As filed with the Securities and Exchange Commission on December 17, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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
incorporation or organization) Identification No.)
350 Park Avenue
New York, New York 10022
(212) 826-0100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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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)
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Copies to:
John W. White, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019-7475
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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.|X|
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(Continued on following page)
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(Continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class of Offering Aggregate Amount of
Securities to be Amount to be Price Offering Registration
Registered Registered(1)(2)(3) Per Unit Price(3) Fee
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary Offering
Debt Securities
Common Stock
Stock Purchase Contracts (4)
Stock Purchase Units (5)
Preferred Stock
Subtotal: $90,650,021 100% (6) $90,650,021 (6) $23,932
Secondary Offering
Common Stock
Subtotal: 500,000 $49.40625 (7) $24,703,125 (7) $ 6,522
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TOTAL.............. $30,454
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</TABLE>
(1) Securities registered by the registrant under Registration Statement No.
333-74165 and not previously sold in the amount of $184,349,979 are
consolidated in this registration statement pursuant to Rule 429 under the
Securities Act. Registration fees with respect to such unsold securities
in the amount of $51,249.29 have previously been paid. The total amount
registered under this registration statement with respect to primary
offering(s), as so consolidated, is $275,000,000.
(2) Includes such indeterminate principal amount of debt securities, such
indeterminate number of shares of common stock and such indeterminate
number of stock purchase contracts, as may from time to time be issued at
indeterminate prices.
(3) Dollar amounts represent the aggregate initial offering price of all
securities to be sold, in United States Dollars or the equivalent in one
or more other currencies or currency units.
(4) Each stock purchase contract of the registrant obligates the registrant to
sell, and its holder to purchase, a number of shares of common stock.
(5) Each stock purchase unit consists of a stock purchase contract and debt
securities or preferred securities registered under this registration
statement or debt obligations of third parties.
(6) 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.
(7) Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average high and low prices of the Common
Stock, as reported by the New York Stock Exchange on December 15, 1999.
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Pursuant to Rule 429 under the Securities Act, the prospectus filed as
part of this registration statement also relates to the securities registered by
the registrant under Registration Statement No. 333-74165 that remain unsold in
the amount of $184,349,979. This registration statement also constitutes
Post-Effective Amendment No. 1 with respect to the registrant's Registration
Statement No. 333-74165.
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.
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<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS Subject to Completion
Preliminary Prospectus
Dated December 17, 1999
[LOGO]
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
$275,000,000
DEBT SECURITIES, COMMON STOCK,
STOCK PURCHASE CONTRACTS,
STOCK PURCHASE UNITS AND PREFERRED STOCK
We may offer these securities in one or more offerings having an aggregate
initial public offering price of up to $275,000,000. When we decide to sell a
particular series of securities, we will prepare a prospectus supplement
describing those securities and our plan of distribution. You should read this
prospectus and any prospectus supplement carefully.
In addition, up to 500,000 shares of common stock being registered may be
offered by certain selling shareholders. For additional information on the
methods of sale, you should refer to the section entitled "Plan of
Distribution."
Our common stock is listed on the New York Stock Exchange under the symbol
"FSA".
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is , 1999
<PAGE>
FSA HOLDINGS
We are Financial Security Assurance Holdings Ltd. In this prospectus we
refer to our company as "FSA Holdings", "we" or "us". We own 100% of Financial
Security Assurance Inc., which we refer to as "FSA". FSA primarily provides
financial guaranty insurance on asset-backed securities and municipal bonds. FSA
was the first insurance company organized to insure asset-backed obligations.
FSA has been a leading insurer of asset-backed obligations, based on number of
transactions insured, since its organization in 1985. In 1990, FSA expanded the
focus of its business to include writing financial guaranty insurance of
municipal obligations and has since become a major insurer of municipal bonds.
FSA writes financial guaranty insurance that typically guarantees
scheduled payments on an issuer's obligations. In the case of a default on these
payments, FSA is generally required to pay the principal, interest or other
amounts due either in accordance with the original payment schedule or, at FSA's
option, on an accelerated basis. The underwriting policy of FSA 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 issuer's
ability to impose and collect fees and charges for public services or specific
projects.
Our business objective is to remain a leading insurer of asset-backed and
municipal obligations employing our transactional and financial skills to
generate strong premium volume at attractive returns. We believe that the demand
for our financial guaranty insurance will remain strong over the long term as a
result of the anticipated continuation of three trends:
expansion of asset securitization outside the residential mortgage
sector;
substantial volume of new domestic municipal bonds that are insured,
due, in part, to the continued use of municipal bonds to finance
repairs and improvements to the nation's infrastructure and
municipal bond purchases by individuals who generally purchase
insured obligations; and
growing use of asset securitization and financial guaranty insurance
in non-U.S. markets, due, in part, to the development of the
Euro-denominated capital market and a more favorable regulatory
environment in Japan.
FSA Holdings or its subsidiaries maintain offices in New York City, San
Francisco, Dallas, London, Paris, Madrid, Sydney, Tokyo, Singapore and Bermuda.
In addition to our domestic business, we pursue international opportunities and
currently operate in the European and Pacific Rim markets. We were the first
financial guaranty insurance company to insure obligations in international
markets.
We expect 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.
FSA's insurance financial strength is rated "Aaa" by Moody's Investors
Service, Inc. FSA's insurer financial strength is rated "AAA" by Standard &
Poor's Ratings Services ("S&P") and Standard and Poor's
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(Australia) Pty. Ltd. FSA's claims-paying ability is rated "AAA" by Fitch IBCA,
Inc. and Japan Rating and Investment Information, Inc.
FSA is licensed to engage in the financial guaranty insurance business in
all 50 states, the District of Columbia and Puerto Rico and has licensed
insurance company subsidiaries in the United Kingdom and Bermuda.
Our principal executive offices 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 prospectus supplement, we will use the net
proceeds from the sale of the securities for general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends for FSA
Holdings for the periods indicated. Earnings represent consolidated earnings
before income taxes and fixed charges. Fixed charges consist of interest and one
third of rental expense which is representative of the interest factor for this
rental expense. We had no capitalized interest for the periods presented.
Years Ended December 31,
------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Ratio of earnings to
fixed charges ........... 51.2 70.0 33.9 21.2 14.3
Ratio of earnings to
combined fixed charges
and preferred stock
dividends ............... 51.2 70.0 33.9 21.2 14.3
DESCRIPTION OF DEBT SECURITIES
The following description provides general terms that may apply to our
debt securities and summarizes material provisions of the indentures. The
prospectus supplement relating to any debt securities offered will describe the
particular terms of those debt securities and may vary the terms of the
indenture for that series.
The summary below does not restate the indentures in their entirety. We
urge you to read the indentures because they, and not this description, define
your rights as holders of the debt securities. We have made copies of the
indentures available as described under the heading "Where You Can Find More
Information" below.
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Ranking; Issuance in Series; Tax Considerations
The debt securities will be our direct and unsecured obligations and will
be either senior debt securities or subordinated debt securities. The senior
debt securities will be issued under an existing senior indenture, as
supplemented from time to time, between FSA Holdings and First Union National
Bank, as trustee. The subordinated debt securities will be issued under a
subordinated indenture, as supplemented from time to time, between FSA Holdings
and a trustee to be named in the prospectus supplement. The senior indenture and
the subordinated indenture are collectively referred to as the indentures.
The senior debt securities will rank equally and ratably with all of our
other unsecured and unsubordinated obligations. 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 of our senior debt. As of
December 31, 1998, and September 30, 1999, we had $230 million of outstanding
senior debt.
We are a non-operating holding company and most of our assets are owned by
our subsidiaries. As a result, we rely primarily on dividends or other payments
from our subsidiaries to pay principal and interest on our outstanding debt
obligations. Accordingly, the debt securities will be effectively subordinated
to all existing and future liabilities, including debt obligations, of our
subsidiaries. The principal liabilities of our subsidiaries relate to
outstanding financial guarantee insurance policies. In addition, as of December
31, 1998, and September 30, 1999, subsidiary debt consisted of $120 million of
surplus notes owed to FSA Holdings. Furthermore, the payment of dividends or
other amounts by FSA, our insurance company subsidiary, is limited under the
applicable insurance laws and regulations of the State of New York.
Neither indenture limits the total amount of debt securities that we may
issue under it, and we may issue debt securities under each indenture up to the
aggregate principal amount authorized by our board of directors from time to
time. Except as may be described in a prospectus supplement, neither the
indentures nor the debt securities limit the amount of other secured or
unsecured debt that we may incur or issue.
We may issue debt securities in one or more separate series of senior debt
securities and/or subordinated debt securities. The prospectus supplement
relating to an offering of a particular series of debt securities will specify
the particular amounts, prices and terms of those debt securities. These terms
may include:
o the title of the debt securities;
o any limit upon the total principal amount of the debt securities;
o the date or dates on which the principal of the debt securities is
payable;
o the rate or rates at which the debt securities bear interest, if
any, or the method by which that rate is determined, the date or
dates from which interest accrues, the interest payment dates on
which any interest is payable, our right, if any, to defer or extend
an interest payment date, and the record dates for the determination
of holders to whom interest is payable;
o the place or places where the principal and any interest on the debt
securities is payable;
o the price or prices at which, the period or periods within which and
the terms and conditions upon which the debt securities may be
redeemed, in whole or in part, at our option, pursuant to any
sinking fund or otherwise;
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o our obligation, if any, to redeem, purchase or repay the debt
securities pursuant to any sinking fund or analogous provisions or
at the option of a holder and the price or prices at which and the
period or periods within which, the currency, currencies, currency
unit or currency units in which, and the terms and conditions upon
which the debt securities will be redeemed, purchased or repaid, in
whole or in part, pursuant to that obligation;
o if other than denominations of $1,000 and any integral multiple of
$1,000, the denominations in which any debt securities are issuable;
o if other than in U.S. Dollars, the currency, currencies, currency
unit or currency units in which the principal of, and premium and
interest, if any, on, the debt securities is payable, or in which
the debt securities are denominated;
o whether the debt securities are issued in whole or in part in the
form of one or more global securities and the depositary with
respect to those global securities and the circumstances under which
those global securities may be registered for transfer or exchange,
or authenticated and delivered, in the name of a person other than
the depositary or its nominee;
o the additions, modifications or deletions, if any, in the events of
default or our covenants specified in the indenture;
o if other than the principal amount of a debt security, the portion
of the principal amount of the debt securities that is payable upon
declaration of acceleration of the maturity of that debt security or
provable in bankruptcy;
o if the amount of payments of principal of, or premium or interest,
if any, on, the debt securities may be determined by reference to an
index, formula or other method, the manner in which those amounts
will be determined and any commodities, currencies, currency units
or indices, value, rate or price relevant to that determination;
o whether defeasance and/or covenant defeasance applies to the debt
securities, as more fully described below under the heading
"--Defeasance or Covenant Defeasance";
o the relative degree, if any, to which the debt securities are senior
to or subordinated to other series of debt securities in right of
payment;
o the terms of any right to convert or exchange the debt securities
into or for our common stock or preferred stock;
o any other terms of the debt securities not inconsistent with the
provisions of the applicable indenture; and
o any trustees, authenticating or paying agents, transfer agents or
registrars or any other agents with respect to the debt securities.
(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. Important Federal income tax consequences and
special considerations applicable to any series of debt securities will be
described in the
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prospectus supplement. The prospectus supplement will also contain any special
Federal income tax, accounting or other information relating to certain other
kinds of debt securities that may be offered, including debt securities linked
to an index or payable in currencies other than U.S. Dollars.
Denominations, Registration, Payment and Transfer
The debt securities will be issuable only in registered form without
coupons. In the absence of any other specification in the prospectus supplement,
a series of debt securities will be issued in denominations of $1,000 and any
integral multiple of $1,000.
Debt securities of any series may be exchanged for debt securities of the
same series in other authorized denominations, in an equal aggregate principal
amount. Debt securities may also be presented for registration of transfer, and
the transferee or transferees will receive new debt securities of the same
series in authorized denominations in an equal aggregate principal amount. Debt
securities to be exchanged or transferred must be presented at the office of the
registrar or at the office of any transfer agent designated by us for that
purpose with respect to any series of debt securities. Debt securities presented
for exchange or registration of transfer must be duly endorsed by, or be
accompanied by a written instrument or instruments of transfer in a form
satisfactory to us and the trustee duly executed by, the holder of these debt
securities or his attorney who has been duly authorized in writing. We may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any exchange or registration of
transfer. We will not assess a service charge.
We will appoint the trustees as registrars and paying agents under the
indentures. We may at any time designate additional transfer agents or paying
agents with respect to any series of debt securities or from time to time change
those designations or approve a change in their locations.
We are not 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 those series to be redeemed, or (b) any debt securities
selected, called or being called for redemption except for the portion of any
debt security to be redeemed in part, which is not redeemed.
The payment of principal of, and premium and interest, if any, on, debt
securities will be made at the office of the trustee for those debt securities
in the City of New York or at the office of a paying agent or paying agents that
we may designate from time to time. At our option, however, we may pay any
interest by check mailed to the address of the person entitled to it as that
address appears in the register for those debt securities. The payment of any
interest on debt securities will be made to the person in whose name that debt
security is registered at the close of business on any record date for that
interest, except in the case of defaulted interest.
Global Debt Securities
Unless otherwise specified in a prospectus supplement for a particular
series of debt securities, each series of debt securities will be issued in
whole or in part in global form that will be deposited with, or on behalf of, a
depository identified in the prospectus supplement relating to that series.
Global securities will be registered in the name of the depository, which will
be the sole direct holder of the global securities. Any person wishing to own a
debt security must do so indirectly through an account with a broker, bank or
other financial institution that, in turn, has an account with the depository.
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Special Investor Considerations for Global Securities. Our obligations
with respect to the debt securities, as well as the obligations of each trustee,
run only to persons who are registered holders of debt securities. For example,
once we make payment to the registered holder, we have no further responsibility
for that payment even if that recipient is legally required to pass the payment
along to an individual investor but fails to do so. As an indirect holder, an
investor's rights relating to a global security will be governed by the account
rules of the investor's financial institution and of the depository, as well as
general laws relating to transfers of debt securities.
An investor should be aware that when debt securities are issued in the
form of global securities:
o the investor cannot have debt securities registered in his or her
own name;
o the investor cannot receive physical certificates for his or her
interest in the debt securities;
o the investor must look to his or her bank or brokerage firm for
payments on the debt securities and protection of his or her legal
rights relating to the debt securities;
o the investor may not be able to sell interests in the debt
securities to some insurance companies or other institutions that
are required by law to hold the physical certificates of debt
securities that they own;
o the depository's policies will govern payments, transfers, exchanges
and other matters relating to the investor's interest in the global
security. Neither FSA Holdings nor the trustees have any
responsibility for any aspect of the depository's actions or for its
records of ownership interests in the global security, and neither
FSA Holdings nor the trustees supervise the depository in any way;
and
o the depository will usually require that interests in a global
security be purchased or sold within its system using same-day
funds.
Special Situations When the Global Security Will Be Terminated. In a few
special situations described below, the global security will terminate and
interests in it will be exchanged for physical certificates representing debt
securities. After that exchange, the choice of whether to hold debt securities
directly or indirectly through an account at an investor's bank or brokerage
firm will be up to the investor. In that event, investors must consult their
banks or brokers to find out how to have their interests in debt securities
transferred to their own names so that they may become direct holders.
The special situations where a global security is terminated are:
o when the depository notifies us that it is unwilling, unable or no
longer qualified to continue as depository, unless a replacement is
named;
o when an event of default on the debt securities has occurred and has
not been cured; or
o when and if we decide to terminate a global security.
A prospectus supplement may list situations for terminating a global
security that would apply only to a particular series of debt securities. When a
global security terminates, the depository is solely responsible for deciding
the names of the institutions that will be the initial direct holders. Unless
otherwise provided in
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a prospectus supplement, debt securities will be issued in denominations of
$1,000 and integral multiples of $1,000, and will be issued in registered form
only, without coupons.
Covenants of FSA Holdings
FSA Holdings' principal covenants under the indentures relate to
limitations on liens, restrictions on stock dispositions and maintenance of
corporate existence. The following summarizes these covenants.
Limitations on Liens. Under the senior indenture, so long as senior debt
securities are outstanding, neither we nor any of our subsidiaries will be
allowed to, directly or indirectly, create, issue, incur or guarantee any
indebtedness for borrowed money which is secured by any mortgage, pledge, lien,
security interest or other encumbrance of any nature on any of the present or
future capital stock of any Restricted Subsidiary. However, we may take these
actions if the senior debt securities then outstanding and, if we so elect, any
of our other indebtedness ranking at least equally with the senior debt
securities are secured equally and ratably with, or prior to, that other secured
debt so long as it is outstanding. This prohibition also applies to guarantees
of any indebtedness for borrowed money which are secured by any mortgage,
pledge, lien, security interest or other encumbrance of any nature on any of the
present or future capital stock of any company, other than FSA Holdings, having
direct or indirect control of any Restricted Subsidiary. (Section 3.06)
"Restricted Subsidiary", as defined in the indentures, means FSA or any
successor to all or substantially all of its business, provided that the
successor is a subsidiary of FSA Holdings. A "subsidiary" is a corporation more
than 50% of the outstanding voting stock of which is owned, directly or
indirectly, by FSA Holdings and/or one or more of its subsidiaries.
Limitations on Disposition of Stock of Restricted Subsidiaries. Under the
senior and subordinated indentures, so long as debt securities are outstanding,
we 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:
o a sale, transfer or other disposition of any capital stock of any
Restricted Subsidiary to a wholly owned subsidiary of FSA Holdings
or that subsidiary;
o a sale, transfer or other disposition of the entire capital stock of
any Restricted Subsidiary for at least fair value; or
o a sale, transfer or other disposition of the capital stock of any
Restricted Subsidiary for at least fair value if, after giving
effect to it, we and our subsidiaries would own more than 80% of the
issued and outstanding voting stock of that Restricted Subsidiary.
(Section 3.07)
For the purposes of this limitation, our board of directors acting in good
faith will determine what constitutes fair value.
Limitations on Consolidation, Merger, Sale or Conveyance. Under the senior
and subordinated indentures, so long as debt securities are outstanding, we will
not consolidate with or merge into any other corporation or convey, transfer or
lease our properties and assets as an entirety or substantially as an entirety
to any person, unless:
o the successor or purchaser is a corporation organized and existing
under the laws of the United States of America, any State of the
United States of America or the District of Columbia;
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o the corporation formed by the consolidation or into which we have
been merged, or which acquired that property, expressly assumes the
due and punctual payment of the principal of, and any premium and
interest on all the debt securities under that indenture, as well as
the due and punctual performance and observance of all of our
covenants and conditions under that indenture; and
o immediately after giving effect to that transaction, no event of
default under the applicable indenture, and no event which, after
notice or lapse of time or both, would become an event of default
under the applicable indenture, has occurred and is continuing.
(Section 9.01)
Events of Default
Any one of the following events will constitute an event of default with
regard to any series of debt securities under an indenture:
(a) default continued for 30 days in payment of any installment of
interest on any of the debt securities of that series when due and
payable; or
(b) default in payment of all or any part of the principal on any of the
debt securities of that series when due and payable either at
maturity, upon any redemption, by declaration or otherwise; or
(c) default in the payment of any sinking fund installment as and when
the same becomes due and payable by the terms of the debt securities
of that series; or
(d) default in the performance, or breach, of any of our covenants or
warranties in respect of the debt securities of that series and
continuance of that default or breach for a period of 60 days after
written notice as provided in that indenture; or
(e) our failure to make any payment at maturity, including any
applicable grace period, in respect of indebtedness in an amount in
excess of $10,000,000, and that failure continues for a period of 10
days after written notice as provided in that indenture; or
(f) our default with respect to any indebtedness, which default results
in the acceleration of indebtedness in an amount in excess of
$10,000,000, without that indebtedness having been discharged or
that acceleration having been cured, waived, rescinded or annulled
for a period of 10 days after written notice as provided in that
indenture; or
(g) the voluntary or involuntary bankruptcy, insolvency, or
reorganization under any applicable law of FSA Holdings or any
Restricted Subsidiary; or
(h) any other event of default provided in the supplemental indenture or
resolution of our board of directors under which that series of debt
securities is issued or in the form of debt security for that
series. (Section 5.01)
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Each indenture requires us to file with the trustee annually a written
statement as to any defaults in the performance or fulfillment of any of our
covenants, agreements or conditions contained in the indenture. (Section 3.05)
Each indenture provides that if the trustee considers it in the interests of the
holders of the debt securities of any series, the trustee may withhold notice to
the holders of debt securities of that series of any default other than a
default in the payment of principal of or interest on the debt securities of
that series. (Section 5.11)
Either the trustee or a specified percentage of the holders of the debt
securities may accelerate the maturity of the unpaid principal amount of and
accrued interest on some or all of the debt securities, depending on the type of
event of default which has occurred and is continuing. The table below shows the
percentage of holders required and the amount of securities which can be
accelerated, for each type of event of default set forth above:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Type of event of default Principal and accrued interest
specified above Percentage of holders required which may be accelerated
- --------------- ------------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a), (b) and (c) Not less than 25% in principal amount All debt securities of that
of the debt securities of the affected series then outstanding
series then outstanding
- ----------------------------------------------------------------------------------------------------------------
(d), with respect to less Not less than 25% in principal amount All debt securities of the
than all series, and (h), of the debt securities of all affected affected series then
unless otherwise specified series then outstanding, voting as a outstanding
in the applicable supplemental single class
indenture
- ----------------------------------------------------------------------------------------------------------------
(d), with respect to all Not less than 25% in principal amount of All debt securities then
series, (e), (f) or (g) all debt securities outstanding under the outstanding
indenture, treated as one class
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
If debt securities of any series are original issue discount debt securities,
then only the amount of the principal of those debt securities then outstanding
as may be specified in the terms of that series and any accrued interest on that
specified principal amount may be accelerated.
A specified percentage of holders of debt securities may waive all
defaults and annul and rescind a declaration of maturity of some or all of the
debt securities if all payments other than the accelerated amounts have been
made and all events of default have been cured, waived or otherwise remedied as
provided in the applicable indenture. Any such waiver, annulment and rescission
must occur before a judgment or decree for amounts due has been obtained or
entered. The table on page 11 of this prospectus shows the percentage of holders
required for each type of event of default set forth above, and the debt
securities:
10
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Type of event of default Debt Securities Subject to
specified above Percentage of holders required Waiver, Annulment and Rescission
- --------------- ------------------------------ --------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(a), (b) and (c) Holders of a majority in aggregate principal All debt securities of that
amount of the debt securities of the affected series then outstanding
series, voting as a separate class,
- ---------------------------------------------------------------------------------------------------------------------
(d), with respect to less Holders of a majority in aggregate All debt securities of the
than all series, and (h), principal amount of all affected debt affected series then
unless otherwise specified securities then outstanding, voting as a outstanding
in the applicable supplemental single class
indenture
- ---------------------------------------------------------------------------------------------------------------------
(d), with respect to all Holders of a majority in aggregate All debt securities then
series, (e), (f) or (g) principal amount of the debt securities outstanding
of all series then outstanding, voting as
a single class
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
It is not necessary that payments of principal due as a result of acceleration
be paid or that the event of default caused by non-payment of the principal due
as a result of acceleration be cured, waived or otherwise remedied in order to
for the applicable holders to rescind and annul a declaration of acceleration of
the maturity of the debt securities of any series as provided above.
Depending on the nature of the default, either the holders of a majority
in principal amount of the outstanding debt securities of all series under the
applicable indenture, voting as a single class, or the holders of a majority in
principal amount of the outstanding debt securities of the affected series may
waive an event of default and its consequences before declaring the acceleration
of maturity of the debt securities of any series. However, the consent of each
security holder affected is required in order to waive a default in the payment
of the principal of or interest on any debt securities or any covenant or
provision of the indenture which specifically requires the consent of the holder
of each debt security affected.
Except for the trustee's duty during an event of default to act with the
required standard of care, the trustee is under no obligation to exercise any of
the trusts or powers vested in it by that indenture at the request, order or
direction of any of the holders of debt securities, unless those holders have
offered the trustee reasonable indemnity. (Sections 6.01 and 6.02) Subject to
these provisions for indemnification, the holders of a majority in principal
amount of the debt securities of each series affected, voting as a separate
class, may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee, or exercising any trust or power conferred
on the trustee with respect to the debt securities of that series. (Section
5.09)
No holder of debt securities of any series will have any right by virtue
of either indenture to institute any legal action or proceeding with respect to
that indenture, unless
o that holder has previously given to the trustee written notice of a
continuing default,
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o the holders of not less than 25% in principal amount of the debt
securities of that series then outstanding have made written request
on the trustee to institute such action or proceeding and have
offered to the trustee any reasonable indemnity that the trustee may
require relating to their request,
o the trustee fails to institute the requested proceeding within 60
days and
o no direction inconsistent with such written request has been given
to the trustee by the holders of a majority in principal amount of
the debt securities of such series then outstanding. (Section 5.06)
These limitations do not apply to a suit for enforcement of payment of the
principal of or interest on a debt security on or after the respective due
dates. (Section 5.07)
Defeasance and Covenant Defeasance
The indentures contain a provision that, if made applicable to any series
of debt securities, permits us to elect, subject to certain conditions:
o to be discharged from our obligations with respect to the debt
securities of that series, subject to limited exceptions
("defeasance") and/or
o to be released from our obligations with respect to that series of
debt securities under the covenant in the indentures relating to
limitations on disposition of stock of Restricted Subsidiaries and,
in the case of the senior indenture, also the covenant relating to
limitations on liens ("covenant defeasance").
To make either of these elections, we must irrevocably deposit with the trustee
as trust funds monies, United States Government Obligations or a combination of
the two sufficient, without reinvestment, in the opinion of a nationally
recognized firm of independent public accountants, to pay and discharge the
principal of and interest on the outstanding debt securities of that series on
the maturity of that principal or interest. (Sections 13.01 through 13.04)
Each indenture provides that, to effect defeasance or covenant defeasance,
we must deliver to the trustee an opinion of counsel stating that defeasance or
covenant defeasance, as applicable, will not cause the holders of the debt
securities to recognize income, gain or loss for Federal income tax purposes.
The opinion must also state that holders will be subject to Federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if defeasance or covenant defeasance had not occurred. In addition, in
the case of defeasance, that opinion of counsel must state that a private letter
ruling or a general revenue ruling to the same effect has been issued by the
United States Internal Revenue Service or state that since the date of the
applicable indenture there has been a change in the applicable Federal income
tax law or the interpretation of the applicable Federal income tax law to the
same effect. (Section 13.04)
In addition to the requirements described above, in order to effect
defeasance or covenant defeasance under the subordinated indenture:
o no default in the payment of principal of, or premium or interest,
if any, on, any senior debt can have occurred and be continuing,
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<PAGE>
o no event of default with respect to senior debt can have occurred
and be continuing and have resulted in that 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 FSA Holdings and the trustee may enter into
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of that indenture or of
modifying in any manner the rights of the holders of the debt securities of that
series. The consent of the holders of not less than a majority in principal
amount of the debt securities at the time outstanding of all series affected by
the proposed additions or changes is required for any such supplemental
indenture, except that the consent of the holder of each debt security is
required in order to:
o extend the final maturity of any debt security,
o reduce the principal amount of any debt security,
o reduce the rate or extend the time of payment of interest on any
debt security,
o reduce any amount payable on redemption of any debt security,
o reduce the amount of the principal of an original issue discount
debt security that would be due and payable upon an acceleration of
the maturity of that debt security or the amount of that debt
security provable in bankruptcy,
o impair or affect the right of any holder to institute suit for the
payment of any debt security, if the debt securities provide for
those rights,
o impair or affect any right of repayment of any debt security at the
option of the holder or
o reduce the percentage of debt securities of any series, the consent
of the holders of which is required for any supplemental indenture.
(Section 8.02)
In addition, without the consent of the holders of any of the debt
securities issued under that indenture, FSA Holdings and the trustee may enter
into supplemental indentures to, among other things, cure any ambiguity or to
correct or supplement any defective or inconsistent provision or to make other
provisions in regard to matters or questions arising under the indenture or
under any supplemental indenture as we may deem necessary or desirable and which
do not adversely affect the interests of the holders of the debt securities.
The holders of at least a majority in principal amount of the debt
securities of all series outstanding under an indenture voting as a class may
waive compliance by us with the covenants contained in that indenture relating
to limitations on liens, limitations on dispositions of stock of Restricted
Subsidiaries and corporate existence. (Section 3.09)
Subordination under the Subordinated Indenture
To the extent provided in the subordinated indenture, payments of
principal, premium and interest, if any, on all of the subordinated debt
securities we issue will be subordinate in right of payment to the prior payment
of all amounts due and payable in respect of all senior debt. Upon any payment
or distribution of
13
<PAGE>
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 FSA Holdings, the
holders of the senior debt will first be entitled to receive payment in full of
principal of, and premium and interest, if any, on, the 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 or interest, if any, on,
the subordinated debt securities. (Sections 14.01 and 14.02)
If the maturity of any subordinated debt securities is accelerated, the
holders of all senior debt outstanding at the time of that acceleration will
first be entitled to receive payment in full of all amounts due on the senior
debt before the holders of subordinated debt securities will be entitled to
receive any payment upon the principal of, or premium or interest, if any, on,
the subordinated debt securities. (Section 14.03)
No payments on account of principal of, or premium or interest, if any,
on, 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 of that senior debt, or if any judicial proceeding shall be
pending with respect to that default. (Section 14.04)
The subordinated indenture defines "senior debt" as the principal of, and
premium and interest, if any, on, Debt, as defined in the subordinated
indenture, 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 those obligations are not superior in right of payment to the subordinated
debt securities or to the other Debt which ranks equally with, or is
subordinated to, the subordinated debt securities; provided, however, that
senior debt does not include:
o any of our Debt which when incurred and without respect to any
election under Section 1111(b) of the Bankruptcy Code was without
recourse to us,
o any of our Debt to any of our subsidiaries,
o Debt to any of our employees,
o any liability for taxes,
o indebtedness or monetary obligations to trade creditors or assumed
by us or any of our subsidiaries in the ordinary course of business
in connection with the obtaining of goods, materials or services and
o the subordinated debt securities.
For the purposes of the definition of senior debt, interest on Debt
includes any interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to us whether or not that claim for
post-petition interest is allowed in that proceeding.
The subordinated indenture places no limitation on the amount of
additional senior debt that may be incurred by us. We may from time to time
incur additional indebtedness constituting senior debt.
14
<PAGE>
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 that issuance. Any change will be described
in the prospectus supplement relating to those subordinated debt securities.
Conversion or Exchange
The debt securities of any series may be convertible or exchangeable into
common stock or preferred stock registered under the registration statement
relating to this prospectus. The specific terms and conditions on which debt
securities of any series may be so converted or exchanged will be set forth in
the applicable prospectus supplement. Those terms may include the conversion or
exchange price, provisions for conversion or exchange, either mandatory, at the
option of the holder, or at our option, and provisions under which the number of
shares of common stock or other securities to be received by the holders of debt
securities would be calculated as of a time and in the manner stated in the
applicable prospectus supplement.
DESCRIPTION OF COMMON STOCK
We are authorized to issue up to 200,000,000 shares of common stock. At
December 10, 1999, 33,017,995 shares of our common stock were outstanding. This
number of shares outstanding includes shares owned by a trust on our behalf and
excludes 158,306 shares of treasury stock.
The following description of our common stock does not purport to be
complete. It does not give full effect to the provisions of statutory or common
law applicable to securities like our common stock. The description is qualified
in its entirety by reference to our certificate of incorporation and by-laws,
which have been incorporated by reference as exhibits to the registration
statement of which this prospectus is a part.
The amount of dividends we pay in the future will be reviewed periodically
by our board of directors in light of our earnings, financial condition and
capital and other cash requirements. It is the policy of our board of directors
that we retain an adequate portion of our earnings to support the growth of our
business. We cannot assure you that any dividends will be paid.
Most of our operations are conducted through FSA and thus our ability to
pay dividends is dependent on FSA's financial condition, results of operations,
cash requirements and other related factors. FSA is also subject to restrictions
contained in the insurance laws and related regulations of New York and other
states.
We 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 who are not 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.
Our common stock is traded on the New York Stock Exchange under the symbol
"FSA". The transfer agent for our common stock is The Bank of New York.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
As may be specified in a prospectus supplement, we may issue stock
purchase contracts obligating holders to purchase from us, and us to sell to the
holders, a number of shares of our common stock at a future date or dates. The
stock purchase contracts may be issued separately or as part of stock purchase
units
15
<PAGE>
consisting of a stock purchase contract and an underlying debt or preferred
security covered by this prospectus, U.S. Treasury security or other U.S.
government or agency obligation. The holder of the unit may be required to
pledge the debt, preferred security, U.S. Treasury security or other U.S.
government or agency obligation to secure its obligations under the stock
purchase contract. The prospectus supplement will specify the material terms of
the stock purchase contracts, the stock purchase units and any applicable pledge
or depository arrangements, including one or more of the following:
o The stated amount that a holder will be obligated to pay under the
stock purchase contract in order to purchase our common stock.
o The settlement date or dates on which the holder will be obligated
to purchase shares of our common stock. The prospectus supplement
will specify whether the occurrence of any events may cause the
settlement date to occur on an earlier date and the terms on which
any early settlement would occur.
o The events, if any, that will cause our obligations and the
obligations of the holder under the stock purchase contract to
terminate.
o The settlement rate, which is a number that, when multiplied by the
stated amount of a stock purchase contract, determines the number of
shares of our common stock that we will be obligated to sell and a
holder will be obligated to purchase under that stock purchase
contract upon payment of the stated amount of that stock purchase
contract. The settlement rate may be determined by the application
of a formula specified in the prospectus supplement. If a formula is
specified, it may be based on the market price of our common stock
over a specified period or it may be based on some other reference
statistic.
o Whether the stock purchase contracts will be issued separately or as
part of stock purchase units consisting of a stock purchase contract
and an underlying debt or preferred security with an aggregate
principal amount or liquidation amount equal to the stated amount.
o The type of underlying security, if any, that is pledged by the
holder to secure its obligations under a stock purchase contract.
Underlying securities may be debt securities, preferred securities,
U.S. Treasury securities or other securities.
o The terms of the pledge arrangement relating to any underlying
securities, including the terms on which distributions or payments
of interest and principal on any underlying securities will be
retained by a collateral agent, delivered to us or be distributed to
the holder.
o The amount of the contract fee, if any, that may be payable by us to
the holder or by the holder to us, the date or dates on which the
contract fee will be payable and the extent to which we or the
holder, as applicable, may defer payment of the contract fee on
those payment dates. The contract fee may be calculated as a
percentage of the stated amount of the stock purchase contract or
otherwise.
The descriptions of the stock purchase contracts, stock purchase units and
any applicable pledge or depository arrangements in this prospectus and in any
prospectus supplement are summaries of the material provisions of the applicable
agreements. These descriptions do not restate those agreements in their
entirety. We urge you to read the applicable agreements because they, and not
the summaries, define your rights as
16
<PAGE>
holders of the stock purchase contracts or stock purchase units. We will make
copies of the relevant agreements available as described under the heading
"Where You Can Find More Information" below.
DESCRIPTION OF PREFERRED STOCK
General
Our restated certificate of incorporation vests our board of directors
with authority to issue up to 20,000,000 shares of preferred stock from time to
time in one or more series, as may be adopted by resolutions of the board of
directors, and to fix, so far as not inconsistent with our restated certificate
of incorporation:
o the rate and times at which, and the conditions under which,
dividends shall be payable on shares of that series, and the status
of those dividends as cumulative or non-cumulative and as
participating or non-participating;
o the price or prices, times and terms and conditions, if any, upon
which or at which shares of that series shall be subject to
redemption;
o the rights, if any, of holders of shares of that series to convert
those shares into, or to exchange those shares for, shares of other
classes of our stock, or series of other classes of our stock, and
the terms and conditions of that conversion or exchange;
o the rights of the holders of shares of that series upon the
liquidation, dissolution or winding up of our affairs or upon any
distribution of our assets;
o the limitations, if any, applicable while that series is
outstanding, on the payment of dividends or making of distributions
on, or the acquisition of, or the use of moneys for the purchase of,
our common stock;
o the full or limited voting rights, if any, to be provided for the
shares of that series; and
o any other designations, preferences and relative, participating,
optional or other similar special rights, and qualifications,
limitations or restrictions of or on the shares of that series.
All shares of our preferred stock will be identical and of equal rank
except as otherwise provided in our restated certificate of incorporation or as
may be fixed by our board of directors as described above. In any event, all
shares of the same series will be identical and of equal rank except as to the
times from which cumulative dividends, if any, on those shares will be
cumulative. We may from time to time amend our restated certificate of
incorporation to increase or decrease the number of authorized shares of
preferred stock.
The material terms of any series of preferred stock being offered by us
will be described in the prospectus supplement relating to that series of
preferred stock. That prospectus supplement may not restate the amendment to our
restated certificate of incorporation or the board resolution that establishes a
particular series of preferred stock in its entirety. We urge you to read that
amendment or board resolution because it, and not the description in the
prospectus supplement, will define your rights as a holder of preferred stock.
The certificate of amendment to our restated certificate of incorporation or
board resolution will be filed with the Secretary of State of the State of New
York and with the SEC.
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<PAGE>
Dividend Rights. The preferred stock will be preferred over our common
stock as to payment of dividends. Before any dividends or distributions on our
common stock, other than dividends or distributions payable in common stock,
shall be declared and set apart for payment or paid, the holders of shares of
each series of preferred stock will be entitled to receive dividends when, as
and if declared by our board of directors. We will pay those dividends either in
cash, shares of common stock or preferred stock or otherwise, at the rate and on
the date or dates indicated in the applicable prospectus supplement. With
respect to each series of preferred stock, the dividends on each share of that
series will be cumulative from the date of issue of the share unless some other
date is set forth in the prospectus supplement relating to the series. Accruals
of dividends will not bear interest.
Rights upon Liquidation. The preferred stock will be preferred over common
stock as to our assets so that the holders of each series of preferred stock
will be entitled to be paid, upon voluntary or involuntary liquidation,
dissolution or winding up and before any distribution is made to the holders of
common stock, the amount set forth in the applicable prospectus supplement.
However, in this case the holders of preferred stock will not be entitled to any
other or further payment. If upon any liquidation, dissolution or winding up our
net assets are insufficient to permit the payment in full of the respective
amounts to which the holders of all outstanding preferred stock are entitled,
our entire remaining net assets will be distributed among the holders of each
series of preferred stock in an amount proportional to the full amounts to which
the holders of each series are entitled.
Redemption. All shares of any series of preferred stock will be redeemable
to the extent set forth in the prospectus supplement relating to the series. All
shares of any series of preferred stock will be convertible into shares of
common stock or into shares of any other series of preferred stock to the extent
set forth in the applicable prospectus supplement.
Voting Rights. Except as indicated in the prospectus supplement, the
holders of preferred stock shall be entitled to one vote for each share of
preferred stock held by them on all matters properly presented to shareholders.
The holders of common stock and the holders of all series of preferred stock
will vote together as one class.
Most of our operations are conducted through FSA and thus our ability to
pay dividends on any series of preferred stock is dependent on FSA's financial
condition, results of operations, cash requirements and other related factors.
FSA is also subject to restrictions contained in the insurance laws and related
regulations of New York and other states.
Outstanding Preferred Stock
As of the date of this prospectus, we have outstanding 2,000,000 shares of
Series A, non-dividend paying, voting, convertible preferred stock having an
aggregate liquidation preference of $700,000. This preferred stock is
convertible, at the option of the holder upon payment of the conversion price,
into an equal number of shares of common stock, subject to anti-dilutive
adjustment. The conversion price per share, subject to anti-dilutive adjustment,
is $29.65. This preferred stock will be redeemed on May 13, 2004 if still
outstanding on that date at a redemption price of $0.35 per share. The holder of
this preferred stock is entitled to one vote per share of preferred stock,
voting together as a single class with the holders of common stock on all
matters upon which holders of common stock are entitled to vote. The holder of
this preferred stock is not entitled to receive dividends or other distributions
of any kind payable to our shareholders, except that, in the event of our
liquidation, dissolution or winding up, that holder is entitled to receive out
of our assets available for this purpose, before any distribution or payment is
made to the holders of our common stock, liquidation payments in the amount of
$0.35 per share. The holder of this preferred stock may not transfer this
preferred stock, except to one of its majority-owned subsidiaries.
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SELLING SHAREHOLDERS
The selling shareholders may be directors, executive officers, holders of
a significant percentage of the shares of our company or holders that may be
considered to be selling securities on our behalf or having purchased securities
from us with a view towards distributing them to others. The prospectus
supplement for any offering of the common stock by selling shareholders will
include the following information:
o the names of the selling shareholders;
o the number of shares held by each of the selling shareholders;
o the percentage of our common stock held by each of the selling
shareholders; and
o the number of shares of the common stock offered by each of the
selling shareholders.
PLAN OF DISTRIBUTION
We or any selling shareholders may sell the securities to one or more
underwriters for a public offering by them. We may also sell securities to
investors directly or through agents or dealers. The supplemental prospectus
will include the names of any underwriters, agents or dealers to be used in the
distribution.
The securities may be offered and sold at a fixed price or prices, which
may be changed from time to time. They may also be offered and sold from time to
time at market prices prevailing at the time of sale, at prices related to these
prevailing market prices or at negotiated prices. We may also, from time to
time, authorize underwriters acting as our agents to offer and sell the
securities. A prospectus supplement will include the terms of these
arrangements. If securities are sold through an underwritten offering, we will
execute an underwriting agreement with an underwriter or underwriters. The
prospectus supplement will include the names of the specific managing
underwriter or underwriters and other underwriters, and the amount of securities
to be underwritten by those underwriters. The prospectus supplement will also
have the terms of the transaction, including commissions, discounts and any
other compensation of the underwriters and dealers. The underwriters will use
this prospectus and the prospectus supplement to sell the securities. The
underwriting agreement will provide that the obligations of the underwriters are
subject to specified conditions precedent and that the underwriters will be
obligated to purchase all the securities if any are purchased.
In connection with the sale of securities, underwriters may be considered
to have received compensation from us in the form of underwriting discounts or
commissions. They may also receive commissions from purchasers of securities for
whom they may act as agent. Underwriters may sell securities to or through
dealers. These dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters, and they may also receive
commissions from the purchasers for whom they may act as agent.
The prospectus supplement will set forth any underwriting compensation
paid by us to underwriters or agents in connection with the offering of
securities, as well as any discounts, concessions or commissions allowed by
underwriters to participating dealers. Underwriters, dealers and agents
participating in the distribution of the securities may be deemed
19
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to be underwriters under the Securities Act. Also 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 us to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by us for
various expenses.
If we use a dealer in the sale of the securities, we will sell the
securities to the dealer, as principal. The dealer may then resell these
securities to the public at varying prices to be determined by the dealer at the
time of resale. The prospectus supplement will name these dealers and the terms
of these arrangements.
We may offer and sell the securities directly to institutional investors
or others. These parties may be deemed to be underwriters under the Securities
Act with respect to their resales. The prospectus supplement will include the
terms of these transactions.
The securities may or may not be listed on a national securities exchange
or a foreign securities exchange. The securities may 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, us and our subsidiaries in the
ordinary course of business.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
from time to time sell any combination of the securities described in this
prospectus in one or more offerings up to a total amount of $275,000,000 or the
equivalent of this amount in foreign currencies or foreign currency units.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. We will file each prospectus supplement with the SEC. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described under the heading "Where You Can
Find More Information" below.
You should rely only on the information provided in this prospectus and in
any prospectus supplement, including the information incorporated by reference.
We have not authorized anyone to provide you with different information. You
should not assume that the information in this prospectus, or any supplement to
this prospectus, is accurate at any date other than the date indicated on the
cover page of these documents.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the Securities
Act that registers the distribution of these securities. The registration
statement, including the attached exhibits and schedules, contains additional
relevant information about us and the securities. For example, the indentures
relating to our debt securities are attached to the registration statement as
exhibits. The rules and regulations of the SEC allow us to omit certain
information included in the registration statement from this prospectus.
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In addition, we file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy this
information and the registration statement at the following locations of the
SEC:
Chicago Regional Office
Public Reference Room New York Regional Office Citicorp Center
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the public reference room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York.
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this prospectus, except
for any information that is superseded by other information that is included in
or incorporated by reference into this document.
This prospectus incorporates by reference the documents listed below that
we have previously filed with the SEC. These documents contain important
information about us.
o The description of our common stock in our Form 8-A that was filed
on December 3, 1993
o Our Annual Report on Form 10-K, as amended, for the year ended
December 31, 1998
o Our Proxy Statement on Schedule 14A that was filed on March 25, 1999
o Our Quarterly Report on Form 10-Q, as amended, for the quarterly
period ended March 31, 1999
o Our Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999
o Our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999
o Our Current Report on Form 8-K dated October 29, 1999
We incorporate by reference any additional documents that we may file with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
between the date of this prospectus and the termination of the offering of the
securities. These documents may include periodic reports, like Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as Proxy
21
<PAGE>
Statements. Any material that we subsequently file with the SEC will
automatically update and replace the information previously filed with the SEC.
You can obtain any of the documents incorporated by reference in this
prospectus from the SEC on its web site (http://www.sec.gov). You can also
obtain these documents from us without charge by visiting our web site
(http://www.FSA.com) or requesting them in writing or by telephone at the
following address:
Robert S. Tucker, Vice President, Investor Relations
Financial Security Assurance Holdings Ltd.
350 Park Avenue
New York, New York 10022
Telephone (212) 826-0100
LEGAL MATTERS
The legality of the securities will be passed upon for us by Bruce E.
Stern, Esq., our General Counsel, and for any underwriters or agents by counsel
to be named in the prospectus supplement. At December 15, 1999, Bruce E. Stern
beneficially owned 6,114 shares of our common stock, of which 2,100 shares were
held in a trust for the benefit of his children, and had economic ownership of
the equivalent of 84,475 shares of our common stock.
EXPERTS
The consolidated financial statements and the related financial statement
schedule of Financial Security Assurance Holdings Ltd. and Subsidiaries included
in our Annual Report on Form 10-K, as amended, for the year ended December 31,
1998, and the consolidated financial statements of Financial Security Assurance
Inc. and Subsidiaries included as an exhibit to that Form 10-K, as amended, have
been incorporated by reference in this prospectus in reliance on the reports of
PricewaterhouseCoopers LLP, given on the authority of that firm as experts in
accounting and auditing and incorporated in this prospectus by reference.
22
<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:
Registration .............................. $ 31,500
Trustee Fees .............................. 7,500
Printing .................................. 30,000
Accounting Fees ........................... 30,000
Legal Fees ................................ 80,000
Rating Agency Fees ........................ 60,000
Miscellaneous ............................. 2,000
========
$241,000
Item 15. Indemnification of Officers and Directors.
Pursuant to the New York Business Corporation Law (the "NYBCL"), we have
the power to indemnify certain persons, including our officers and directors,
under stated circumstances and subject to certain limitations in connection with
services performed in good faith for us.
Under our by-laws, 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 our director or officer, or served
any other corporation or entity of any type or kind, domestic or foreign, in any
capacity, at our request, shall be indemnified against judgments, fines, amounts
paid in settlement and reasonable expenses, unless (a) 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 (b) 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 by-laws or, when authorized by the certificate
of incorporation or the by-laws, 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 were 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.
We maintain directors' and officers' liability insurance which insures
against liabilities that our directors or officers may incur in such capacities.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
1.1 Form of Underwriting Agreement.*
3.1 Restated Certificate of Incorporation. +
23
<PAGE>
3.2 Amended and Restated By-Laws, as amended and restated on February
14, 1996 (incorporated by reference to Exhibit 5 to registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996).
4.1 Amended and Restated Trust Indenture dated as of February 24, 1999,
between the registrant and First Union National Bank, as Trustee.+
4.2 Form of Subordinated Indenture.+
4.3 Form of senior debt security (contained in Exhibit 4.1).+
4.4 Form of subordinated debt security (contained in Exhibit 4.2).+
4.5 Form of Purchase Contract Agreement (including as Exhibit A the Form
of the Security Certificate).+
5.1 Opinion of Bruce E. Stern, Esq.**
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preferred Stock Dividends. +
23.1 Consent of PricewaterhouseCoopers LLP. **
23.2 Consent of Bruce E. Stern, Esq. (contained in Exhibit 5.1).
24.1 Power of Attorney.**
25.1 Statement of Eligibility and Qualification on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under the
Amended and Restated Trust Indenture filed as Exhibit 4.1 to this
registration statement.**
25.2 Statement of Eligibility and Qualification on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under the
Subordinated Indenture filed as Exhibit 4.2 to this registration
statement. ++
- ----------------
* To be filed by a report on Form 8-K pursuant to Item 601 of Regulation
S-K.
** Filed herewith.
+ Previously filed as an exhibit to Registration Statement No. 333-74165 and
incorporated by reference into this document.
++ Filed herewith as Exhibit 25.1 and incorporated by reference into this
document as Exhibit 25.2.
Item 17. Undertakings.
(a) 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 of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the
24
<PAGE>
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 (a)(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 the SEC 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.
(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) 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.
25
<PAGE>
(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.
(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.
26
<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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York, on December 15, 1999.
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:
Signature Title Date
--------- ----- ----
* Chairman of the Board, December 15, 1999
- ---------------------------- Chief Executive
Robert P. Cochran Officer and Director
(principal executive officer)
*
Roger K. Taylor President and Director December 15, 1999
- ----------------------------
* Executive Vice President
- ---------------------------- and Director December 15, 1999
Sean W. McCarthy
* Chief Financial Officer
- ---------------------------- (principal financial officer) December 15, 1999
John A. Harrison
* Controller
- ---------------------------- (principal accounting officer) December 15, 1999
Jeffrey S. Joseph
* Director December 15, 1999
- ----------------------------
Terry L. Baxter
27
<PAGE>
Signature Title Date
--------- ----- ----
* Director December 15, 1999
- ----------------------------
Robert N. Downey
* Director December 15, 1999
- ----------------------------
Anthony M. Frank
* Director December 15, 1999
- ----------------------------
Fudeji Hama
* Director December 15, 1999
- ----------------------------
K. Thomas Kemp
* Director December 15, 1999
- ----------------------------
David O. Maxwell
* Director December 15, 1999
- ----------------------------
James M. Osterhoff
* Vice Chairman of the December 15, 1999
- ---------------------------- Board and Director
James H. Ozanne
* Director December 15, 1999
- ----------------------------
Richard A. Post
* Director December 15, 1999
- ----------------------------
Howard M. Zelikow
* Bruce E. Stern, by signing his name hereto, does hereby execute
this 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 Stern
- --------------------------
Bruce E. Stern
Attorney-in-Fact
28
<PAGE>
Exhibit Index
Exhibit No. Exhibit
- ----------- -------
1.1 Form of Underwriting Agreement.*
3.1 Restated Certificate of Incorporation. +
3.2 Amended and Restated By-Laws, as amended and restated on February
14, 1996 (incorporated by reference to Exhibit 5 to registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996).
4.1 Amended and Restated Trust Indenture dated as of February 24, 1999,
between the registrant and First Union National Bank, as Trustee.+
4.2 Form of Subordinated Indenture.+
4.3 Form of senior debt security (contained in Exhibit 4.1).+ 4.4 Form
of subordinated debt security (contained in Exhibit 4.2).+ 4.5 Form
of Purchase Contract Agreement (including as Exhibit A the Form of
the Security Certificate).+
5.1 Opinion of Bruce E. Stern, Esq.**
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preferred Stock Dividends. +
23.1 Consent of PricewaterhouseCoopers LLP. **
23.2 Consent of Bruce E. Stern, Esq. (contained in Exhibit 5.1).
24.1 Power of Attorney.**
25.1 Statement of Eligibility and Qualification on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under the
Amended and Restated Trust Indenture filed as Exhibit 4.1 to this
registration statement.**
25.2 Statement of Eligibility and Qualification on Form T-1 under the
Trust Indenture Act of 1939, as amended, of the trustee under the
Subordinated Indenture filed as Exhibit 4.2 to this registration
statement. ++
- ----------------
* To be filed by a report on Form 8-K pursuant to Item 601 of Regulation
S-K.
** Filed herewith.
+ Previously filed as an exhibit to Registration Statement No. 333-74165 and
incorporated by reference into this document.
++ Filed herewith as Exhibit 25.1 and incorporated by reference into this
document as Exhibit 25.2.
Exhibit 5.1
December 17, 1999
Registration Statement on Form S-3
Ladies and Gentlemen:
This opinion is being provided to you by the undersigned, as General
Counsel of Financial Security Assurance Holdings Ltd., a New York corporation
(the "Issuer"). I have acted as counsel to the Issuer in connection with the
preparation and filing with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), of a
Registration Statement on Form S-3 (the "Registration Statement"), and the
prospectus included therein (the "Prospectus"), relating to the registration by
the Issuer of:
(a) $90,650,021 in the aggregate, to be issued from time to time in
one or more primary offerings, of (i) debt securities representing
unsecured obligations of the Issuer (the "Senior Debt Securities") to be
issued pursuant to the Amended and Restated Trust Indenture (the
"Indenture") dated as of February 24, 1999, between the Issuer and First
Union National Bank, as trustee (the "Trustee") and subordinated debt
securities ("Subordinated Debt Securities" and, together with the Senior
Debt Securities, the "Debt Securities") to be issued pursuant to a
Subordinated Indenture (the "Subordinated Indenture") between the Issuer
and a trustee (the "Subordinated Trustee") to be named in a prospectus
supplement relating to the Subordinated Debt Securities; (ii) shares of
common stock of the Issuer, par value $.01 per share ("Common Stock");
(iii) contracts to purchase Common Stock ("Stock Purchase Contracts");
(iv) units ("Stock Purchase Units") consisting of a Stock Purchase
Contract and Debt Securities, Preferred Securities (as defined below) or
debt obligations of third parties; and (v) shares of preferred stock of
the Issuer ("Preferred Securities"); and
(b) 500,000 shares of Common Stock to be issued from time to time in
one or more secondary offerings.
The securities referred to in the foregoing clause (a), when added to
$184,349,979 of securities of the same type which were previously registered by
the Issuer on Form S-3 (Registration Statement No. 333-74165) and which remain
unsold, result in an aggregate amount of $275,000,000 of such registered
securities. The Registration Statement constitutes Post-Effective Amendment No.
1 to Registration Statement No. 333-74165.
In so acting, I have examined and relied upon the originals, or copies
certified or otherwise identified to my satisfaction, of such records,
documents, certificates and other instruments as in my judgment are necessary or
appropriate to enable me to render the opinion expressed below. My opinion
assumes that each of the definitive Subordinated Indenture and the definitive
purchase contract agreement (the "Purchase Contract Agreement") between the
Issuer and a purchase contract agent (the "Purchase Contract Agent") to be named
in a prospectus
<PAGE>
supplement relating to the Stock Purchase Contracts and Stock Purchase Units, as
applicable, will be in substantially the form filed as an exhibit to the
Registration Statement.
Based upon the foregoing, I am of the following opinion:
1. When the Senior Debt Securities have been duly executed,
authenticated, issued, delivered and paid for as contemplated by the
Registration Statement and any prospectus supplement relating to the
Senior Debt Securities and in accordance with the Indenture, assuming the
terms of such Senior Debt Securities have been duly established so as not
to violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon the Issuer and so as to comply
with any requirement imposed by any court or governmental body having
jurisdiction over the Issuer, the Senior Debt Securities will be validly
issued and will constitute valid and binding obligations of the Issuer in
accordance with their terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability relating to or affecting the rights of creditors and
by general principles of equity.
2. When the Subordinated Indenture has been duly authorized,
executed and delivered by the Issuer and the Subordinated Trustee, and the
Subordinated Debt Securities have been duly executed, authenticated,
issued, delivered and paid for as contemplated by the Registration
Statement and any prospectus supplement relating to the Subordinated Debt
Securities and in accordance with the Subordinated Indenture, assuming the
terms of such Subordinated Debt Securities have been duly established so
as not to violate any applicable law or result in a default under or
breach of any agreement or instrument binding upon the Issuer and so as to
comply with any requirement imposed by any court or governmental body
having jurisdiction over the Issuer, the Subordinated Debt Securities will
be validly issued and will constitute valid and binding obligations of the
Issuer in accordance with their terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability relating to or affecting the rights of
creditors and by general principles of equity.
3. When the Common Stock has been duly issued and sold as
contemplated by the Registration Statement and any prospectus supplement
relating to the Common Stock, against payment of the consideration fixed
therefor by the Board of Directors of the Issuer or a duly authorized
committee thereof, the Common Stock will be duly authorized, validly
issued, fully paid and nonassessable.
4. When the Purchase Contract Agreement has been duly authorized,
executed and delivered by the Issuer and the Purchase Contract Agent, and
the Stock Purchase Contracts and Stock Purchase Units, as applicable, have
been duly executed, countersigned, issued, delivered and paid for as
contemplated by the Registration Statement and any prospectus supplement
relating to the Stock Purchase Contracts and Stock Purchase Units, as
applicable, and in accordance with the Purchase Contract Agreement,
assuming the terms of such Stock Purchase Contracts and Stock Purchase
Units, as applicable, have been duly established so as not to violate any
applicable law or result in a default under or breach of any agreement or
instrument binding upon the Issuer and so as to comply with any
requirement imposed by any court or governmental body having jurisdiction
over the Issuer, the Stock Purchase Contracts and Stock Purchase Units, as
applicable, will be validly issued and will constitute valid and binding
2
<PAGE>
obligations of the Issuer in accordance with their terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws of general applicability relating to or affecting the
rights of creditors and by general principles of equity.
5. When the Preferred Stock has been duly issued and sold as
contemplated by the Registration Statement and any prospectus supplement
relating to the Preferred Stock, against payment of the consideration
fixed therefor by the Board of Directors of the Issuer or a duly
authorized committee thereof, the Preferred Stock will be duly authorized,
validly issued, fully paid and nonassessable.
The opinion expressed above is limited to the laws of the State of New
York, the Act and the federal laws of the United States of America.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name under the caption "Legal
Matters" in the Prospectus. In giving such consent, I do not thereby concede
that I am within the category of persons whose consent is required under Section
7 of the Act or the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ Bruce Stern
Bruce E. Stern,
General Counsel
Financial Security Assurance Holdings Ltd.,
350 Park Avenue,
New York, NY 10022.
3
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Financial Security Assurance Holdings Ltd. on Form S-3, relating to the shelf
registration of (a) $275,000,000 of debt securities, common stock, stock
purchase contracts, stock purchase units and preferred stock to be sold in one
or more primary offerings and (b) 500,000 shares of common stock to be sold in
one or more secondary offerings of:
1. Our report dated January 26, 1999, except for the restatements and
reclassifications section in Note 2 as to which the date is August 4, 1999, on
our audits of the consolidated balance sheets of Financial Security Assurance
Holdings Ltd. and Subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1998, and
financial statement schedule which appear in Financial Security Assurance
Holdings Ltd.'s Annual Report on Form 10-K, as amended, for the fiscal year
ended December 31, 1998, which report is included in Item 8 of the Annual Report
on Form 10-K, as amended, for the fiscal year ended December 31, 1998.
2. Our report dated January 26, 1999 on our audits of the consolidated balance
sheets of Financial Security Assurance Inc. and Subsidiaries as of December 31,
1998 and 1997, and the related consolidated statements of income, changes in
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 1998, which report is included in exhibit 99 to the Annual
Report on Form 10-K, as amended.
We also consent to the reference to our Firm under the caption "Experts".
/s/ PricewaterhouseCoopers LLP
-------------------------------
PricewaterhouseCoopers LLP
December 15, 1999
Exhibit 24.1
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS:
WHEREAS, Financial Security Assurance Holdings Ltd., a New York
corporation (the "Company"), proposes to file with the Securities and Exchange
Commission (the "Commission"), under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), a Registration Statement on Form S-3,
and one or more amendments thereto, with respect to debt securities, common
stock, stock purchase contracts, stock purchase units and/or preferred stock of
the Company (the "Registration Statement"); and
WHEREAS, each of the undersigned is a director or officer of the Company
as set forth opposite his name below.
NOW, THEREFORE, each of the undersigned hereby constitutes and appoints
Robert P. Cochran, Roger K. Taylor and Bruce E. Stern, and each of them, with
full power to act without the other, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities (until revoked in writing), to
sign the Registration Statement and any amendments thereto, and to sign any
related Registration Statement filed by the Company pursuant to Rule 462(b)
under the Securities Act, and any amendments thereto, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary fully to all intents and purposes as he might or could
do in person, thereby ratifying and confirming all that said attorney-in-fact
and agents or any of them, or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Power
of Attorney as of this 11th day of November, 1999.
/s/ Terry L. Baxter
- ------------------------------
Terry L. Baxter Director
/s/ Robert P. Cochran
- ------------------------------
Robert P. Cochran Chairman of the Board, Chief
Executive Officer and Director
/s/ Robert N. Downey
- ------------------------------
Robert N. Downey Director
/s/ Anthony M. Frank
- ------------------------------
Anthony M. Frank Director
/s/ Fudeji Hama
- ------------------------------
Fudeji Hama Director
/s/ K. Thomas Kemp
- ------------------------------
K. Thomas Kemp Director
<PAGE>
page 2
/s/ David O. Maxwell
- ------------------------------
David O. Maxwell Director
/s/ Sean W. McCarthy
- ------------------------------
Sean W. McCarthy Executive Vice President and Director
/s/ James M. Osterhoff
- ------------------------------
James M. Osterhoff Director
/s/ James H. Ozanne
- ------------------------------
James H. Ozanne Vice Chairman of the Board and Director
/s/ Richard A. Post
- ------------------------------
Richard A. Post Director
/s/ Roger K. Taylor
- ------------------------------
Roger K. Taylor President, Director
/s/ Howard M. Zelikow
- ------------------------------
Howard M. Zelikow Director
/s/ John A. Harrison
- ------------------------------
John A. Harrison Managing Director and Chief Financial
Officer
/s/ Jeffrey S. Joseph
- ------------------------------
Jeffrey S. Joseph Managing Director and Controller
Exhibit 25.1
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
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |X|
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
401 South Tryon Street, 12th Floor
Charlotte, North Carolina 28202
(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 obligor 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)826-01004
(Address, including zip code, of principal executive offices)
---------------------------------
US $275,000,000
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Debt Securities
(Title of the indenture securities)
-----------------------------------
<PAGE>
Item 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.
Item 2. Affiliations with the obligor and underwriters.
If the obligor or any underwriter for the obligor is an affiliate of the
trustee, describe each such affiliation.
None. 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 this 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.
Items 3-15.
Because the obligor is not in default on any securities issued under
indentures under which the applicant is trustee, Item 3 through 15 are not
required herein.
Item 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.
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 First Union National Bank, or
instruments corresponding thereto.
2
<PAGE>
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939. Included on signature page 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.
- ----------------------
* Incorporated by reference to Exhibits bearing identical numbers in Item 16 of
the Form T-1 of First Union National Bank, filed as Exhibit 25.1 to Form S-4
Registration Statement of Unifi, Inc. filed with the Securities and Exchange
Commission on April 2, 1998 (Registration No. 333-49243).
3
<PAGE>
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 17th day of December, 1999.
FIRST UNION NATIONAL BANK
(trustee)
By: /s/ Shawn Bednasek
----------------------
Name: Shawn Bednasek
Title: 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, 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/ Shawn Bednasek
------------------------
Name: Shawn Bednasek
Title: Vice President
Dated: December 17, 1999.
4
<PAGE>
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Washington, D.C. 20219
CERTIFICATE
I, John D. Hawke, Jr., 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.
000001), 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 7th day of April, 1999.
/s/ John D. Hawke, Jr.
---------------------------
Comptroller of the Currency
[SEAL OF THE COMPTROLLER
OF THE CURRENCY]
5
<PAGE>
BY-LAWS OF
FIRST UNION NATIONAL BANK
Charter No. 1
Effective May 18, 1998
<PAGE>
BY-LAWS OF
FIRST UNION NATIONAL BANK
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.10 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 April in
each year, commencing with the year 1998, 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
April 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 1.20 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 1.30 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 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.
<PAGE>
Section 1.40 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 1.50 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 1.60 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 2.10 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.
Section 2.20 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 2.30 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.
<PAGE>
Section 2.40 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 2.50 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 2.60 Quorum. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a less number may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice.
Section 2.70 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 2.80 Advisory Boards. The Board of Directors may appoint Advisory
Boards for each of the states in which the Association conducts operations. 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 Association in such state
with regard to the best interests of the Association and to perform such other
duties as the Board of Directors may lawfully delegate. The senior officer in
such state, or such officers as directed by such senior officer, may appoint
advisory boards for geographic regions within such state and may consult with
the State Advisory Boards prior to such appointment.
ARTICLE III
COMMITTEES OF THE BOARD
Section 3.10 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
<PAGE>
(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.
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 4.10 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 4.20 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.
<PAGE>
Section 4.30 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
Association except the Examining Committee, and its Chief Executive Officer
unless some other officer is so designated by the Board of Directors.
Section 4.40 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 4.60 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 5.10 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 City Trust
Offices located in such cities within the State of North Carolina as designated
by the Board of Directors.
Section 5.20 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
<PAGE>
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 5.30 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 or officers of this Association who shall be
appointed annually or from time to time by the Board of Directors of the
Association. 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 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.
<PAGE>
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 5.40 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 5.50 Personal Trust Administration Committee. There shall be a
Personal Trust Administration Committee composed of not less than five (5)
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 5.60 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
<PAGE>
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 5.70 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 the next ensuing regular meeting for its review and approval.
ARTICLE VI
STOCK AND STOCK CERTIFICATES
Section 6.10 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 6.20 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 7.10 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 8.10 Fiscal Year. The fiscal year of the Association shall be the
calendar year.
<PAGE>
Section 8.20 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
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 8.30 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 9.10 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 9.20 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.
<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 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.
<PAGE>
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 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 or 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.
<PAGE>
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 the 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.
<PAGE>
Legal Title of Bank: First Union National Bank
Address: Two First Union Center
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Page RC-1
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1999
All 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 Amountin Thousands RCFD Bil Mil Thou
-------------------------------------------
<S> <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 8,946,000 1.a.
b. Interest-bearing balances (2)................................................. 0071 266,000 1.b.
2. Securities: ////////////
a. Held-to-maturity securities (from Schedule RC-B, column A).................... 1754 1,644,000 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).................. 1773 47,356,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell........... 1350 2,856,000 3.
4. Loans and lease financing receivables ////////////
a. Loans and leases, net of unearned income (from
Schedule RC-C)...........................................RCFD 2122132,839,000 //////////// 4.a.
b. LESS: Allowance for loan and lease losses................RCFD 3123 1,743,000 //////////// 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 131,096,000 4.d.
5. Trading assets (from Schedule RC-D).............................................. 3545 8,333,000 5.
6. Premises and fixed assets (including capitalized leases)......................... 2145 3,070,000 6.
7. Other real estate owned (from Schedule RC-M)..................................... 2150 134,000 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2180 262,000 8.
9. Customers' liability to this bank on acceptances outstanding..................... 2155 807,000 9.
10. Intangible assets (from Schedule RC-M)........................................... 2143 5,115,000 10.
11. Other assets (from Schedule RC-F)................................................ 2160 10,789,000 11.
12. Total assets (sum of items 1 through 11)......................................... 2170 220,674,000 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
Address: Two First Union Center
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Page RC-1
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amountin Thousands Bil Mil Thou
------------------------------------------
<S> <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 129,621,000 13.a.
(1) Noninterest-bearing (1).......................RCON 6631 21,341,000 //////////////// 13.a.(1)
(2) Interest-bearing..............................RCON 6636 108,280,000 //////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, ///////////////////////////////
part II).................................................................... RCFN 2200 9,838,000 13.b.
(1) Noninterest-bearing...........................RCFN 6631 466,000 //////////////// 13.b.(1)
(2) Interest-bearing..............................RCFN 6636 9,372,000 //////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase...... RCFD 2800 23,796,000 14.
15. a. Demand notes issued to the U.S. Treasury.................................... RCON 2840 782,000 15.a.
b. Trading liabilities (from Schedule RC-D).................................... RCFD 3548 4,984,000 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 14,643,000 16.a.
b. With a remaining maturity of more than one year through three years......... RCFD A547 5,639,000 16.b.
c. With a remaining maturity of more than three years.......................... RCFD A548 2,872,000 16.c.
17. Not applicable.................................................................. ////////////////
18. Bank's liability on acceptances executed and outstanding........................ RCFD 2920 807,000 18.
19. Subordinated notes and debentures (2)........................................... RCFD 3200 4,269,000 19.
20. Other liabilities (from Schedule RC-G).......................................... RCFD 2930 6,515,000 20.
21. Total liabilities (sum of items 13 through 20).................................. RCFD 2948 203,766,000 21.
22. Not applicable.................................................................. ////////////////
EQUITY CAPITAL ////////////////
23. Perpetual preferred stock and related surplus................................... RCFD 3838 161,000 23.
24. Common stock.................................................................... RCFD 3230 455,000 24.
25. Surplus (exclude all surplus related to preferred stock)........................ RCFD 3839 13,306,000 25.
26. a. Undivided profits and capital reserves...................................... RCFD 3632 3,553,000 26.a.
b.......Net unrealized holding gains (losses) on available-for-sale securities.. RCFD 8434 (562,000) 26.b.
c.........Accumulated net gains (losses) on cash flow hedges................... RCFD 4336 0 26.c
27. Cumulative foreign currency translation adjustments............................. RCFD 3284 (5,000) 27.
28. Total equity capital (sum of items 23 through 27)............................... RCFD 3210 16,908,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28)................... RCFD 3300 220,674,000 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 independent external Number
auditors as of any date during 1996............................................ RCFD 6724 N/A M.1.
</TABLE>
<PAGE>
Legal Title of Bank: First Union National Bank
Address: Two First Union Center
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Page RC-1
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
public 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)
Legal Title of Bank: First Union National Bank
Address: Two First Union Center
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 33869
Call Date: 6/30/98 ST-BK: 37-0351 FFIEC 031
Page RC-1
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
deposit.
(2) Includes limited-life preferred stock and related surplus.
