, fill
vacancies therein, discharge any committee or member thereof either with or
without cause at any time, and change at any time the authority and
responsibility of any such committee.
5
<PAGE>
A majority of the members of any committee of the Board of Directors may
fix such committee's rules of procedure. All action by any committee shall be
reported to the Board of Directors at a meeting succeeding such action, except
such actions as the Board may not require to be reported to it in the resolution
creating any such committee. Any action by any committee shall be subject to
revision, alteration, and approval by the Board of Directors, except to the
extent otherwise provided in the resolution creating such committee; provided,
however, that no rights or acts of third parties shall be affected by any such
revision or alteration.
ARTICLE IV
Officers and Employees
Section 4.1 Officers. The officers of the Association may be a Chairman of
the Board, a Vice Chairman of the Board, one or more Chairmen or Vice Chairmen
(who shall not be required to be directors of the Association), a President, one
or more Vice Presidents, a Secretary, a Cashier or Treasurer, and such other
officers, including officers holding similar or equivalent titles to the above
in regions, divisions or functional units of the Association, as may be
appointed by the Board of Directors. The Chairman of the Board and the President
shall be members of the Board of Directors. Any two or more offices may be held
by one person, but no officer shall sign or execute any document in more than
one capacity.
Section 4.2 Election, Term of Office, and Qualification. Each officer
shall be chosen by the Board of Directors and shall hold office until the annual
meeting of the Board of Directors held next after his election or until his
successor shall have been duly chosen and qualified, or until his death, or
until he shall resign, or shall have been disqualified, or shall have been
removed from office.
Section 4.2(a) Officers Acting as Assistant Secretary. Notwithstanding
Section 1 of these By-laws, any Senior Vice President, Vice President, or
Assistant Vice President shall have, by virtue of his office, and by authority
of the By-laws, the authority from time to time to act as an Assistant Secretary
of the Bank, and to such extent, said officers are appointed to the office of
Assistant Secretary.
Section 4.3 Chief Executive Officer. The Board of Directors shall
designate one of its members to be the President of this Association, and the
officer so designated shall be an ex officio member of all committees of the
6
<PAGE>
Association except the Examining Committee, and its Chief Executive Officer
unless some other officer is so designated by the Board of Directors.
Section 4.4 Duties of Officers. The duties of all officers shall be
prescribed by the Board of Directors. Nevertheless, the Board of Directors may
delegate to the Chief Executive Officer the authority to prescribe the duties of
other officers of the corporation not inconsistent with law, the charter, and
these By-laws, and to appoint other employees, prescribe their duties, and to
dismiss them. Notwithstanding such delegation of authority, any officer or
employee also may be dismissed at any time by the Board of Directors.
Section 4.5 Other Employees. The Board of Directors may appoint from time
to time such tellers, vault custodians, bookkeepers, and other clerks, agents,
and employees as it may deem advisable for the prompt and orderly transaction of
the business of the Association, define their duties, fix the salary to be paid
them, and dismiss them. Subject to the authority of the Board of Directors, the
Chief Executive Officer or any other officer of the Association authorized by
him, may appoint and dismiss all such tellers, vault custodians, bookkeepers and
other clerks, agents, and employees, prescribe their duties and the conditions
of their employment, and from time to time fix their compensation.
Section 4.6 Removal and Resignation. Any officer or employee of the
Association may be removed either with or without cause by the Board of
Directors. Any employee other than an officer elected by the Board of Directors
may be dismissed in accordance with the provisions of the preceding Section 4.5.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the Chief Executive Officer of the Association. Any such
resignation shall become effective upon its being accepted by the Board of
Directors, or the Chief Executive Officer.
ARTICLE V
Fiduciary Powers
Section 5.1 Capital Management Group. There shall be an area of this
Association known as the Capital Management Group which shall be responsible for
the exercise of the fiduciary powers of this Association. The Capital Management
Group shall consist of four service areas: Fiduciary Services, Retail Services,
Investments and Marketing. The Fiduciary Services unit shall consist of personal
trust, employee benefits, corporate trust and operations. The General Office for
the Fiduciary Services unit shall be located in Charlotte, N.C., with
7
<PAGE>
City Trust Offices located in such cities within the State of North Carolina as
designated by the Board of Directors.
Section 5.2 Trust Officers. There shall be a General Trust Officer of this
Association whose duties shall be to manage, supervise and direct all the
activities of the Capital Management Group. Further, there shall be one or more
Senior Trust Officers designated to assist the General Trust Officer in the
performance of his duties. They shall do or cause to be done all things
necessary or proper in carrying out the business of the Capital Management Group
in accordance with provisions of applicable law and regulation.
Section 5.3 Capital Management/General Trust Committee. There shall be a
Capital Management/General Trust Committee composed of not less than four (4)
members of the Board of Directors of this Association who shall be appointed
annually or from time to time by its membership. The General Trust Officer shall
serve as an ex-officio member of the Committee. Each member shall serve until
his successor is appointed. The Board of Directors or the Chairman of the Board
may change the membership of the Capital Management/General Trust Committee at
any time, fill vacancies therein, or discharge any member thereof with or
without cause at any time. The Committee shall counsel and advise on all matters
relating to the business or affairs of the Capital Management Group and shall
adopt overall policies for the conduct of the business of the Capital Management
Group including but not limited to: general administration, investment policies,
new business development, and review for approval of major assignments of
functional responsibilities. The Committee shall meet at least quarterly or as
called for by its Chairman or any three (3) members of the Committee. A quorum
shall consist of three (3) members. In carrying out its responsibilities, the
Capital Management/General Trust Committee shall review the actions of all
officers, employees and committees utilized by this Association in connection
with the activities of the Capital Management Group and may assign the
administration and performance of any fiduciary powers or duties to any of such
officers or employees or to the Investment Policy Committee, Personal Trust
Administration Committee, Account Review Committee, Corporate and Institutional
Accounts Committee, or any other committees it shall designate. One of the
methods to be used in the review process will be the thorough scrutiny of the
Report of Examination by the Office of the Comptroller of the Currency and the
reports of the Audit Division of First Union Corporation, as they relate to the
activities of the Capital Management Group. These reviews shall be in addition
to reviews of such reports by the Audit Committee of the Board of Directors. The
Chairman of the Capital Management/ General Trust Committee shall be appointed
by the Chairman of the Board of Directors. He shall cause to be recorded in
appropriate minutes all actions taken by the
8
<PAGE>
Committee. The minutes shall be signed by its Secretary and approved by its
Chairman. Further, the Committee shall summarize all actions taken by it and
shall submit a report of its proceedings to the Board of Directors at its next
regularly scheduled meeting following a meeting of the Capital
Management/General Trust Committee. As required by Section 9.7 of Regulation 9
of the Comptroller of the Currency, the Board of Directors retains
responsibility for the proper exercise of the fiduciary powers of this
Association.
The Fiduciary Services unit of the Capital Management Group will maintain
a list of securities approved for investment in fiduciary accounts and will from
time to time provide the Capital Management/General Trust Committee with current
information relative to such list and also with respect to transactions in other
securities not on such list. It is the policy of this Association that members
of the Capital Management/General Trust Committee should not buy, sell or trade
in securities which are on such approved list or in any other securities in
which the Fiduciary Services unit has taken, or intends to take, a position in
fiduciary accounts in any circumstances in which any such transaction could be
viewed as a possible conflict of interest or could constitute a violation of
applicable law or regulation. Accordingly, if any such securities are owned by
any member of the Capital Management/General Trust Committee at the time of
appointment to such Committee, the Capital Management Group shall be promptly so
informed in writing. If any member of the Capital Management/General Trust
Committee intends to buy, sell, or trade in any such securities while serving as
a member of the Committee, he should first notify the Capital Management Group
in order to make certain that any proposed transaction will not constitute a
violation of this policy or of applicable law or regulation.
Section 5.4 Investment Policy Committee. There shall be an Investment
Policy Committee composed of not less than seven (7) officers and/or employees
of this Association who shall be appointed annually or from time to time by the
Board of Directors. Each member shall serve until his successor is appointed.
Meetings shall be called by the Chairman or any two (2) members of the
Committee. A quorum shall consist of five (5) members. The Investment Policy
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the Capital Management/General Trust Committee. All actions
taken by the Investment Policy Committee shall be recorded in appropriate
minutes, signed by the Secretary thereof, approved by its Chairman and submitted
to the Capital Management/General Trust Committee at its next ensuing regular
meeting for its review and approval.
Section 5.5 Personal Trust Administration Committee. There shall be a
Personal Trust Administration Committee composed of not less than five (5)
9
<PAGE>
officers, who shall be appointed annually or from time to time by the Board of
Directors. Each member shall serve until his successor is appointed. Meetings
shall be called by the Chairman or any three (3) members of the Committee. A
quorum shall consist of three (3) members. The Personal Trust Administration
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the Capital Management/General Trust Committee. All action
taken by the Personal Trust Administration Committee shall be recorded in
appropriate minutes signed by the Secretary thereof, approved by its Chairman,
and submitted to the Capital Management/General Trust Committee at its next
ensuing regular meeting for its review and approval.
Section 5.6 Account Review Committee. There shall be an Account Review
Committee composed of not less than four (4) officers and/or employees of this
Association, who shall be appointed annually or from time to time by the Board
of Directors. Each member shall serve until his successor is appointed. Meetings
shall be called by the Chairman or any two (2) members of the Committee. A
quorum shall consist of three (3) members. The Account Review Committee shall
exercise such fiduciary powers and perform such duties as may be assigned to it
by the Capital Management/General Trust Committee. All actions taken by the
Account Review Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman and submitted to the Capital
Management/ General Trust Committee at its next ensuing regular meeting for its
review and approval.
Section 5.7 Corporate and Institutional Accounts Committee. There shall be
a Corporate and Institutional Accounts Committee composed of not less than five
(5) officers and/or employees of this Association, who shall be appointed
annually, or from time to time, by the Capital Management/General Trust
Committee and approved by the Board of Directors. Meetings may be called by the
Chairman or any two (2) members of the Committee. A quorum shall consist of
three (3) members. The Corporate and Institutional Accounts Committee shall
exercise such fiduciary powers and duties as may be assigned to it by the
General Trust Committee. All actions taken by the Corporate and Institutional
Accounts Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman and made available to the General
Trust Committee at its next ensuing regular meeting for its review and approval.
ARTICLE VI
Stock and Stock Certificates
10
<PAGE>
Section 6.1 Transfers. Shares of stock shall be transferable on the books
of the Association, and a transfer book shall be kept in which all transfers of
stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to his shares, succeed to all rights and liabilities of the
prior holder of such shares.
Section 6.2 Stock Certificates. Certificates of stock shall bear the
signature of the Chairman, the Vice Chairman, the President, or a Vice President
(which may be engraved, printed, or impressed), and shall be signed manually or
by facsimile process by the Secretary, Assistant Secretary, Cashier, Assistant
Cashier, or any other officer appointed by the Board of Directors for that
purpose, to be known as an Authorized Officer, and the seal of the Association
shall be engraved thereon. Each certificate shall recite on its face that the
stock represented thereby is transferable only upon the books of the Association
properly endorsed.
ARTICLE VII
Corporate Seal
Section 7.1 The President, the Cashier, the Secretary, or any Assistant
Cashier, or Assistant Secretary, or other officer thereunto designated by the
Board of Directors shall have authority to affix the corporate seal to any
document requiring such seal, and to attest the same. Such seal shall be
substantially in the following form.
ARTICLE VIII
Miscellaneous Provisions
Section 8.1 Fiscal Year. The fiscal year of the Association shall be the
calendar year.
Section 8.2 Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, notices,
applications, schedules, accounts, affidavits, bonds, undertakings, proxies, and
other instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the Board,
the Vice Chairman of the Board, any Chairman or Vice Chairman, the President,
any Vice President or Assistant Vice President, the Secretary or any Assistant
11
<PAGE>
Secretary, the Cashier or Treasurer or any Assistant Cashier or Assistant
Treasurer, or any officer holding similar or equivalent titles to the above in
any regions, divisions or functional units of the Association, or, if in
connection with the exercise of fiduciary powers of the Association, by any of
said officers or by any Trust Officer or Assistant Trust Officer (or equivalent
titles); provided, however, that where required, any such instrument shall be
attested by one of said officers other than the officer executing such
instrument. Any such instruments may also be executed, acknowledged, verified,
delivered or accepted in behalf of the Association in such other manner and by
such other officers as the Board of Directors may from time to time direct. The
provisions of this Section 8.2 are supplementary to any other provision of these
By-laws.
Section 8.3 Records. The Articles of Association, the By-laws, and the
proceedings of all meetings of the shareholders, the Board of Directors,
standing committees of the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be signed by the
Secretary, Cashier, or other officer appointed to act as Secretary of the
meeting.
ARTICLE IX
By-laws
Section 9.1 Inspection. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
Section 9.2 Amendments. The By-laws may be amended, altered or repealed,
at any regular or special meeting of the Board of Directors, by a vote of a
majority of the whole number of Directors.
12
<PAGE>
Exhibit A
First Union National Bank
Article X
Emergency By-laws
In the event of an emergency declared by the President of the United
States or the person performing his functions, the officers and employees of
this Association will continue to conduct the affairs of the Association under
such guidance from the directors or the Executive Committee as may be available
except as to matters which by statute require specific approval of the Board of
Directors and subject to conformance with any applicable governmental directives
during the emergency.
OFFICERS PRO TEMPORE AND DISASTER
Section 1. The surviving members of the Board of Directors or the
Executive Committee shall have the power, in the absence or disability of any
officer, or upon the refusal of any officer to act, to delegate and prescribe
such officer's powers and duties to any other officer, or to any director, for
the time being.
Section 2. In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of this
Association by its directors and officers as contemplated by these By-laws, any
two or more available members of the then incumbent Executive Committee shall
constitute a quorum of that Committee for the full conduct and management of the
affairs and business of the Association in accordance with the provisions of
Article II of these By-laws; and in addition, such Committee shall be empowered
to exercise all of the powers reserved to the General Trust Committee under
Section 5.3 of Article V hereof. In the event of the unavailability, at such
time, of a minimum of two members of the then incumbent Executive Committee, any
three available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Association in
accordance with the foregoing provisions of this section. This By-law shall be
subject to implementation by resolutions of the Board of Directors passed from
time to time for that purpose, and any provisions of these By-laws (other than
this section) and any resolutions which are contrary to the provisions of this
section or to the provisions of any such implementary
13
<PAGE>
resolutions shall be suspended until it shall be determined by an interim
Executive Committee acting under this section that it shall be to the advantage
of this Association to resume the conduct and management of its affairs and
business under all of the other provisions of these By-laws.
Officer Succession
BE IT RESOLVED, that if consequent upon war or warlike damage or disaster,
the Chief Executive Officer of this Association cannot be located by the then
acting Head Officer or is unable to assume or to continue normal executive
duties, then the authority and duties of the Chief Executive Officer shall,
without further action of the Board of Directors, be automatically assumed by
one of the following persons in the order designated:
Chairman
President
Division Head/Area Administrator - Within this officer class, officers
shall take seniority on the basis of length of service in such office or,
in the event of equality, length of service as an officer of the
Association.
Any one of the above persons who in accordance with this resolution
assumes the authority and duties of the Chief Executive Officer shall continue
to serve until he resigns or until five-sixths of the other officers who are
attached to the then acting Head Office decide in writing he is unable to
perform said duties or until the elected Chief Executive Officer of this
Association, or a person higher on the above list, shall become available to
perform the duties of Chief Executive Officer of the Association.
BE IT FURTHER RESOLVED, that anyone dealing with this Association may
accept a certification by any three officers that a specified individual is
acting as Chief Executive Officer in accordance with this resolution; and that
anyone accepting such certification may continue to consider it in force until
notified in writing of a change, said notice of change to carry the signatures
of three officers of the Association.
Alternate Locations
The offices of the Association at which its business shall be conducted
shall be the main office thereof in each city which is designated as a City
Office (and branches, if any), and any other legally authorized location which
may be leased or acquired by this Association to carry on its business. During
an emergency resulting in any authorized place of business of this Association
being unable to function, the business ordinarily conducted at such location
shall be
14
<PAGE>
relocated elsewhere in suitable quarters, in addition to or in lieu of the
locations heretofore mentioned, as may be designated by the Board of Directors
or by the Executive Committee or by such persons as are then, in accordance with
resolutions adopted from time to time by the Board of Directors dealing with the
exercise of authority in the time of such emergency, conducting the affairs of
this Association. Any temporarily relocated place of business of this
Association shall be returned to its legally authorized location as soon as
practicable and such temporary place of business shall then be discontinued.
Acting Head Offices
BE IT RESOLVED, that in case of and provided because of war or warlike
damage or disaster, the General Office of this Association, located in
Charlotte, North Carolina, is unable temporarily to continue its functions, the
Raleigh office, located in Raleigh, North Carolina, shall automatically and
without further action of this Board of Directors, become the "Acting Head
Office of this Association";
BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage or
disaster, both the General Office of this Association and the said Raleigh
Office of this Association are unable to carry on their functions, then and in
such case, the Asheville Office of this Association, located in Asheville, North
Carolina, shall, without further action of this Board of Directors, become the
"Acting Head Office of this Association"; and if neither the Raleigh Office nor
the Asheville Office can carry on their functions, then the Greensboro Office of
this Association, located in Greensboro, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association"; and if neither the Raleigh Office, the Asheville Office, nor the
Greensboro Office can carry on their functions, then the Lumberton Office of
this Association, located in Lumberton, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association". The Head Office shall resume its functions at its legally
authorized location as soon as practicable.
15
<PAGE>
Legal Title of Bank: First Union National Bank of NC
Call Date: 3/31/97 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center
Page RC-1
City, State Zip: Charlotte, NC 28288-0201
FDIC Certificate No.: |0|4|8|8|5|
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1997
The schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
----
C400
------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou < -
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////
a. Noninterest-bearing balances and currency and coin(1).......................................... 0081 2,003,276 1.a
b. Interest-bearing balances(2)................................................................... 0071 297,579 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A)..................................... 1754 569,806 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)................................... 1773 1,641,071 2.b.
3. Federal funds sold and securities purchased under agreements to resell............................ 1350 2,536,841 3.
4. Loans and lease financing receivables: //////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 22,332,077 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses...............................RCFD 3123 174,675 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve...................................RCFD 3128 0 ////////////////// 4.c.
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c)............................................ 2125 22,157,402 4.d.
5. Trading assets (from Schedule RC-D)............................................................... 3545 2,112,168 5.
6. Premises and fixed assets (including capitalized leases).......................................... 2145 858,917 6.
7. Other real estate owned (from Schedule RC-M)...................................................... 2150 7,718 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M).......... 2130 18,614 8.
9. Customers' liability to this bank on acceptances outstanding...................................... 2155 403,090 9.
10. Intangible assets (from Schedule RC-M)............................................................ 2143 346,564 10.
11. Other assets (from Schedule RC-F)................................................................. 2160 2,301,064 11.
12. Total assets (sum of items 1 through 11).......................................................... 2170 35,254,110 12.
------------------
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: First Union National Bank of NC
Call Date: 3/31/97 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center
Page RC-1
City, State Zip: Charlotte, NC 28288-0201
FDIC Certificate No.: |0|4|8|8|5|
Schedule RC--Continued
<TABLE>
<CAPTION>
-----------------------------
Dollar Amounts in Thousands /////////////// Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES /////////////////////////////
13. Deposits: /////////////////////////////
a. In domestic offices (sum of totals of /////////////////////////////
columns A and C from Schedule RC-E, part I) .......................................... RCON 2200 12,901,568 13.a.
(1) Noninterest-bearing(1) .............................. RCON 6631 4,616,676 ///////////////////////////// 13.a.
(2) Interest-bearing .................................... RCON 6636 8,284,892 ///////////////////////////// 13.a.
b. In foreign offices, Edge and Agreement /////////////////////////////
subsidiaries, and IBFs (from Schedule RC-E, part II) ................................. RCFN 2200 7,149,255 13.b.
(1) Noninterest-bearing ................................ RCFN 6631 0 ///////////////////////////// 13.b.
(2) Interest-bearing ................................... RCFN 6636 7,149,255 ///////////////////////////// 13.b.
14. Federal funds purchased and securities sold ///////////////////////////// 13.b.
under agreements to repurchase .......................................................... RCFD 2800 6,274,314 14.
15. a. Demand notes issued to the U.S. Treasury ............................................. RCON 2840 115,931 15.a.
b. Trading liabilities (from Schedule RC-D) ............................................. RCFD 3548 2,201,346 15.b.
16. Other borrowed money (includes mortgage indebtedness /////////////////////////////
and obligations under capitalized leases): /////////////////////////////
a. With a remaining maturity of one year or less ........................................ RCFD 2332 1,754,025 16.a.
b. With a remaining maturity of more than one year ...................................... RCFD 2333 416,761 16.b.
17. Not applicable /////////////////////////////
18. Bank's liability on acceptances executed and outstanding ................................ RCFD 2920 403,090 18.
19. Subordinated notes and debentures (2) ................................................... RCFD 3200 925,000 19.
20. Other liabilities (from Schedule RC-G)................................................... RCFD 2930 808,495 20.
21. Total liabilities (sum of items 13 through 20) .......................................... RCFD 2948 32,949,785 21.
22. Not applicable /////////////////////////////
EQUITY CAPITAL /////////////////////////////
23. Perpetual preferred stock and related surplus ........................................... RCFD 3838 0 23.
24. Common stock ............................................................................ RCFD 3230 82,795 24.
25. Surplus (exclude all surplus related to preferred stock) ................................ RCFD 3839 763,989 25.
26. a. Undivided profits and capital reserves ............................................... RCFD 3632 1,468,980 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities ........................................................ RCFD 8434 (11,439) 26.b.
27. Cumulative foreign currency translation adjustments ..................................... RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) ....................................... RCFD 3210 2,304,325 28.
29. Total liabilities, limited-life preferred stock, /////////////////////////////
and equity capital (sum of items 21 and 28).............................................. RCFD 3300 35,254,110 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the
statement below that best describes the most comprehensive
level of auditing work performed for the bank by Number
independent external auditors as of any date during 1996 ................................................ RCFD 6724 2 M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with
generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may
be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
